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I am writing this post because one of my PLM peers recently asked me this question: “Is the BOM losing its position? He was in discussion with another colleague who told him:
“If you own the BOM, you own the Product Lifecycle”.
This statement made me think of ä recent post from Jan Bosch recent post: Product Development fallacy #8: the bill of materials has the highest priority.
Software becomes increasingly an essential part of the final product, and combined with Jan’s expertise in software development, he wrote this article. I recommend reading the full post (4 min read) and next browse through the comments.
If you cannot afford these 10 minutes, here is my favorite quote from the article:
An excessive focus on the bill of materials leads to significant challenges for companies that are undergoing a digital transformation and adopting continuous value delivery. The lack of headroom, high coupling and versioning hell may easily cause an explosion of R&D expenditure over time.
Where did the BOM focus come from? A historical overview related to the rise (and fall) of the BOM.
In the beginning, there was the drawing.
Before the era of computers, there was “THE drawing”, describing assemblies, subassemblies or parts. And on the drawing, you can find the parts list if relevant. This parts list was the first Bill of Material, describing the parts/materials shown on the drawing.
Next came MRP/ERP
With the introduction of the MRP system (Material Requirement Planning), it was the first step that by using computers, people could collect the material requirements for one system as data and process. Entering new materials/parts described on drawings was still a manual process, as well as referring to existing parts on the drawing. Reuse of parts was a manual process based on individual knowledge.
In the nineties, MRP evolved into ERP (Enterprise Resource Planning), which included the MRP part and added resource and manufacturing planning and financial reporting.
The ERP system became the most significant IT system, the execution system of the company. As it was the first enterprise system implemented, it was the first moment we learned about implementation challenges – people change and budget overruns. However, as the ERP system brought visibility to the company’s execution, it became a “must-have” system for management.
The introduction of mainstream 2D CAD did not affect the company’s culture so much. Drawings became electronic drawings, and the methodology of the parts list on the drawing remained.
Sometimes the interaction with the MRP/ERP system was enhanced by an interface – sending the drawing BOM to ERP. The advantage of the interface: no manual transfer of data reducing typos and BOM errors. The disadvantages at that time: relatively expensive (connectivity between systems was a challenge) and mostly one direction.
And then there was PDM.
In parallel with the introduction of ERP systems, mainstream 3D CAD systems became affordable, particularly SolidWorks, Solid Edge and Inventor. These 3D CAD systems allow sharing of parts and assemblies in different products, and the PDM database was the first aid to support part reuse, versioning and standardization.
By extracting the parts from the assemblies and subassemblies, it was possible to generate a BOM structure in the PDM system to be transferred or typed into the ERP system. We did not talk about EBOM or MBOM then, as there was only one BOM in the ERP system, and the PDM system was a tool to feed the ERP system.
Many companies still have based their processes on this approach. ERP (read SAP nowadays) is the central execution system, and PDM is an external system. You might remember the story and image from my previous post about people, processes and tools. The bad practice example: Asking the ERP system to provide a part number when starting to design a part.
And then products started to change.
In the early 2000s, I worked with SmarTeam to define the E&E (Electronics and Electrical) template. One of the new concepts was to synchronize all design data coming from different disciplines to a single BOM structure.
It was the time we started to talk about the EBOM. A type of BOM, as the structure to consolidate all the design data, was based on parts.
The EBOM, most of the time, reflects the design intent in logical groups and sending the relevant parts in the correct order to the ERP system was a favorite expensive customization for service providers. How to transfer an engineering BOM view to an ERP system that only understands the manufacturing view?
Note: not all ERP systems have the data model to differentiate between engineering parts and manufacturing parts
The image below illustrates the challenge and the customer’s perception. 
The automated link between the design side (EBOM) and manufacturing side (MBOM) was a mission impossible – too many exceptions for the (spaghetti) code.
And then came the MBOM.
The identified issues connecting PDM and ERP led to the concept of implementing the MBOM in the PLM system. The MBOM in PLM is one of the characteristics of a PLM implementation compared to a PDM implementation. In a traditional PLM system, there is an interaction and connection between the EBOM and MBOM. EBOM parts should end up as MBOM parts. This interaction can be supported by automation, however, as it is in the same system, still leaving manual changes possible.
The MBOM structure in PLM could then be the information structure to transfer to the ERP system; however, there is more, as Jörg W. Fischer wrote in his provoking post-Die MBOM muss weg (The MBOM must go). He rightly points out (in German) that the MBOM is not a structure on its own but a combination of different views based on Assembly Drawings, Process Planning and Material Requirements.
His conclusion:
Calling these structures, MBOM is trying to squeeze all three structures into one. That usually doesn’t work and then leads to much more emotional discussions in the project. It also costs a lot of money. It is, therefore, better not to use the term MBOM at all.
And indeed, just having an MBOM in your PLM system might help you to prepare some of the manufacturing steps, the needed resources and parts. The MBOM result still has to be localized at the local plant where the manufacturing takes place. And here, the systems used are the ERP system and the MES system.
The main advantage of having the MBOM in the PLM system is the direct relation between specification and manufacturing intent, allowing manufacturing engineering to work collaboratively with engineering in the same environment.
- The first benefit is fewer iterations and a shorter time to production, thanks to early interaction and manufacturing involvement in the engineering process.
- The second benefit is: product knowledge is centralized in a single system. Consolidating your Product Knowledge in ERP does not make sense due to global localization and the missing capabilities to manage the iterative engineering processes on non-existing parts.
And then came the SBOM, the xBOM
Traditional PLM vendors and implementations kept using xBOM structures as placeholders for related specification data (mechanical designs, electrical, software deliverables, serialized products). Most of the time, related files.
And with this approach, talking about digital thread, PLM systems also touch on the concepts of Configuration Management.
I will not go into the details here but look at the two images by clicking on them and see a similar mindset.
It is about the traceability of information in structures and systems. These structures work well in a relatively static and linear product development and delivery environment, as illustrated below:
Engineering change and release processes are based on managing the changes in different structures from the left to the right.
And then came software!
Modern connected products are no longer mechanical products. The product’s functionality no longer depends on the mechanical properties but mainly on embedded electronics and software used. For example, look at the mechanical design of a telecom transmission tower – its behavior merely comes from non-mechanical components, and they can change over time. Still, the Bill of Material contains a lot of concrete and steel parts.
The ultimate example is comparing a Tesla (software on wheels) with a traditional car. For modern connected products, electronics and software need to be part of the solution. Software and electronics allow the product to be upgraded over time. Managing these products in the same manner as mechanical products is impossible, inefficient and therefore threatening your company’s future business.
I requote Jan Bosch:
An excessive focus on the bill of materials leads to significant challenges for companies that are undergoing a digital transformation and adopting continuous value delivery. The lack of headroom, high coupling and versioning hell may easily cause an explosion of R&D expenditure over time.
The model-based, connected enterprise
I will not solve the puzzle of the future in this post. You can read my observations in my series: The road to model-based and connected PLM. We need a new infrastructure with at least two modes. One that still serves as a System of Record, storing information in a traditional manner, like a Bill of Materials for the static parts, as not everyone and everything can be connected.
In addition, we need various Systems of Engagement that enable close to real-time interaction between products (systems) and relevant stakeholders for the engagement scope(multidisciplinary / consumers).
Digital twins are examples of such environments. Currently, these Systems of Engagement often work disconnected from the System of Record due to the lack of understanding of how to connect. (standard connectors? / OSLC?)
Our mission is to explore, as I wrote in my post Time to split PLM and drop our mechanical mindset.
And while I was finalizing this post, I read a motivating post from Jan Bosch again for all of you working on understanding and pushing the digital transformation in your eco-system.
The title: Be the protagonist of your life: 15 rules A starting point for more to come.
Conclusion
The BOM is no longer the master of the product lifecycle when it comes to managing connected products, where functionality mainly depends on software. BOM structures with related documents are just one of the extracted baselines from a data-driven, connected enterprise. This traditional PLM infrastructure requires other, non-BOM-driven structures to represent the actual status of a virtual or physical product.
The BOM is not dead, but there is more ………
Your thoughts?
July and August are the quiet summer months here in Europe when companies slow down to allow people to recharge themselves.
However, the speed and hectic are not the same overall, nor is the recharging time. I will be entering a six-week thinking break, assembling thoughts to explore after the summer break. Here are some topics – and you may note – they are all connected.
The MBOM discussion
Although my German is not as good as my English, I got intrigued by a post from Prof. Dr. Jörg W. Fischer.
He claims there is no meaning to the MBOM and, therefore, the “expensive” PLM concept of the MBOM has to disappear – read the original post here.
Jörg claims there are three reasons why the MBOM why we should not speak about the MBOM – here are the google translated quotes – and I left out some details to keep a place for the thoughts – not the answer yet:
- The MBOM as the structure for deriving the assembly drawings. No BOM! (here, I fully agree)
- The structure that comes out as a result when planning the assembly. Again, no BOM. (here, I tend to agree – however, we could extend this structure to an MBOM)
- The MBOM as the classic parts list in the ERP, the one with which the MRP run is performed. Is that an MBOM? Until recently, I thought so. But it isn’t. So again, no MBOM. (here, I tend to agree – however, we could extend this structure to an MBOM)
The topic on LinkedIn here initiated an interesting sharing of viewpoints. I am quite aligned with Martin Eigner’s comment. It is a pity that this type of discussion is hidden in a LinkedIn environment and in the German language. It would be great to discuss such a topic at a PLM conference. For example, the CIMdata PLM roadmap conference had several Multiview BOM discussions coming from Aerospace and Defense action groups.
Perhaps comparing these two viewpoints – preferably in English – could lead to a better understanding for all of us. Now communication language and system dependencies might blur the methodology discussion.
Cheryl Peck (CIMdata PLM Roadmap organizer)/ Jörg W. Fischer, are you open to this suggestion? BOM discussions have always been popular.
PLM Roadmap & PDT 2022
The good news is the upcoming PLM Roadmap & PDT 2022 event is scheduled as an in-person event on the 18th and 19th of October in Gothenburg, Sweden. Let’s hope no new corona-variant will destroy this plan. I am confident to be there as the Swedish COVID-19 approach has kept society open as much as possible.
Therefore, I am collecting my topics to discuss and preparing my luggage and presentation to be there.
The theme of the conference: Digital Transformation and PLM – a call for PLM Professionals to redefine and re-position the benefits and value of PLM, is close to my experience.
New PLM paradigms are coming up, while at the same time, we are working on solidifying existing concepts, like the Multiview BOM. The PDT part of the conference always brought interesting sessions related to sustainability and, often, the circular economy.
I am curious to see the final agenda. Hakan Karden already gave us some insights into why it is good to be curious – read it here.
Sustainability
Talking and learning about sustainability at PDT Europe is not a luxury. In particular, we experienced an unforeseen heatwave in western Europe, reminding us that the climate is not slowing down. More the contrary, rapid climate change caused by human influence becomes more and more visible.
Unfortunately, the people that suffer from droughts, bushfires, and famine are not the ones that can be held responsible for these effects. It is a global crisis, and the strongest shoulders must carry the weight to address these issues.
In that context, we had an internal meeting with the PLM Global Green Alliance core team members to plan our activities for the rest of the year.
Besides interviews with PLM vendors and technology solution providers, we want to create opportunities for PGGA members to discuss PLM technology, methodology or change topics of interest, moderated by one of our core team members.
One of our observations is that awareness of the need for a more sustainable society exists. In polls all around the world, the majority of people mention their concerns.
However, where to start? What does matter, and how to influence companies as individuals? We also need to learn what is real and what is greenwashing. Therefore we want to schedule open discussions with PGGA members (are you already a member?) to share knowledge and thoughts about a topic. More about the agenda after the summer break.
Discussions & Podcasts
While I remain open for discussions and those who contacted me with a direct message on LinkedIn will acknowledge there is always a follow-up.
Whenever I have time – most of the time, I target Fridays for ad-hoc discussions – I am happy to schedule a zoom session to learn and discuss a particular topic without obligations. It will be a discussion, not a consult.
During Covid-lockdowns, I learned to appreciate podcasts. While making the daily walk through the same environment, the entertainment came from listening to an interesting podcast.
I learned a lot about history, mysteries, and human behavior. Of course, I was also looking for PLM-related podcasts. Of course, the major vendors found their way to podcasts too. However, I think they are often too slick, only highlighting a vision and not enough discussing what really happens in the field.
Starting a PLM-related podcast, and I want to highlight three of them
The Share PLM podcast, with 11 episodes, started promising in 2020. After a first start, it becomes difficult to deliver continuous new content.
Currently, I am talking with the Share PLM team to see how we can build this continuity and extend the content. There are so many interesting persons in our network that have valuable opinions about PLM to share. More after the summer
The Peer Check podcast from CoLab is not a typical PLM podcast. More a focus on what engineering leaders should know. They started in 2022 and have already published ten episodes. I am in the process of listening to all of them, and I found them very refreshing.
This week I was happy to join Adam Keating, founder of CoLab, in a discussion related to Systems of Record and Systems of Engagement. More new after the summer.
The Change Troubleshooter podcast from Nina Dar, with already 34 episodes, is a podcast not focusing on PLM purely. Although Nina has a background in coaching PLM implementations, her episodes are around A Human Approach to Innovation and Change. You can imagine it is quite aligned with my area of interest.
In particular, Nina and I are having some side discussions about sustainability and (the lack of) human behavior to address climate change. You might hear more from Nina through our PGGA community.
More podcasts?
I am curious to learn if similar podcasts exist to the topics I mentioned in this post. If so, provide a link in the comments. With enough feedback, I will publish a top-ten list this year’s end.
Conclusion
In a society that seems to behave as if everything is black and white, to be solved by a tweet, we need people that can build a colorful opinion. Conferences, discussions and podcasts can help you remain curious and learn. As it must be extremely boring if you know already everything.
Have a great summertime.
In the series learning from the past to understand the future, we have almost reached the current state of PLM before digitization became visible. In the last post, I introduced the value of having the MBOM preparation inside a PLM-system, so manufacturing engineering can benefit from early visibility and richer product context when preparing the manufacturing process.
Does everyone need an MBOM?
It is essential to realize that you do not need an EBOM and a separate MBOM in case of an Engineering To Order primary process. The target of ETO is to deliver a unique customer product with no time to lose. Therefore, engineering can design with a manufacturing process in mind.
The need for an MBOM comes when:
- You are selling a specific product over a more extended period of time. The engineering definition, in that case, needs to be as little as possible dependent on supplier-specific parts.
- You are delivering your portfolio based on modules. Modules need to be as long as possible stable, therefore independent of where they are manufactured and supplier-specific parts. The better you can define your modules, the more customers you can reach over time.
- You are having multiple manufacturing locations around the world, allowing you to source locally and manufacture based on local plant-specific resources. I described these options in the previous post
The challenge for all companies that want to move from ETO to BTO/CTO is the fact that they need to change their methodology – building for the future while supporting the past. This is typically something to be analyzed per company on how to deal with the existing legacy and installed base.
Configurable EBOM and MBOM
In some previous posts, I mentioned that it is efficient to have a configurable EBOM. This means that various options and variants are managed in the same EBOM-structure that can be filtered based on configuration parameters (date effectivity/version identifier/time baseline). A configurable EBOM is often called a 150 % EBOM
The MBOM can also be configurable as a manufacturing plant might have almost common manufacturing steps for different product variants. By using the same process and filtered MBOM, you will manufacture the specific product version. In that case, we can talk about a 120 % MBOM
Note: the freedom of configuration in the EBOM is generally higher than the options in the configurable MBOM.
The real business change for EBOM/MBOM
So far, we have discussed the EBOM/MBOM methodology. It is essential to realize this methodology only brings value when the organization will be adapted to benefit from the new possibilities. 
One of the recurring errors in PLM implementations is that users of the system get an extended job scope, without giving them the extra time to perform these activities. Meanwhile, other persons downstream might benefit from these activities. However, they will not complain. I realized that already in 2009, I mentioned such a case: Where is my PLM ROI, Mr. Voskuil?
Now let us look at the recommended business changes when implementing an EBOM/MBOM-strategy
- Working in a single, shared environment for engineering and manufacturing preparation is the first step to take.
Working in a PLM-system is not a problem for engineers who are used to the complexity of a PDM-system. For manufacturing engineers, a PLM-environment will be completely new. Manufacturing engineers might prepare their bill of process first in Excel and ultimately enter the complete details in their ERP-system. ERP-systems are not known for their user-friendliness. However, their interfaces are often so rigid that it is not difficult to master the process. Excel, on the other side, is extremely flexible but not connected to anything else.
And now, this new PLM-system requires people to work in a more user-friendly environment with limited freedom. This is a significant shift in working methodology. This means manufacturing engineers need to be trained and supported over several months. Changing habits and keep people motivated takes energy and time. In reality, where is the budget for these activities? See my 2016 post: PLM and Cultural Change Management – too expensive?
- From sequential to concurrent
Once your manufacturing engineers are able to work in a PLM-environment, they are able to start the manufacturing definition before the engineering definition is released. Manufacturing engineers can participate in design reviews having the information in their environment available. They can validate critical manufacturing steps and discuss with engineers potential changes that will reduce the complexity or cost for manufacturing. As these changes will be done before the product is released, the cost of change is much lower. After all, having engineering and manufacturing working partially in parallel will reduce time to market.
Reducing time to market by concurrent engineering
One of the leading business drivers for many companies is introducing products or enhancements to the market. Bringing engineering and manufacturing preparation together also means that the PLM-system can no longer be an engineering tool under the responsibility of the engineering department.
The responsibility for PLM needs to be at a level higher in the organization to ensure well-balanced choices. A higher level in the organization automatically means more attention for business benefits and less attention for functions and features.
From technology to methodology – interface issues?
The whole EBOM/MBOM-discussion often has become a discussion related to a PLM-system and an ERP-system. Next, the discussion diverted to how these two systems could work together, changing the mindset to the complexity of interfaces instead of focusing on the logical flow of information.
In an earlier PI Event in München 2016, I lead a focus group related to the PLM and ERP interaction. The discussion was not about technology, all about focusing on what is the logical flow of information. From initial creation towards formal usage in a product definition (EBOM/MBOM).
What became clear from this workshop and other customer engagements is that people are often locked in their siloed way of thinking. Proposed information flows are based on system capabilities, not on the ideal flow of information. This is often the reason why a PLM/ERP-interface becomes complicated and expensive. System integrators do not want to push for organizational change, they prefer to develop an interface that adheres to the current customer expectations.
SAP has always been promoting that they do not need an interface between engineering and manufacturing as their data management starts from the EBOM. They forgot to mention that they have a difficult time (and almost no intention) to manage the early ideation and design phase. As a Dutch SAP country manager once told me: “Engineers are resources that do not want to be managed.” This remark says all about the mindset of ERP.
After overlooking successful PLM-implementations, I can tell the PLM-ERP interface has never been a technical issue once the methodology is transparent. A company needs to agree on logical data flow from ideation through engineering towards design is the foundation.
It is not about owning data and where to store it in a single system. It is about federated data sets that exist in different systems and that are complementary but connected, requiring data governance and master data management.
The SAP-Siemens partnership
In the context of the previous paragraph, the messaging around the recently announced partnership between SAP and Siemens made me curious. Almost everyone has shared an opinion about the partnership. There is a lot of speculation, and many questions were imaginarily answered by as many blog posts in the field. Last week Stan Przybylinski shared CIMdata’s interpretations in a webinar Putting the SAP-Siemens Partnership In Context, which was, in my opinion, the most in-depth analysis I have seen.
For what it is worth, my analysis:
- First of all, the partnership is a merger of slide decks at this moment, aiming to show to a potential customer that in the SAP/Siemens-combination, you find everything you need. A merger of slides does not mean everything works together.
- It is a merger of two different worlds. You can call SAP a real data platform with connected data, where Siemens offering is based on the Teamcenter backbone providing a foundation for a coordinated approach. In the coordinated approach, the data flexibility is lower. For that reason, Mendix is crucial to make Siemens portfolio behave like a connected platform too.
You can read my doubts about having a coordinated and connected system working together (see image above). It was my #1 identified challenge for this decade: PLM 2020 – PLM the next decade (before COVID-19 became a pandemic and illustrated we need to work connected) - The fact that SAP will sell TC PLM and Siemens will sell SAP PPM seems like loser’s statement, meaning our SAP PLM is probably not good enough, or our TC PPM capabilities are not good enough. In reality, I believe they both should remain, and the partnership should work on logical data flows with data residing in two locations – the federated approach. This is how platforms reside next to each other instead of the single black hole.
- The fact that standard interfaces will be developed between the two systems is a subtle sales argument with relatively low value. As I wrote in the “from technology to methodology”-paragraph, the challenges are in the organizational change within companies. Technology is not the issue, although system integrators also need to make a living.
- What I believe makes sense is that both SAP and Siemens, have to realize their Industry 4.0 end-to-end capabilities. It is a German vision now for several years and it is an excellent vision to strive for. Now it is time to build the two platforms working together. This will be a significant technical challenge mainly for Siemens as its foundation is based on a coordinated backbone.
- The biggest challenge, not only for this partnership, is the organizational change within companies that want to build an end-to-end connected solution. In particular, in companies with a vast legacy, the targeted industries by the partnership, the chasm between coordinated legacy data and intended connected data is enormous. Technology will not fix it, perhaps smoothen the pain a little.
Conclusion
With this post, we have reached the foundation of the item-centric approach for PLM, where the EBOM and MBOM are managed in a real-time context. Organizational change is the biggest inhibitor to move forward. The SAP-Siemens partnership is a sales/marketing approach to create a simplified view for the future at C-level discussions.
Let us watch carefully what happens in reality.
Next time potentially the dimension of change management and configuration management in an item-centric approach.
Or perhaps Martijn Dullaart will show us the way before, following up on his tricky poll question
Already five posts since we started looking at the roots of PLM, where every step illustrated that new technical capabilities could create opportunities for better practices. Alternatively, sometimes, these capabilities introduced complexity while maintaining old practices. Where the previous posts were design and engineering-centric, now I want to make the step moving to manufacturing-preparation and the MBOM. In my opinion, if you start to manage your manufacturing BOM in the context of your product design, you are in the scope of PLM.
For the moment, I will put two other related domains aside, i.e., Configuration Management and Configured Products. Note these domains are entirely different from each other.
Some data model principles
In part five, I introduced the need to have a split between a logical product definition and a technical EBOM definition. The logical product definition is more the system or modular structure to be used when configuring solutions for a customer. The technical EBOM definition is, most of the time, a stable engineering specification independent of how and where the product is manufactured. The manufacturing BOM (the MBOM) should represent how the product will be manufactured, which can vary per location and vary over time. Let us look in some of the essential elements of this data model
The Product
The logical definition of the product, which can also be a single component if you are a lower tier-supplier, has an understandable number, like 6030-10B. A customer needs to be able to order this product or part without a typo mistake. The product has features or characteristics that are used to sell the product. Usually, products do not have a revision, as it is a logical definition of a set of capabilities. Most of the time, marketing is responsible for product definition. This would be the sales catalog, which can be connected in a digital PLM environment. Like the PDM-ERP relation, there is a similar discussion related to where the catalog resides—more on the product side later in time.
The EBOM
Related to the product or component in the logical definition, there is an actual EBOM, which represents the technical specification of the product. The image above shows the relation represented by the blue “current” link.
Note: not all systems will support such a data model, and often the marketing sides in managed disconnected from the engineering side. Either in Excel or in a specialized Product Line Engineering (PLE) tools.
We discussed in the previous post that if you want to minimize maintenance, meaning fewer revisions on your EBOM, you should not embed manufacturer-specific parts in your EBOM.
The EBOM typically contains purchase parts and make parts. The purchased parts are sourced based on their specification, and you might have a single source in the beginning. The make parts are entirely under your engineering control, and you define where they are produced and by whom. For the rest, the EBOM might have functional groupings of modules and subassemblies that are defined for reuse by engineering.
Note: An EBOM is the place where multidisciplinary collaboration comes together. This post mainly deals with the mechanical part (as we are looking at the past)
Note: An EBOM can contain multiple valid configurations which you can filter based on a customer or market-specific demand. In this case, we talk about a Configured EBOM or a 150 % EBOM.
The MBOM
The MBOM represents the way the unique product is going to be manufactured. This means the MBOM-structure will represent the manufacturing steps. For each EBOM-purchase-part, the approved manufacturer for that plant needs to be selected. For each make-part in the EBOM, if made in this plant per customer order, the EBOM parts need to be resolved by one or more manufacturing steps combined with purchased materials.
Let us look at some examples:
The flat MBOM
Some companies do not have real machinery anymore in their plants, the product they deliver to the market is only assembled at the best financial location. This means that all MBOM-parts should arrive at the shop floor to be assembled there. As an example, we have plant A below.
Of course, this is a simplified version to illustrate the basics of the MBOM. The flat MBOM only makes sense if the product is straightforward to assemble. Based on the engineering specifications, the assembly drawing(s) people on the shop floor will know what to do.
The engineering definition specifies that the chassis needs to be painted, and fitting the axles requires grease. These quantities are not visible in the EBOM; they will appear in the MBOM. The quantities and the unit of measure are, of course, relevant here.
Note: The exact quantities for paint and grease might be adjusted in the MBOM when a series of Squads have been manufactured.
The MBOM and Bill of Process
Most of the time, a product is manufactured in several process steps. For that reason, the MBOM is closely related to the Bill of Process or the Routing definitions. The image below illustrates the relationship between an MBOM and the operations in a plant.
If we continue with our example of the Squad, let us now assume that the wheels and the axle are joined together in a work cell. In addition, the chassis is painted in a separate cell. The MBOM would look like the image below:
In the image, we see that the same Engineering definition now results in a different MBOM. A company can change the MBOM when optimizing the production, without affecting the engineering definition. In this MBOM, the Axle assembly might also be used in other squads manufactured by the company.
The MBOM and purchased parts
In the previous example, all components for the Squad were manufactured by the same company with the option to produce in Plant A or in Plant B. Now imagine the company also has a plant C in a location where they cannot produce the wheels and axle assembly. Therefore plant C has to “purchase” the Wheel-Axle assembly, and lucky for them plant B is selling the Wheel+Axle assembly to the market as a product.
The MBOM for plant C would look like the image below:
For Plant C, they will order the right amount of the Wheel+Axle product, according to its specifications (HF-D240). How the Wheel+Axle product is manufactured is invisible for Plant C, the only point to check is if the Wheel+Axle product complies with the Engineering Definition and if its purchase price is within the target price range.
Why this simple EBOM-MBOM story?
For those always that have been active in the engineering domain, a better understanding of the information flow downstream to manufacturing is crucial. Historically this flow of information has been linear – and in many companies, it is still the fact. The main reason for that lies in the fact that engineering had their own system (PDM or PLM), and manufacturing has their own system (ERP).
Engineers did their best to provide the best engineering specification and release the data to ERP. In the early days, as discussed in Part 4, the engineering specification was most of the time based on a kind of hybrid BOM containing engineering and manufacturing parts already defined.
Next, manufacturing engineering uses the engineering specifications to define the manufacturing BOM in the ERP system. Based on the drawings and parts list, they create a preferred manufacturing process (MBOM and BOP) – most of the time, a manual process. Despite the effort done by engineering, there might be a need to change the product. A different shape or dimension make manufacturing more efficient or done with existing tooling. This means an iteration, which causes delays and higher engineering costs.
The first optimization invented was the PDM-ERP interface to reduce the manual work and introduction of typos/misunderstanding of data. This topic was “hot” between 2000 and 2010, and I visited many SmarTeam customers and implementers to learn and later explain that this is a mission impossible. The picture below says it all.
We have an engineering BOM (with related drawings). Through an interface, this EBOM will be restructured into a manufacturing BOM, thanks to all kinds of “clever” programming based on particular attributes. Discussed in Part 3
The result, however, was that the interface was never covering all situations and became the most expensive part of the implementation.
Good business for the implementing companies, bad for the perception of PDM/PLM.
The lesson learned from all these situations: If you have a PLM-system that can support both the EBOM and MBOM in the same environment, you do not need this complex interface anymore. You can still use some automation to move from an EBOM to an MBOM.
However, three essential benefits come from this approach
- Working in a single environment allows manufacturing engineers to work directly in the context of the EBOM, proposing changes to engineering in the same environment and perform manual restructuring on the MBOM as programming logic does not exist. Still, compare tools will ensure all EBOM-parts are resolved in the manufacturing definition.
- All product Intellectual Property is now managed in a single environment. There is no scattered product information residing in local ERP-systems. When companies moved towards multiple plants for manufacturing, there was the need for a centralized generic MBOM to be resolved for the local plant (local suppliers / local plant conditions). Having the generic MBOM and Bill of Process in PLM was the solution.
- When engineers and manufacturing engineers work in the same environment, manufacturing engineering can start earlier with the manufacturing process definition, providing early feedback to engineering even when the engineering specification has not been released. This approach allows real concurrent engineering, reducing time to market and cost significantly
Conclusion
Again 1600 words this time. We are now at the stage that connecting the EBOM and the MBOM in PLM has become a best practice in most standard PLM-systems. If implemented correctly, the interface to ERP is no longer on the critical path – the technology never has been the limitation – it is all about methodology.
Next time a little bit more on advanced EBOM/MBOM interactions
In my earlier posts, I explored the incompatibility between current PLM practices and future needs for digital PLM. Digital PLM is one of the terms I am using for future concepts. Actually, in a digital enterprise, system borders become vague, it is more about connected platforms and digital services. Current PLM practices can be considered as Coordinated where the future for PLM is aimed at Connected information. See also Coordinated or Connected.
Moving from current PLM practices toward modern ways of working is a transformation for several reasons.
- First, the scope of current PLM implementation is most of the time focusing on engineering. Digital PLM aims to offer product information services along the product lifecycle.
- Second, because the information in current PLM implementations is mainly stored in documents – drawings still being the leading In advanced PLM implementations BOM-structures, the EBOM and MBOM are information structures, again relying on related specification documents, either CAD- or Office files.
So let’s review the transformation challenges related to moving from current PLM to Digital PLM
Current PLM – document management
The first PLM implementations were most of the time advanced cPDM implementations, targeting sharing CAD models and drawings. Deployments started with the engineering department with the aim to centralize product design information. Integrations with mechanical CAD systems had the major priority including engineering change processes. The multidisciplinary collaboration was enabled by introducing the concept of the Engineering Bill of Materials (EBOM). Every discipline, mechanical, electrical and sometimes (embedded) software teams, linked their information to the EBOM. The product release process was driven by the EBOM. If the EBOM is released, the product is fully specified and can be manufactured.
Although people complain implementing PLM is complex, this type of implementation is relatively simple. The only added mental effort you are demanding from the PLM user is to work in a structured way and have a more controlled (rigid) way of working compared to a directory structure approach. For many people, this controlled way of working is already considered a limitation of their freedom. However, companies are not profitable because their employees are all artists working in full freedom. They become successful if they can deliver in some efficient way products with consistent quality. In a competitive, global market there is no room anymore for inefficient ways of working as labor costs are adding to the price.
The way people work in this cPDM environment is coordinated, meaning based on business processes the various stakeholders agree to offer complete sets of information (read: documents) to contribute to the full product definition. If all contributions are consistent depends on the time and effort people spent to verify and validate their consistency. Often this is not done thoroughly and errors are only discovered during manufacturing or later in the field. Costly but accepted as it has always been the case.
Next Step PLM – coordinated document management / item-centric
When the awareness exists that data needs to flow through an organization in a consistent manner, the next step of PLM implementations comes into the picture. Here I would state we are really talking about PLM as the target is to share product data outside the engineering department.
The first logical extension for PLM is moving information from an EBOM view (engineering) toward a Manufacturing Bill of Materials (MBOM) view. The MBOM is aiming to represent the manufacturing definition of the product and becomes a placeholder to link with the ERP system and suppliers directly. Having an integrated EBOM / MBOM process with your ERP system is already a big step forward as it creates an efficient way of working to connect engineering and manufacturing.
As all the information is now related to the EBOM and MBOM, this approach is often called the item-centric approach. The Item (or Part) is the information carrier linked to its specification documents.
Managing the right version of the information in relation to a specific version of the product is called configuration management. And the better you have your configuration management processes in place, the more efficient and with high confidence you can deliver and support your products. Configuration Management is again a typical example where we are talking about a coordinated approach to managing products and documents.
Implementing this type of PLM requires already more complex as it needs different disciplines to agree on a collective process across various (enterprise) systems. ERP integrations are technically not complicated, it is the agreement on a leading process that makes it difficult as the holistic view is often failing.
Next, next step PLM – the Digital Thread
Continuing reading might give you the impression that the next step in PLM evolution is the digital thread. And this can be the case depending on your definition of the digital thread. Oleg Shilovitsky recently published an article: Digital Thread – A new catchy phrase to replace PLM? related to his observations from ConX18 illustrate that there are many viewpoints to this concept. And of course, some vendors promote their perfect fit based on their unique definition. In general, I would classify the idea of Digital Thread in two approaches:
The Digital Thread – coordinated
In the Digital Thread – coordinated approach we are not revolutionizing the way of working in an enterprise. In the coordinated approach, the PLM environment is connected with another overlay, combining data from various disciplines into an environment where the dependencies are traceable. This can be the Aras overlay approach (here explained by Oleg Shilovitsky), the PTC Navigate approach or others, using a new extra layer to connect the various discipline data and create traceability in a more or less non-intrusive way. Similar concepts, but less intrusive can be done through Business Intelligence applications, although they are more read-only than a system approach.
The Digital Thread – connected
In the Digital Thread – connected approach the idea is that information is stored in an extremely granular way and shared among disciplines. Instead of the coordinated way, where every discipline can have its own data sources, here the target is to be data-driven (neutral/standard formats). I described this approach in the various aspects of the model-based enterprise. The challenge of a connected enterprise is the standardized data definition to make it available for all stakeholders.
Working in a connected enterprise is extremely difficult, in particular for people educated in the old-fashioned ways of working. If you have learned to work with shared documents, like Google Docs or Office documents in sharing mode, you will understand the mental change you have to go through. Continuous sharing of the information instead of waiting until you feel your part is complete.
In the software domain, companies are used to working this way and integrating data in a continuous stream. We have to learn to apply these practices also to a complete product lifecycle, where the product consists of hardware and software.
Still, the connect way of working is the vision that digital enterprises should aim for as it dramatically reduces the overhead of information conversion, overhead, and ambiguity. How we will implement in the context of PLM / Product Innovation is a learning process, where we should not be blocked by our echo chamber as Jan Bosch states in his latest post: Don’t Get Stuck In Your Company’s Echo Chamber
Jan Bosch is coming from the software world, promoting the Software-Centric Systems conference SC2 as a conference to open up your mind. I recommend you to take part in upcoming PLM-related events: CIMdata’s PLM roadmap Europe combined with PDT Europe on 24/25th October in Stuttgart, or if you are living in the US there is the upcoming PI PLMx CHICAGO 2018 on Nov 5/6th.
Conclusion
Learning and understanding are crucial and take time. A digital transformation has many aspects to learn – keep in mind the difference between coordinated (relatively easy) and connected (extraordinarily challenging but promising). Unfortunately there is no populist way to become digital.
Note:
If you want to continue learning, please read this post – The True Impact of Industry 4.0 Revealed -and its internal links to reference information from Martijn Dullaart – so relevant.
In my series describing the best practices related to a (PLM) data model, I described the general principles, the need for products and parts, the relation between CAD documents and the EBOM, the topic of classification and now the sensitive relation between EBOM and MBOM.
First some statements to set the scene:
- The EBOM represents the engineering (design) view of a product, structured in a way that it represents the multidisciplinary view of the functional definition of the product. The EBOM combined with its related specification documents, models, drawings, annotations should give a 100 % clear definition of the product.
- The MBOM represents the manufacturing view of a product, structured in a way that represents the way the product is manufactured. This structure is most of the time not the same as the EBOM, due to the manufacturing process and purchasing of parts.
A (very) simplified picture illustrating the difference between an EBOM and a MBOM. If the Car was a diesel there would be also embedded software in both BOMs (currently hidden)
For many years, the ERP systems have claimed ownership of the MBOM for two reasons
- Historically the MBOM was the starting point for production. Where the engineering department often worked with a set of tools, the ERP system was the system where data was connected and used to have a manufacturing plan and real-time execution
- To accommodate a more advanced integration with PDM systems, ERP vendors began to offer an EBOM capability also in their system as PDM systems often worked around the EBOM.
These two approaches made it hard to implement “real” PLM where (BOM) data is flowing through an organization instead of stored in a single system.
By claiming ownership of the BOM by ERP, some problems came up:
- A disconnect between the iterative engineering domain and the execution driven ERP domain. The EBOM is under continuous change (unless you have a simple or the ultimate product) and these changes are all related to upstream information, specifications, requirements, engineering changes and design changes. An ERP system is not intended for handling iterative processes, therefore forcing the user to work in a complex environment or trying to fix the issue through heavy customization on the ERP side.
- Global manufacturing and outsourced manufacturing introduced a new challenge for ERP-centric implementations. This would require all manufacturing sites also the outsourced manufacturers the same capabilities to transfer an EBOM into a local MBOM. And how do you capitalize the IP from your products when information is handled in a dispersed environment?
The solution to this problem is to extend your PDM implementation towards a “real” PLM implementation providing the support for EBOM, MBOM, and potential plant specific MBOM. All in a single system / user-experience designed to manage change and to allow all users to work in a global collaborative way around the product. MBOM information then will then be pushed when needed to the (local) ERP system, managing the execution.
Note 1: Pushing the MBOM to ERP does not mean a one-time big bang. When manufacturing parts are defined and sourced, there will already be a part definition in the ERP system too, as logistical information must come from ERP. The final push to ERP is, therefore, more a release to ERP combined with execution information (when / related to which order).
In this scenario, the MBOM will be already in ERP containing engineering data complemented with manufacturing data. Therefore from the PLM side we talk more about sharing BOM information instead of owning. Certain disciplines have the responsibility for particular properties of the BOM, but no single ownership.
Note 2: The whole concept of EBOM and MBOM makes only sense if you have to deliver repetitive products. For a one-off product, more a project, the engineering process will have the manufacturing already in mind. No need for a transition between EBOM and MBOM, it would only slow down the delivery.
Now let´s look at some EBOM-MBOM specifics
EBOM phantom assemblies
When extracting an EBOM directly from a 3D CAD structure, there might be subassemblies in the EBOM due to a logical grouping of certain items. You do not want to see these phantom assemblies in the MBOM as they only complicate the structuring of the MBOM or lead to phantom activities. In an EBOM-MBOM transition these phantom assemblies should disappear and the underlying end items should be linked to the higher level.
EBOM materials
In the EBOM, there might be materials like a rubber tube with a certain length, a strip with a certain length, etc. These materials cannot be purchased in these exact dimensions. Part of the EBOM to MBOM transition is to translate these EBOM items (specifying the exact material) into purchasable MBOM items combined with a fitting operation.
EBOM end-items (make)
For make end-items, there are usually approved manufacturers defined and it is desirable to have multiple manufacturers (certified through the AML) for make end-items, depending on cost, capacity and where the product needs to be manufactured. Therefore, a make end-item in the EBOM will not appear in a resolved MBOM.
EBOM end-items (buy)
For buy end-items, there is usually a combination of approved manufacturers (AML) combined with approved vendors (AVL). The approved manufacturers are defined by engineering, based on part specifications. Approved vendors are defined by manufacturing combined with purchasing based on the approved manufacturers and logistical or commercial conditions
Are EBOM items and MBOM items different?
There is a debate if EBOM items should/could appear in an MBOM or that EBOM items are only in the EBOM and connected to resolved items in the MBOM. Based on the previous descriptions of the various EBOM items, you can conclude that a resolved MBOM does not contain EBOM items anymore in case of multiple sourcing. Only when you have a single manufacturer for an EBOM item, the EBOM item could appear in the MBOM. Perhaps this is current in your company, but will this stay the same in the future?
It is up to your business process and type of product which direction you choose. Coming back to one-off products, here is does not make sense to have multiple manufacturers. In that case, you will see that the EBOM item behaves at the same time as an MBOM item.
What about part numbering?
Luckily I reached the 1000 words so let´s be short on this debate. In case you want an automated flow of information between PLM and ERP, it is important that shared data is connected through a unique identifier.
Automation does no need intelligent numbering. Therefore giving parts in the PLM system and the ERP system a unique, meaningless number you ensure guaranteed digital connectivity.
If you want to have additional attributes on the PLM or ERP side that describe the part with a number relevant for human identification on the engineering side or later at the manufacturing side (labeling), this all can be solved.
An interesting result of this approach is that a revision of a part is no longer visible on the ERP side (unless you insist). Each version of the MBOM parts is pointing to a unique version of an MBOM part in ERP, providing an error free sharing of data.
Conclusion
Life can be simple if you generalize and if there was no past, no legacy and no ownership of data thinking. The transition of EBOM to MBOM is the crucial point where the real PLM vision is applied. If there is no data sharing on MBOM level, there are two silos, the characteristic of the old linear past.
(See also: From a linear world to a circular and fast)
What do you think? Is more complexity needed?
I will be soon discussing these topics at the PDT2015 in Stockholm on October 13-14. Will you be there ?
And for Dutch/Belgium readers – October 8th in Bunnik:
Op 8 oktober ben ik op het BIM Open 2015 Congres in Bunnik waar ik de overeenkomsten tussen PLM en BIM zal bespreken en wat de constructie industrie kan leren van PLM
In my previous post, BOM for Dummies related to Configure To Order, I promised to come back on the special relation between the items in the BOM and the CAD data. I noticed from several posts in PLM and PDM groups that also the importance of CAD data is perceived in a different manner, depending on the background of the people or the systems they are experienced with.
So I would like to start with some general statements based on these observations.
People who are talking about the importance of CAD data and product structures are usually coming from a background in PDM. In an environment where products are designed, the focus is around data creation, mostly CAD data. The language around parts in the BOM is mostly targeting design parts. So in a PDM environment CAD data is an important topic – therefore PDM people and companies will talk about CAD data and vaults as the center of information.
When you are working in a PLM environment, you need a way to communicate around a product, through its whole lifecycle, not only the design phase but also supporting manufacturing phases, the possible changes of an existing product through engineering changes, the traceability of as-built data and more. In a PLM environment, people have the physical part (often called the ERP part) in mind, when they talk about a part number.
As PLM covers product information across various departments and disciplines, the information carrier for product information cannot be the CAD data. The BOM, usually the mBOM, is the main structure used to represent and produce the product. Most parts in the mBOM have a relation to a CAD document (in many companies still the 2D drawing). Therefore PLM people and companies understanding PLM will talk about items and products and their lifecycle as their center of information.
CAD data in relation to Engineering to Order
The above generalizations have to be combined with the different main business processes. In a strict Engineering To Order environment, where you design and build a solution only once for a specific customer, there is no big benefit of going through an eBOM and mBOM transition.
During the design process the engineer already has manufacturing in mind, which will be reflected in the CAD structure they build – sometime hybrid representing both engineering and manufacturing items. In such an environment CAD data is leading to build a BOM structure.
And in cases where engineering is done in one single 3D CAD system, the company might use the PDM system from this vendor to manage their Bill of Materials. The advantage of this approach is that PDM is smoothly integrated with the design environment. However it restricts in a certain matter the future as we will see in further reading.
Not everyone needs the Engineering to Order process !
Moving to an integrated, multi-disciplinary engineering process or changing the main process from Engineering To Order to Built To Order / Configure To Order will cause major challenges in the company.
I have seen in the recent past, several companies that would like to change their way of working from a CAD centric Engineering To Order process towards a more Built to Order or Configure To Order process. The bottle neck of making this switch was every time that engineering people think in CAD structures and all knowledge is embedded in the CAD data. They now want to configure their products in the CAD system.
For Configure to Order you have to look at a different way to your CAD data:
Questions to ask yourself as a company are:
- When I configure my products around a CAD structure, what should I do with data from other disciplines (Electrical/Tooling/Supplier data) ?
- When I upgrade my 3D CAD system to a new version, do I need to convert all old CAD data to the newest versions in order to keep my configurations alive?
- When configuring a new customer solution, do I need to build my whole product in CAD in order to assure it is complete?
- In Configure to Order the engineering BOM and manufacturing BOM are different. Does this mean that when I go through a new customer order, all CAD data need to be handled, going through eBOM and mBOM transition again?
For me it is obvious that only in an Engineering to Order environment the CAD data are leading for order fulfillment. In all other typical processes, BTO (Built to Order), CTO (Configure to Order) and MTS (Make to Stock), product configuration and definition is done around items and the CAD data is important associated data for the product definition and manufacturing
In the case of order fulfillment in a Configure to Order process, the CAD structure is not touched as configuration of the product is available based on items. Each item in the mBOM has it relations to CAD data or other specifying information.
In the case of Built To Order, a huge part of the product is already configured, like in Configure To Order. Only new interfaces or functionality will go through a CAD design process. This new design might be released through a process with an eBOM to mBOM transition. In cases where the impact or the amount of data created in engineering is not huge, it is even possible to configure the changes immediately in an mBOM environment.
A second point, which is also under a lot of discussion in the field ( PLM interest groups), is that PDM is easily to introduce as a departmental solution. The engineering BOM is forwarded to manufacturing and there further (disconnected) processed. The step from PDM to PLM is always a business change.
When PDM vendors talk about ERP integration, they often mean the technical solution of connecting the two systems, not integrating the processes around the BOM (eBOM/mBOM transition) 0r an integrated engineering change (ECR/ECO). See how easy it is according to some PDM vendors:
or
PLM requires an adaptation of all departments to work different and together around a single product definition. Especially in a mid-market company, this is a big issue, as all product knowledge is stored in the CAD data and the knowledge how to produce the product is stored in the mBOM on the ERP side. These environments are often disconnected.
Conclusion: In the context of PDM the importance of CAD data is clear and for companies following a strict Engineering To Order process the main source of product knowledge. Companies following the Built To Order / Configure To Order process should configure their products around items to keep flexibility towards the future.
Companies with the intention to move to Built To Order or Configure To Order should not invest too much in CAD data configuration as it creates a roadblock for the future.
In my next post I will address the question that comes up from many directions, addressed by Jim Brown and others, as discussed in one of his recent posts around a PLM standard definition and more ….
This is the third post on Bill of Material handling for different types of companies, this time the focus on Configure To Order (CTO). In the CTO process, products are assembled and configured based on customer requirements. This means there is no more engineering needed when customer requirements are known. CTO examples are, the ordering process of a car with all its options, or ordering a personal computer over the internet.
So what has Configure To Order to do with PLM as there is no engineering?
The main PLM activity takes places when designing the configurable product. Designing a product that is configurable, requires a complete different approach as compared to Engineering to Order or Build to Order. Although we see a similar Configure to Order activity in the R&D departments of companies that follow the Build to Order process. They are also designing products or modules that can be used as-is in customer specific orders as part of the solution.
The challenge of CTO is to design products that are modular, and where options and variants are designed on a common platform with common interfaces. If you look to the dashboard of a car you will see placeholders for additional options (in case you have the minimal car version) and also you might see that for example the radio display in a basic car version differs from the complete board computer in the luxury version. The common platform is one dashboard, fitting to numerous options.
An engineering department will not focus on designing and defining each of the possible combinations of options as this would be impossible to manage. What can be managed is the common platform (the baseline) and all different options on top of this baseline.
So what happens with the BOM?
The initial design of configurable products goes through similar steps as the BTO process, which means starting from a conceptual BOM, moving to an Engineering BOM (eBOM) and finally produce a BOM for manufacturing (mBOM). The difference is that in the CTO process the mBOM is not developed for just one product, but contains all definitions for all possible products. In this situation we talk about a generic mBOM.
Only when a customer order exists, the generic mBOM is resolved into a specific mBOM for this customer order, which then can be sent to the ERP system for execution.
In a generic BOM the relations are managed by filters. These filters define the effectivity of the link, in simple words if the relation between two parts in the BOM is valid (and shown) or not. There are various ways to define effectivity – with again a differentiation in usage
- revision based effectivity – which means the relation between two items is valid in case the revisions match
- date effectivity – which means the relation is valid during a certain time interval
Both methods are used most of the time for non-configurable products. The revision and date effectivity are used to be able to track the product history through time and therefore to have full traceability. But this does not work if you want to configure every time a customer specific order.
In that case we use unit or option based filtering.
- unit effectivity – which means the relation between two items is valid for a unit (or a range of units) produced. For example a batch of products or a unique product with a serial number
- option effectivity – which means the relation between two items is valid in case a certain condition is valid. Which condition depends on the configuration rules for this option. Example of options are: color, version, country
It is clear that unit and option based filtering of a BOM can lead to a conceptual complex product definition which goes beyond the BOM for Dummies target. Below an illustration of the various filter concepts (oops the animated gif does not work – i will investigate):
The benefit of this filtering approach is that there is a minimum of redundancy of data to manage. This makes it a common practice in the aerospace and automotive industry. An example describing all the complexity can be found for example here, but I am sure on this level there are enough publications and studies available.
And what about the CAD ?
I will write a separate post on this topic, as all the possible interactions and use cases with CAD are a topic on its own. You can imagine, having the 3D virtual world combined with a configurable BOM brings a lot of benefits
What PLM functions are required to support Configure to Order ?
- Project management – not so much focus here as the delivery project for a customer does not require much customer interaction. Of course, the product development processes requires advanced capabilities which I will address later in a future post.
- Document management – same approach as for project management. The product related documentation needs to exist and secured. Customer specific documentation can be generated often automatically.
- Product Management – managing all released and available components for a solution, related to their Bill of Materials. Often part of product management is the classification of product families and its related modules
- Item management – The main activities here are in the mBOM area. Capabilities for BOM generation (eBOM/mBOM), baseline and compare using filtering (unit based / option based) in order to support the definition if the manufactured product
- Workflow processes – As we are dealing with standardized components in the BOM, the Engineering Change Request (ECR) and Engineering Change Order (ECO) processes will be the core for changes. And as we want to manage controlled manufacturing definition, the Manufacturer Change Order process and Standard Item Approval process are often implemented
Optional:
- Requirements Management – specially for complex products, tracking of individual requirements and their implementation, can save time and costs during delivery to understand and handle the complex platform
- Service Management – as an extension of item management. When a customer specific order has been delivered it might be still interesting for the company that delivered the product to keep traceability of the customer configuration for service options – managing the Service and As-Built BOM
- Product Configurator – the reason I write it as optional, is because the target is order execution, which is not a PLM role anymore. The ERP system should be able to resolve the full mBOM for an order. The PLM product configuration definition is done through Product and Item management. Depending on the customer environment the role of configurator might be found in PLM in case ERP does not have the adequate tools.
Conclusion:
It is hard to describe the Configure To Order process in the scope of BOM for Dummies. As various detailed concepts exist per industry there is no generic standard. This is often the area where the PLM system, the PLM users and implementers are challenged the most: to make it workable, understandable and maintainable
Next time some industry specific observations for a change
Continuing the posts on Bill of Material handling for different types of companies, this time the focus on BOM handling in a Build to Order process. When we are talking about Build to Order process, we mean that the company is delivering solutions for its customers, based on existing components or modules. A typical example is the food processing industry. In order to deliver a solution, a range of machinery (ingredient manipulation) and transporting systems are required. The engineering tasks are focused on integrating these existing components. In many cases new or adjusted components are required to complete the solution.
Research and Development in a BTO company
In a typical BTO company you see actually two processes.
- The main BTO process, fulfilling the needs for the customers based on existing components
- An R&D department, which explores new technologies and develops new components or modules, which will become available for selling to new customers.
This is the innovation engine of the company and often can be found in a complete isolated environment – extra security – no visibility for other departments till release. The task for this R&D department is to develop machinery or modules based on new, competitive technologies, which are rapidly configurable and can be used in various customer solutions. The more these machines or modules are configurable, the better the company can respond to demands from customers, assuming a generic machine and interfaces does not degrade performance, compared to optimal tuned machinery.
I will describe the BOM handling for this department in a future post, as also here you will see particular differences with the ETO and BTO BOM handling.
Back to the core of BTO
I found a nice picture from 2003 published by Dassault Systems describing the BTO process:
We see here the Bidding phase where a conceptual BOM is going to be defined for costing. Different from the ETO process, the bidding company will try to use as much as possible known components or technology. The reason is clear: it reduces the risk and uncertainties, which allow the bidding company to make a more accurate and competitive cost estimate for these parts. When a company becomes mature in this area, a product configurator can be used to quantify the estimated costs.
The result from the bidding phase is a conceptual BOM, where hopefully 60 % or more is already resolved. Now depending on the amount of reuse, the discussion comes up: Should modifications being initiated from the eBOM or from the mBOM?
In case of 60 % reuse, it is likely that engineering will start working around the eBOM and from there complete the mBOM. Depending on the type of solution, the company might decide to handle the remaining 40 % engineering work as project unique and treat it the same way as in an ETO process. This means no big focus on the mBOM as we are going to produce it only once.
I have worked with companies, which tried to analyze the 40 % customer specific engineering per order and from there worked towards more generic solutions for future orders. This would mean that a year later the same type of order would now be defined for perhaps 80 %. Many companies try to change themselves from a project centric company towards a product centric company, delivering configured products through projects.
Of course when solutions become 100 % configurable, we do not speak from BTO anymore, but from Configure to Order (CTO). No engineering is needed; all components and interfaces are designed to work together in certain conditions without further engineering. As an example, when you buy a car or you order a PC through the internet – it is done without sales engineering – it is clearly defined which options are available and in which relation.
See below:
However the higher the amount of reuse, the more important it becomes to work towards an mBOM, which we will than push the order to ERP.
And this is the area where most of the discussions are in a PLM implementation.
- Are we going to work based on the mBOM and handle all required engineering modifications from there?
Or
- Do we first work on a complete eBOM and once completed, we will complete the mBOM?
The reuse from existing components and modules (hardware) is one of the main characteristics of BTO. Compare this to ETO where the reuse of knowledge is the target no reuse of components.
The animation shows the high level process that I discussed in this post.
What PLM functions are required to support Build to Order ?
- Project management – the ability to handle data in the context of project. Depending on the type of industry extended with advanced security rules for project access
- Document management – where possible integrated with the authoring applications to avoid data be managed outside the PLM system and double data entry
- Product Management – managing all released and available components for a solution, related to their Bill of Materials. Often part of product management is the classification of product families and its related modules
- Item management – The main activities here are in the mBOM area. As items in a BTO environment are reused, it is important to provide relevant ERP information in the PLM environment. Relevant ERP information is mostly actual costs, usage information (when was it used for the last time) and availability parameters (throughput time / warehouse info).
As historically most of the mBOM handling is done in ERP, companies might not be aware of this need. However they will battle with the connection between the eBOM in PLM and the mBOM (see many of my previous posts).
As part of the BTO process is around engineering, an EBOM environment with connections to specifying documents is needed. This requires that the PLM system has eBOM/mBOM compare capabilities and an easy way to integrate engineering changes in an existing mBOM.
- Workflow processes – As we are dealing with standardized components in the BOM, the Engineering Change Request (ECR) and Engineering Change Order (ECO) processes will be the core for changes. In addition you will find a Bidding Process, a Release process for the customer order, Manufacturer Change Order process and a Standard Item Approval process.
Optional:
- A Sales Configurator allowing the sales engineering people to quickly build the first BOM for costing. Working with a Sales Configurator requires a mature product rationalization.
- Supplier Exchange data management – as many BTO companies work with partners and suppliers
- Service Management – as an extension of item management. Often in this industry the company who Builds the solutions provides maintenance services and for that reason requires another Bill of Material, the service BOM, containing all components needed when revising a part of the machine
- Issues Management – handling issues in the context of PLM gives a much better environment for a learning organization
- Requirements Management – specially for complex products, tracking of individual requirements and their implementation, can save time and costs during delivery
Conclusion (so far):
When you compare these PLM requirements with the previous post around ETO, you will discover a lot of similarities. The big difference however is HOW you use them. Here consultancy might be required as I do not believe that by having just functionality a company in the mid-market will have time to learn and understand the special tweaks for their business processes.
Next post more on configurable products
This time a few theoretical posts about BOM handling, how the BOM is used in different processes as Engineering To Order (ETO), Make To Order (MTO) and Build To Order (BTO) organizations and finally which PLM functions you would expect to support these best practices.
I noticed from various lectures I gave, from the search hits to my blog and from discussions in forums that there is a need for this theoretical base. I will try to stay away from too many academic terminologies, so let’s call it BOM for Dummies.
Note: All information is highly generalized to keep is simple. I am sure in most of the companies where the described processes take place more complexity exists.
What is a BOM?
A BOM, abbreviation for Bill of Materials, is a structured, often multi-level list of entities and sub-entities used to define a product
I keep the terminology vague as it all depends to who is your audience. In general when you speak with people in a company that does engineering and manufacturing, you have two major groups:
- The majority will talk about the manufacturing BOM (mBOM), which is a structure that contains the materials needed to manufacture a product in a certain order.
We will go more in depth into the mBOM later. - When you speak with the designers in a company they will talk about the eBOM, which is a structure that contains the components needed to define a product.
Both audiences will talk about ‘the BOM’ and ‘parts’ in the BOM, without specifying the context (engineering or manufacturing). So it is up to you to understand their context.
Beside these two major types of BOMs you will find some other types, like Conceptual BOM, Customer Specific BOM, Service BOM, Purchase BOM, Shipping BOM.
Each BOM is representing the same product only from a different usage point of view
The BOM in an Engineering To Order company
In an Engineering to Order company, a product is going to be developed based on requirements and specifications. These requirements lead to functions and systems to be implemented. For complex products companies are using systems engineering as a discipline, which is a very structured approach that guarantees the system you develop is matching all requirements and these requirements have been validated.
In less complex and less automated environments, you will see that the systems engineering is done in the head of the experienced engineers. Based on the requirements, they recognize solutions that have been done before and they build a first conceptual structure to describe the product. This is a conceptual BOM, often only a few levels deep, and this BOM is mainly used for costing and planning the work to be done.
A conceptual BOM could like this (open the picture in a separate window to see the animation)
Depending of the type of engineering company, they are looking for the reuse of functions or systems. The reuse of functions means that you manage your company’s Intellectual Property (IP) where the reuse of systems can be considered as the reuse of standard building blocks (modules) to build a product. The advantage of system reuse of course is the lower risk, as the system has been designed and built and tested before.
From the conceptual BOM different disciplines start to work and design the systems and their interfaces. This structure could be named the eBOM as it represents the engineering point of view from the product. In Engineering to Order companies there is a big variation on how to follow up after engineering. Some companies only specify how the product should be made, which materials to use and how to assemble them. The real manufacturing of the product is in that case done somewhere else, for example at the customer site. Other companies still do the full process from engineering and manufacturing.
As there is usually no reuse of the designed products, there is also no investment in standardizing items and optimizing the manufacturing of the product. The eBOM is entered in the ERP system and there further processed to manufacture the product. A best practice in this type of environments is the approach that the eBOM is not a 100 % pure the eBOM, also items and steps needed for manufacturing might be added by the engineers as it is their responsibility to specify everything for manufacturing without actually making the product.
This animation shows on high level the process that I described (open the link in a separate window to see the animation)
What PLM functions are required to support Engineering To Order
The following core functions apply to this process:
- Project management – the ability to handle data in the context of project. Depending on the type of industry extended with advanced security rules for project access
- Document management – where possible integrated with the authoring applications to avoid data be managed outside the PLM system and double data entry
- Classification of functions and/or systems in order to have an overview of existing IP (what have we done) and to promote reuse of it
- Item management – to support the eBOM and its related documentation. Also the items go through a lifecycle representing its maturity:
– The eBOM might be derived from the mechanical 3D CAD structure and further extended from there.
– For design reviews it would be useful to have the capability to create baselines of the eBOM including its specifying documents and have the option to compare baselines to analyze progress
– The completed eBOM would be transferred to the ERP system(s). In case of a loose ERP connection a generic XML export would be useful (or export to Excel as most companies do) - Workflow processes – to guarantee a repeatable, measurable throughput of information – both approval and change processes
Optional:
- Supplier Exchange data management – as many ETO companies work with partners and suppliers
- Issues Management – handling issues in the context of PLM gives a much better environment for a learning organization
- Requirements Management – specially for complex products, tracking of individual requirements and their implementation, can save time and costs during delivery
- A configurator allowing the sales engineering people to quickly build the first conceptual BOM based on know modules combined with engineering estimates. This is the base for a better controlled bidding / costing
Let me know if this kind of posts make sense for you …..
Next time we will look at the BOM in a Build To Order process
Jos Voskuil's Weblog 
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