Utilizing Bill of Materials (BOM) in SAP Business One, Web Client

OEC Computers is a technology company that sells standard computer products such as desktops, laptops, and accessories while also manufacturing custom gaming tables designed for professional and home gamers.

They manage different product structures depending on how products are:

• Manufactured in-house custom gaming tables from materials and resources.
• Sold as bundles or kits (PC + monitor + keyboard + mouse).
• Packaged as fixed-price sets (for example, home office or gaming packages).
• Reused flexible structures for promotions and special offers.

Each scenario requires different inventory behavior, pricing logic, and document handling. SAP Business One, Web client offers different BOM types for different business needs. The production manager can choose the right BOM type for the right process.

On the Bill of Materials (BOM) app, you can choose one of four different types of BOMs.

A production bill of materials

• Is a list of items and (possibly) resources that are consumed in the production process.
• Then, to start the production process, we issue a Production Order document, based on the Bill of Materials, and release the components from the warehouse to the shop floor.
• When the production process is completed, the finished product is added to inventory.
• This is the main production process concept in SAP Business One, Web client but not the only one.

All other three types: Sales, Assembly and Template BOM types are used in marketing documents and do not go through a production process (therefore, no resources are involved in these BOMs). The components of these BOMs are assembled to create the parent item.

• The Sales BOM is used in sales documents. The parent item must be a sales item. For example, when the company sells build-it-yourself kits. The parent item is the kit name, and the component items are the inventory items that compose the kit. Once you select the parent item in a sales document, all the components appear as sub-items. You can update the quantities of the parent item or the components. However, you cannot delete a component or add new sub-items to the kit in the sales document. When you set up the BOM, you can select the Hide BOM Components in Printout option, so that when you print the document, only the parent appears.
• The Assembly BOM is similar to the sales BOM. It represents a collection of individual items in a set with a specific price. Unlike the sales bill of materials, only the parent item appears in the sales order document; the components do not appear as sub-items.

  For both the sales BOM and the assembly BOM, you do not manage the parent item as an inventory item, but instead as a sales item. The components can be sales items and inventory items at the same time.

• The Template BOM has no restrictions. Both the parent and the children can be any type of items. It can be used in sales and purchasing documents. Once you select the parent item, all its children appear. You can delete, add, or duplicate rows and make any modification as necessary within the marketing documents. A primary use for a Template BOM is as a quick typing tool to enter multiple items simultaneously onto sales or purchasing documents.

Depending on the BOM type, you must define a certain category in the item master record of the parent item:

• For the assembly and sales BOMs, the finished product must be a sales item.
• Templates can have each of the three attributes (purchased, sales, and inventory items). The finished product of the production BOM must be an inventory item. If you also want to purchase this item, you can define it as a purchased item. If you also want to sell it, you should also define it as a sales item. If you produce it for inventory, as a component of another BOM, then do not define it as a sales item, so it will not appear as a choice in a sales document list of items.
• The components can also have each of the three categories (purchased, sales, and inventory items) and can also be purchased or sold individually.
• The components for sales BOMs and assembly BOMs must be sales items.

Let us talk about bill of materials pricing:

• In the unit price column, since this is a production bill of materials, we see the cost of each component. In a non-perpetual system, the unit price is the price of the item, taken from the price list.
• The Product Price, indicated at the top of the Bill of Materials, is defaulted from the parent item. It can be derived from the component's total unit price. To copy the total unit price, choose the Set Price option, as indicated in the image.
• Alternatively, the product price can be entered manually.
• When you add or update the Bill of Materials, the product price is updated in the price list that appears in the General area of the bill of materials.
• SAP Business One desktop client also provides a global update for a batch of bill of materials product prices, according to the components' prices. This is done in the Production module → Update Item Prices Globally window.

• OEC Computers produces custom gaming tables.
• Each of these items is manufactured from several component items and uses resources to produce them.
• The list of items and resources needed to produce the finished product is recorded in the Bill of Materials.

To manufacture a custom gaming table, few items are needed: solid wood desktop panel, aluminum frame, sit-stand legs, and wood screws.

Additionally, the wood panel needs to be cut. To do this, two resources are required: one machine resource that is the table saw and one labor resource of machine operator employee.

One more labor type resource is required, the technician.

• The screenshot above shows how the custom gaming table bill of materials looks like in SAP Business One, Web client.
• Warehouse 01 has been defined as the shop floor area and is indicated in the rows.
• When this bill of materials was created, the production manager added text rows (number 1 and 5) indicating the production instructions.
• Few resources are involved - the Table Saw machine appears in row 3 for three cycles. In row 4 and 9 labor type resources are included with quantities of hourly rate unit of measure.
• When starting the production process, this bill of materials is copied into a Production Order.
• Note that:
  • The finished goods are also defined as items (master data) in the system.
  • In real life production bills of materials often have several levels. In our example, the Aluminum frame component can also be a bill of materials if it is built in the company warehouse.

• A phantom item is an element in the bill of materials that does not actually exist in the inventory. It is used to simplify the bill of materials. Although the phantom item appears in the bill of materials, the production order shows the components needed to make the phantom item rather than the phantom item itself.
• An item can be defined as a phantom item in the item master data.
• In the graphic we see the gaming table bill of materials. The cup holder set phantom item was defined as a production bill of materials type with its three components . When the gaming table bill of materials is copied to the production order, the components of the cup holder set BOM (that is the ring, the bracket and the screws) will appear in the production order, but not the cup holder set phantom item.
• Note that any updates made to the components of a phantom item BOM will automatically apply to all BOMs that include this phantom item when they are copied into a new production order.