A BOM is a product structure used to control pricing, inventory and production. A costing BOM is a cherished commodity by FICO consultants!
BOMs are primarily used for material requirement planning. During finished good (FG) product costing, the system performs a BOM explosion to calculate the shortage quantity. Routing is also an important concept that ties into the controlling cost of production calculation.
Sales Order
A bill of materials (BOM) is a formally structured list of all the component parts that go into a finished product. It also lists the quantity and unit of measure for each item. BOMs are used in a variety of processes, including production planning, inventory management and product costing. A well-managed BOM can increase production efficiency, reduce costs and improve the bottom line.
A BOM can be viewed on several different levels: the parent material level, the components level, and the items level. The components level consists of the parent material and all of its child components. This is the most detailed level of a BOM. The BOM can also be broken down into multiple levels, such as assembly and routing.
The assembly BOM is a list of the component pieces that make up an assembly or sub-assembly. This level contains the granular detail that allows you to track which components are being used at each assembly step. An assembly can have many levels of children, and each level can be broken down into even more specific components.
Routing is a list of operations that are performed on the components in order to turn them into semi-finished goods or finished goods. It identifies the resources consumed during these operations, such as labor and machine electricity. The system also records the cost of these resources as category 1 activity types and assigns them to a work center.
In addition to providing the detailed information needed for assembling and producing products, a BOM also helps companies plan for and control inventory. By keeping an accurate record of all the raw materials required to build a product, companies can avoid stockouts and other problems that may disrupt production. The information contained in a BOM can also help them identify the cause of product failures, so they can quickly replace the faulty parts.
A BOM is a vital tool for any manufacturing company. Without a BOM, it would be difficult to manage the manufacturing process and ensure that all products are produced correctly. An integrated ERP solution like SAP Business One makes it easy to create and maintain BOMs, improving overall production efficiency.
Production Order
During the production process, a company must obtain the raw materials and components needed to make a product. Then, it creates a production order that lists the steps needed to produce the finished product within a certain timeframe. The order also lays out the resources used, such as labor and machine electricity. The production order combines bill of material (BOM) and routing data.
BOMs can be created at two levels: plant and client* level. A plant-level BOM is used for inventory control, while a client*-level BOM is used for costing. Both types of BOMs are supported by SAP.
A Sales BOM is used in a sales document when the parent item is a sales item, rather than an inventory item. This is the most common type of BOM. For example, a kit that includes all the parts to assemble a piece of furniture would be a Sales BOM. In this case, the child items appear as sub-items in the Sales BOM.
Unlike a Sales BOM, an Assembly BOM uses only the finished parent item as the main item. It lists the component items as sub-items, and their quantity required in the manufacture of the finished parent item. This allows you to see how much each component costs and to determine which items are in stock.
The Routing tab of a BOM is similar to a sales order, except that it contains more detailed information about how the product is assembled. It lists the raw and fabricated components as well as the operations to convert them into semi-finished goods (SFG) or finished goods (FG). The Routing tab can be set up for different production versions.
If you want to change the BOM, use transaction CS02. Enter the parent material and select a date when you want the changes to take effect. Click Save to save the new BOM.
When you make a change to a BOM, the system updates the pricing, inventory control and delivery processing at either the main item level or the component level. If the main item is not an inventory item, the system can also update the BOM explosion at the parent-child level. It can be set up to do so by default or manually.
Assembly
A BOM is a detailed, formally structured list of all the components that go into constructing a product or assembly. It includes the material number and quantity of each component, as well as the unit of measure. A BOM can be single- or multi-level. It can also include exploded views of assemblies and sub-assemblies, which break each down into its component parts. The resulting list identifies the exact parts that are needed to build an assembly or sub-assembly, and also includes instructions for procuring the required materials.
The process of creating a bill of materials is complex, and involves input from a variety of departments within a company, including engineering, design, purchasing, and materials management. A faulty BOM can cause production delays and wasted inventory, leading to increased costs for a business. To avoid these costs, it is essential to have a comprehensive and accurate BOM.
Depending on the product’s usage, a BOM may be referred to as an engineering change, sales, manufacturing or routing BOM. Each has a different purpose, and the users of each type vary by business needs. For example, the engineering change BOM is typically used by companies that produce thousands of products and regularly terminate some of them.
In a production order, a BOM is the basis for determining raw material requirements and establishing timelines for completion of the assembly. A complete BOM will contain all the steps necessary to construct a specific product and the timeframe in which it must be completed. This allows businesses to plan ahead for sourcing the needed materials and can help minimize production delays and waste.
When creating a production order, the BOM must be updated whenever the process of constructing a product changes. A change in the list of components or their quantity will require a new version of the BOM, which must be modified and then approved by the engineering department. In addition, the BOM must be matched with a routing or work center.
To change a BOM, you need to log into the SAP Easy Access screen and open transaction CS02. Enter the parent material for which you want to change the BOM. Then, enter the BOM usage = 1 (BOM usage is the name given to a specific usage of the BOM). After entering this value, click on “Go” to go to the next screen. In the next screen, you can modify the component code or quantity of the desired product. When you are finished, click on “Save.”
Routing
From manufacturing, tracking and shipping products to ensuring that you accurately calculate costs, the entire production process can be a complex one. ERP solutions like SAP Business One help alleviate these difficulties and make the process more efficient and accurate. In particular, an integrated ERP system can help with the creation of a Bill of Material (BOM). A BOM is a detailed list of the components that you require to manufacture X units of a Product.
A BOM is typically organized into a hierarchical order and lists the raw materials and sub-items, or child items, that will combine to form the finished item. In addition, a BOM can include a component scrap percentage that affects the quantity required of each individual component. It also defines the type, unit of measure, and the status of the product.
There are several different types of BOMs, and each has its own unique uses. For example, a sales BOM is used for make-to-order production of goods as ordered by customers. A production BOM is required for standard production orders and for MRP runs. It contains all of the finished parent and child items that complement each other as well as any intermediate or component states that will be turned into final products during the production process.
In addition to the information found in a BOM, an ERP solution can also support the tracking of engineering change management and lifecycles. These features enable you to manage revisions of a BOM as they occur. For instance, you can assign a date range to a BOM and track changes that occur during that period.
Another important function is the ability to create multiple alternative BOMs for a single product. This helps to avoid the need for manual entry of redundant data. The alternative BOMs can be created for purchasing, production, or both. They can also be based on different lot sizes, validity dates and production processes.
A BOM is a very important piece of the product structure. It enables companies to communicate their product structure effectively between their partners and to ensure that they are making the correct products. It also allows them to optimize the cost of each unit of production and improve their supply chain.