Many Bills of Material Does A Company Need?
Finding a bill of material in a manufacturing company isn't a problem.
In many companies, deciding on which one to use is the problem! Many departments
have bills of material, often all different ... and all wrong! Engineering
originates new bills and the other departments update their data base when
they feel like it, add information they need and exclude the rest. These
actions are often justified as "being flexible!"
department operates in a vacuum without necessarily communicating to anyone
else. And out on the shop floor, each manager has a little black book with
the "real" bill that is used to build the product. Configuration control
may be unknowingly reassigned to the shop floor, not in Engineering, where
it belongs. Continuing the practice of keeping Engineering, Manufacturing,
Cost Accounting and "unofficial bills" is costly in many ways. The product
as manufactured may be different than was designed. Product costs are calculated
for something different than is actually manufactured. The material scheduled
from suppliers or the plant floor may not be the material that will actually
be used to make the product. Quality deterioration, excess and obsolete
inventory, product liability and lost profits will be the visible results.
Goal: A Single Company Bill of Material
General Manager recently told me, "Our company isn't profitable enough
to pay the price to maintain several bills of material any longer." The
alternative to multiple bills of material is to create a single company
bill of material.The advantages are obvious. But running the business with
a single company bill of material does require a significant change in
operating practices. Each department no longer has the flexibility to change
the bills when they feel like it. They can no longer operate in a vacuum.
Interdepartmental communication is a must.
the many bills in a company into a single company bill of material can
be a traumatic event. Several emotional issues, such as the part numbering
system, whether to include hardware on the bills and deciding who is responsible
for structuring the bills, are often hotly debated issues. The filibuster
may even continue without reaching any meaningful conclusion. Progress
on fixing the bill of material problems is indefinitely stalled.
these emotional issues are not usually the most critical problems needing
to be resolved. Bill of material accuracy, avoiding overstructured bills
by removing unnecessary levels, or adding levels of understructured bills
are some of the real problems that need to be addressed. Modularizing bills
of material and creating planning bills to satisfy Order Entry and Master
Scheduling requirements may be necessary for products with many options.
Implementing the necessary systems and procedures to manage engineering
changes is critical. These are the real issues that need to be addressed.
bill of material is a company document, not a departmental document. And
every company needs only one. All existing bills should be combined into
a common company bill of material that meets every department's needs.
Unproductive efforts to maintain multiple bills should be eliminated. The
job starts with reaching a consensus that the bill of material is a company,
not single department document. A high "quality" bill of material means
all of the internal customer's expectations are met. All functions need
to first understand all the needs, i.e. all expectations of the bills.
Treat bill of material structuring as a process. Apply the proven principles
and tools to improving quality to the process and reaching zero defects.
This will lead to one accurate company bill of material ... and more profit!