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Bills of Materials
Part 1 of 2

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The objective of this talk is to show how a company can create a bill of material process that will support lean manufacturing techniques. Many manufacturing companies have adopted lean manufacturing practices as an integral part of their shop floor activities. Lean manufacturing techniques have radically changed the work processes on the shop floor. The result of lean manufacturing techniques is seen in reductions in paperwork, transactions, and material movement. Additionally, phe­nomenal changes have been measured in increased throughput speed for material in the manufacturing process and a dramatic reduction in process cycle time. One way to view this change in thinking is that the shop floor is making a move from complex tools and techniques to simpler visual tools. A couple of examples of this is the increased use of kanban and cellular manufacturing techniques.

The companies that have been successful in applying lean manu­facturing to the shop floor have tried to spread the word to other areas of the company about the many benefits of lean manufacturing and lean thinking. One area that has provided tremendous benefits is chang­ing the bill of material process.

Let's look at what some of the potential conflicts might be between a traditional manufacturing approach and a lean manufacturing ap­proach. Past bill of material practices and techniques taught that the bills of material should be structured as built or as engineered. The data was engineering controlled and consequently changes to the data had to pass muster with this group. Many engineering departments have reputations for having large backlogs of engineering changes that need processing, and many times these same engineering departments have difficulty in hitting due dates with their work. This is in sharp contrast to the flexible, fast, and simple methods used in lean manufac­turing. The result is that many times you would see a bill of material process designed for a traditional work order/material issue and re­ceipt process trying to support a lean manufacturing process that nei­ther required nor wanted work orders, transactions, issues, or receipts. This has forced many companies to define an effective bill of material process as one that is total company-oriented and flexible.

By changing the bill of material process to support lean manufac­turing bills of materials, companies have eliminated or reduced paper­work and transactions on the shop floor along with getting dramatic reductions in WIP inventory levels.

While changing to lean bills of material provides many benefits, there are still some obstacles. One of the obstacles is knowing how to properly structure and maintain bills of materials to support lean manu­facturing principals and still provide users with their required informa­tion. Additionally, there is a need for a better understanding of how the software tools will support lean bills of materials.


Let's start by looking at a typical material flow for a manufacturing process shown in figure 1. There are many candidates for reduction or elimination such as •    purchased and raw material stockroom •    WIP stockroom •   queue •   setup/changeover •    move. Figure 2 shows the bill of material for this product. Notice the use of multiple levels in the bill of material structure to support the traditional WIP storage and inventory transactions. Typically this multilevel bill of material structure requires lots of paperwork and

numerous transactions. Addi­tionally, the bill of material structure requires more engi­neering effort to maintain it, which results in greater bill of material accuracy problems. Lean manufacturing compa-sies want bills of material with fewer levels (sometimes only one), which are easier to main­tain and keep accurate.


By pulling from the list of lean manufacturing tech­niques and skills in table 1 and applying them to this product and pro­cess, we have been able   to   radically change the manufac­turing process and material flow.


We now have a re­vised material flow in figure 3 and a much shallower bill of ma­terial in figure 4.

The bill of mate­rial has fewer levels and fewer items to maintain and there­fore may have a higher level of data quality. This higher level of accuracy is

mandatory to the companies that will be using backflushing techniques to automate material transactions. The lean bill of material has the po­tential to create conflicts with product engineering and production plan­ning because of how current bill of material structures are used to help these business functions operate. Just eliminating levels in the bills of material would eliminate information (for example, WIP tracking, trans­actions points, work orders, engineering drawings/specifications) these areas need. This is why certain key software functionality is needed to support lean bills of material.


Each bill of material starts life with one level. The zero level is the finished product, and level one is the purchased items. I recommend that a zero-based budget approach for levels in the bills of material be adopted. There are five reasons for adding or having additional levels in the bill of material. Challenge all levels that do not meet one of the following requirements:

      There is a business reason to do work orders (printed or electronic)
and/or inventory transaction for an item.

      There is a need for to make and sell an item as a service part.

      Frequently within the process there is a residual inventory carried
on hand.

      The product is frequently returned by the customer for rebuilding
or refurbishment or disassembly.

      There is a benefit to creating common parts grouping for different
bill of material users.

The parent part numbers for numbers 3,4, and 5 are coded as phan­tom items in the item master file. Phantom software logic will be ex­plained later.


To Be Continued


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