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BILLS OF MATERIAL

Bills of Material Overview

A bill of materials is a list of items which comprise a finished product or subassembly.  Accurate bills of material are essential to a good manufacturing inventory system and serve as the foundation for the entire costing and planning process.

How is the bill of material used?  Of prime importance is costing.  Standard costs for material, setup, labor, outside processing, and overhead can be established for each component in a bill of material.  The Print/Rollup Standard Costs program will calculate and add these costs up through all levels of the bill of material and establish a total standard cost for the top level item.  Standard costing is essential in many manufacturing environments for cost analysis and pricing.

The indented bill of material reports will handle up to 35 levels in a product structure.  The parent product is considered to be level zero and its components level one.   If any of the components in level one are subassemblies, their components are considered level two, and so forth.  You do not need to specify levels; the system automatically defines the relationships.

When a work order is created, the bill of materials for the item is copied into a work order bill of material, at which point the required quantities for each component are allocated in inventory and compared with what's on hand and already on order.  From this decisions can be made as to what needs to be purchased, ordered, or rescheduled to meet material requirements.

Selling kits may be defined as bills of material.  A selling kit allows you to specify a kit of items with one ordering number and one price.  The kit item number itself is never manufactured or stocked.  When the invoice is created, inventory is relieved for each of the kit components.

The bill of material file allows extensive notes to be maintained on each component and on the bill itself.  Non-stock items such as labor and outside processing can also be defined within a bill of material.  These features allow extensive manufacturing documentation to be built into the bill of material for companies that do not wish to use routings and work centers.

You can define approved substitute parts, approved vendors, and approved manufacturers globally for all situations, by specific parent item numbers, or only for specific customers.  These can print on bill of material reports, purchase orders, and work order pick lists.