Manufacturing Requirements Planning 



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 benefits.

To be Continued


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