New Paradigms for Bills of Material

by Dave Garwood

What's new with bills of material? A lot of exciting things have been happening with the bill of material structuring process. Many old paradigms have been replaced and new ones created. Take a look at three examples ...

ECN vs. BMCN
For decades, the bill of material was considered an engineering document. But many departments and functional areas in the business use the bill of material everyday. For example, planning functions use bills as a bridge to link manufacturing schedules to individual material or part needs. Cost accounting uses bills to calculate product costs. The plant floor uses bills to determine what to pull to make the product. The list of bill of material users or "internal customers" goes on and on. Who is affected when the bill changes? Usually everyone! The old paradigm was often to make the change in engineering and toss the new, revised bill over the wall and leave everyone to fend for themselves!

And thus the name Engineering Change Notice (ECN). In effect, engineering notified everyone else the change had already been made! As a result, many departments were forced to keep their own bill of material files -- a costly duplicate effort. The new paradigm is to create a process where the impact on the business is considered before the change is made. In fact, in some cases the change may be so significant it may be determined to not make the bill change.

Representatives from any functional area can ask to be informed before the change is made. Among the considerations to go ahead with the change are safety of the product, potential obsolete inventory, impact on current customer delivery schedules, cost to make the change, tooling availability and many more. Individuals are notified via email of the pending change and are given a drop dead to respond to a bill of material administrator. Once all input and impact of the change are considered, the disposition of old material is determined and the timing of the change, the Bill of Material Change Notice (BMCN) is distributed. As a result, the change is made with minimal negative impact and cost.

Engineering Release vs. Launch Phase
The term "engineering release" is obsolete and should be replaced. The old paradigm was for engineering to design a new product and during this time the rest of the organization did not want to be bothered until it was ready. In fact, manufacturing often would not act until the design was finalized, even if engineering let them have a peek at what was coming. Once engineering completed their work, an "engineering release," including bills of material, was tossed over the wall to the other functional areas to begin their work to produce, sell, plan and service the new product. This approach created several problems, including long lead times to get new products into customers' hands and costly redesigns and recalls!

A revolutionary process was developed to make new product development faster and more efficient. We call it MAP (Market Aimed Products). MAP incorporates the concepts of concurrent engineering and much more. MAP is a series of five phases and four go/no go gates. The fourth phase is the design phase. During this phase the business processes to manufacture, market, sell, distribute, train, plan and many more activities are concurrently designed while the product is being designed. Documentation such as bills of material, QC specs, drawings, etc are also created and used to build prototypes and initial production run units.

Once the development team, consisting of more than engineering people, determines the product and businesses processes are ready, the new product moves seamlessly into the Launch Phase. During the Launch phase, the new product is made available to the marketplace. The bills of material are already created and tested by everyone who will use them prior to launch. Notice the entire organization is involved, including manufacturing, as the product is designed. The product is not designed in a vacuum and tossed over the wall or "released" by engineering. The product and bills of material evolved concurrently and were used in all functional areas.

Less is More ... Really!
How should we structure the bills? This is an often asked question. My answer, "Flat." Permit me to make a general statement......"any bill of material with more than 3 levels is probably overstructured". Of course, their are always a few exceptions. However, if your bills have more than 3 levels, you probably have identified an opportunity to simplify the bill structures and reduce maintenance costs. However, just removing levels in the bills is not likely the first step.

Speed has become an essential competitive weapon. This means very short lead times. JIT or Lean manufacturing concepts are effectively used to strip the lead times of unnecessary elements. As we look at manufacturing processes, we often see a lot of wait or queue time that cause long lead times. In many cases, levels in the bills of material were created to keep track of this material and it sat and waited. As the manufacturing process is "leaned," the material flows, not sits, and the need for the bill of material level disappears. But the manufacturing process has to be changed in this case before the bill can change.

An essential rule: "The bill of material should reflect, not dictate, the manufacturing process." Fix the process and simpler, shallow bills of material will follow!