When is it a good time for a bill of material to explode?
INSIGHT ARTICLE |
An effective bill of material (BOM) process can reduce costs related to inaccurate part information, as well as increase material consumption efficiencies when setup properly. Within Microsoft Dynamics 365 (formerly Dynamics AX), a multitude of BOM’s can be created and utilized for production purposes. RSM US LLP has built upon this functionality to ensure that BOM’s related to food production (such as dairy) explode according to business best practices.
A BOM is a list of raw material products, components and assemblies that are needed to build or manufacture a product. A BOM is typically in a hierarchy format with the finished produced product at the top level and the components and materials at the bottom level. When we refer to a BOM “explosion” it relates to the displaying of sub-assembly components or parts. A fundamental requirement within the dairy industry is to have the ability to manufacture a product that utilizes BOM explosion functionality.
RSM has leveraged Dynamics 365 functionality and expanded it so that the user only has to enter the top-level product. The system is able to identify that the product entered is linked to sub-assembly components and automatically “explodes” this to display.
For a simple example, the user might enter “1% Milk” as the product to be produced. The BOM component is “raw milk;” however, the sub-components that make up raw milk are butterfat and skim milk.
Automatically, the system knows that it will consume from inventory the butterfat and skim milk components at the ratio specified within the BOM in order to produce 1 percent milk. At this time, the sub-components have “exploded” within the BOM. The user doesn’t need to worry about knowing this information, all they have to do is input the amount of “raw milk” being consumed to produce the finished product. RSM’s key functionality completes the calculation behind the scenes for them.
Key benefits include:
- System calculates and displays the sub-component explosion automatically
- User interaction is easy to understand
- The BOM explosion can be leveraged during sales order, production order and purchase order processing
- Inventory can be tracked at either the component or sub-component level
- Parameterized control so that the functionality can be displayed or hidden based upon the company’s best practices
By combining the BOM explosion functionality with RSM’s blend optimizer solution, this becomes a powerful tool that results in cost minimization and reduction of out-of-specification products, and allows for the controlling of the use of ingredients in inventory.
ERP system solutions are not all the same. Critical functionality such as BOM explosion and implosion are essential to food and beverage manufacturers. If you are researching an ERP solution for your business, look for key functionality such as production recipe, blending, grower accounting, producer payroll and execution capabilities like the one described above.