Bill of Material
Most companies either don't measure bill of
material accuracy or complain about how low it is. Those that think
their bills are good, but don't measure them per the
industry standard (Ref. Class A checklist) are
surprised to find how poor the accuracy is. Inaccurate bills of
material mean an inaccurate material plan and capacity plan. Without
material and capacity you can't build the product.
The first step in achieving bill accuracy is to
rethink what should be included in the bill. In the past we wanted
to put everything on the bill of material. That is not the case
today. Many items that are a common commodity can be eliminated by
simply having a local supplier keep the bins full much the same as a
bread man does in a grocery store. This allows the company to
operate at a much lower overhead and at the same time buy these
components cheaper. Rethinking what needs to be on the bill of
material is an important step in the reengineering process.
Another issue to consider in achieving bill
accuracy is where the source for information comes from. Many
companies try to load the responsibility for bill of material
accuracy totally on engineering. Unfortunately, in most companies
the engineering resource available to monitor and keep the bills
accurate is no where adequate to maintain the minimum of 98% to
properly operate MRP II. Reengineering maintenance of the bill
should start with a clean piece of paper when considering resources.
There is a resource that touches the product every day and can
monitor the bill for accuracy at no cost .That resource is the shop
people. All that needs to be done is to get them to report the
inaccuracies. Because of engineering's poor performance correcting
bill errors that the shop has reported, it is a major task to get
the shop to start reporting inaccuracies. Engineering will have to
make the reported changes in a timely manner if management is to
overcome the resistance from the shop. Overcoming the huge backlog
is best done by using the shop people. Many companies run a 100%
accuracy because they have reengineered the process and created a
behavior change in the shop and in engineering.
Another reengineering step that needs to be considered is
flatting the bill of material. The bill can be altered with code
commonly called the phantom so the MRP system does not plan a level
in the bill even though engineering calls for it. An examination of
the manufacturing process will determine if flattening is possible.
If the manufacturing process does not allow flattening a continuous
improvement process needs to be started to begin creating flow
cells through out manufacturing. The flow cells can allow the
elimination of many levels. What drives the need for change? Tell
sales and marketing you can reduce lead time by a factor of ten.
Tell finance there will be a ten fold reduction in work in process
inventory. Tell manufacturing they will be able to eliminate
transactions ten fold. Tell quality they can expect a significant
increase in the quality of the product. That is to name a few of the
To be Continued
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