Five advantages of a multi-level bill of Materials

12 September 2018 Tony Richardson Accountancy Services, Genus Management Accounts, Exact

To understand the benefits a multi-level bill of materials can bring to a manufacturing business we must first look at the alternative.

Most manufacturing companies will use a bill of materials in some form when designing and manufacturing their products. In its basic form this is a list of all the materials required and perhaps the routing steps to manufacture the item, this is often referred to as a single level bill of materials. While this is useful and gives guidance, it is perhaps most beneficial when producing more simplified items comprising of only 2 or 3 parts.

However, it is often the case that companies are manufacturing a product that is not only made up of raw materials but also sub-components that themselves require manufacturing. In these instances, the single level bill of materials can become more difficult to navigate, can be prone to more errors and is far less flexible if/when revisions are required at a later stage. See the example below*.

Manufactured item = 3 Wheel Trolley

Single Level Bill of Materials

Part No

Description

Unit

QTY

112-001

Plywood,12mm,2400x1200

SH

0.125

111-006

Varnish, Semi Gloss

L

0.05

130-001

Labour

HR

2.75

110-001

Side Piece

EA

6

110-002

Top Piece

EA

3

105-001

MS Flat 80x8

M

0.75

111-001

Galvanising

KG

0.009

102-108

Wheel, with tyre, 100mm

EA

3

100-001

MS Bolt, M10x70, Galv

EA

3

100-002

M10, washer, Galv

EA

6

100-003

M10, Nut, Galv

EA

9

100-004

MS Bolt, M10x30, Galv

EA

3

100-005

M10 Square Nut

EA

3

 

Multi-Level Bill of Materials

Level

Part No

Description

Unit

QTY

1

120-001

Trolley, 3 wheeled

EA

1

2

112-001

Plywood Platform

EA

1

3

106-001

Plywood,12mm,2400x1200

SH

0.125

3

111-006

Varnish, Semi Gloss

L

0.05

3

130-001

Labour

HR

0.65

2

110-001

Wheel Housing

EA

3

3

110-003

Side Piece

EA

2

4

105-001

MS Flat 80x8

M

0.1

4

111-001

Galvanising

KG

0.001

4

130-000

Labour

HR

0.1

3

110-002

Top Piece

EA

1

4

105-001

MS Flat 80x8

M

0.05

4

111-001

Galvanising

KG

0.001

4

130-000

Labour

HR

0.5

3

102-108

Wheel, with tyre, 100mm

EA

1

3

100-001

MS Bolt, M10x70, Galv

EA

1

3

100-002

M10, washer, Galv

EA

2

3

100-003

M10, Nut, Galv

EA

3

3

100-004

MS Bolt, M10x30, Galv

EA

1

3

100-005

M10 Square Nut

EA

1

 

As you can see from the example the multi-level bill of materials provides a much clearer picture as to the structure of the item being manufactured. We can see the trolley is made of two major parts, the Plywood platform and the Wheel Housings, from there we can again see the breakdown of each of these sub-components in terms of both materials/sub-components and labour. Whereas on the single level bill of materials it is not clear as to how the different components come together to form the end product.

It also allows for easier revisions, if the trolley was to be changed to a 4-wheel version then you can simply update the quantity of the Wheel Housing from 3 to 4. On a single level bill of materials, the quantity of multiple parts would need to be amended but it is not clear as to which parts or labour relate to the Wheel Housing to even make that change.

Another advantage you can see when looking at the example is when we think about the level of knowledge or expertise required to manufacture an item. With a single level bill of materials, the person on the shop floor would have to have in depth knowledge of the quantity of material required for each element whereas with a multi-level bill of materials the need for such knowledge is negated by the more detailed breakdown of the manufacturing process.

 

In summary, the five advantages of a multi-level bill are:

  1. Simplifies what can often be a complex production structure
  2. Reduces the need for in-depth knowledge of a products manufacturing process
  3. Makes it easier to visualise how components come together to form the overall product
  4. Easier to manage engineering revisions
  5. Ease of transition from engineering design to manufacturing process

 

In today's digital age, more manufacturing companies are moving their inventory and manufacturing process management onto business software to help improve efficiency and bridge the divide between the shop floor and the top floor. Here at Shorts we pride ourselves on our software projects team’s ability to analyse the requirements of companies of all sizes and provide a software solution to suit those needs. If your business could benefit from a solution to help manage your manufacturing processes, be it anything from managing multi-level bills of material to multi-site inventory management then please contact us.

 

 

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