Examining Bills of Materials

Objective

After completing this lesson, you will be able to define bill of material functionality in SAP Ariba.

Bills of Materials Definition

Bill of Materials (BOM) is the product structure or associated list of raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, alternative components groups and the quantities of each needed to manufacture a finished product. A BOM serves as a basis for production planning activities and is used to calculate the costs of materials required for a specific product or assembly. Depending on the industry, BOMs may also be referred to as recipes or lists of ingredients. BOMs contain important basic data for numerous areas of a company, for example:

  • Manufacturer Part ID
  • Product costing
  • Vendor Part ID
  • Quantity
  • Vendors who supply the part

Note

Having a BOM available in direct material sourcing requires turning on a specific parameter allowing for BOM structures to be integrated or created in SAP Ariba. However, the direct materials sourcing functionality operates in three modes: BOM-based product planning and sourcing, Materials-only sourcing, and Hybrid mode, making it flexible for customers who might require a BOM structure or just materials.

Supported BOM Types

SAP Ariba enables you to import multiple types of BOMs, such as group BOMs, normal BOMs, multi-BOMs, or variant BOMs from your external system. You can create sourcing events based on these BOMs to get accurate pricing information from the suppliers. The uniqueness of the BOMs is defined by BOM number, Alternate BOM number, and Usage.

In addition to standard material BOMs, SAP Ariba supports the following types of BOMs:

BOM TypeDefinition
Group BOMIn a group BOM, the materials added in one plant are available in all plants. That means, if you add a material in one plant, the system validates if that material is added to all the plants the BOM is assigned to.
Normal BOMA normal BOM is similar to a Group BOM, but the plant is assigned while creating the BOM. The materials added to a plant aren’t copied to all plants, because the BOM number varies for BOMs assigned to different plants.
Variant BOM

A variant BOM is similar to an existing BOM, but differs in one or more material components. Variant BOMs can also differ in the quantities of the materials. In addition to the common materials, a variant can also have materials that differ from the existing BOM.

For example: If a BOM with BOM number ,BOM 1 contains MAT1 and MAT2 as materials. A variant BOM with BOM number, BOM 2 can have MAT1 and MAT3 as materials. In this example, MAT1 is common between the two BOMs.

Multi-BOMA multi-BOM contains materials that are used to manufacture alternative products, where one material is used in both the alternatives. Multi-BOMs or multiple BOMs usually have common materials that differ in quantity along with other materials required for the alternative product. For example: Product A can be manufactured by the following alternative methods:
  • Method 1: Using 100 of MAT1 and 10 of MAT2
  • Method 2: Using 50 of MAT1 and 10 of MAT2

BOM Functionalities

Once the direct material sourcing- related features are turned on, the following functionality is available for working with BOMs:

  • BOM Owner assignment: After a materials manager user assigns an owner, SAP Ariba emails the part owner indicating they have a new part assigned.
  • BOM comparison: Materials managers can compare BOMs and their components.
  • BOM security: By default, only certain users are able to view the BOM after it has been created. As a result, customer administrator users may assign the users or groups of users that can view the BOM or edit the BOM attributes.
  • BOM search: Materials manager and materials viewer users can search for all the BOMs to which a part belongs.

Multilevel BOMs

Nesting and creating subassemblies within your BOM enables you to isolate specific subassemblies, so you can share only the design data that you need your partner or contract manufacturer to see. If your partner is helping you with a design, you might choose to share just the subassembly that relates to their work, protecting the intellectual property associated with the other aspects of the product design.

A multilevel BOM is also helpful when you have complex and highly configurable products. Updating a subassembly within a larger product assembly can be done quickly if you have structured your BOM as multileveled, since a change order only needs to address a subset of the product. The subassembly can be revised and used in multiple higher level assemblies as necessary. The higher level assemblies only need to be revised as far up the product structure tree as form fit and function rules dictate.

Buyers with the Materials Manager group permission can assign contract manufacturers and programs at any level in a BOM. BOM child levels inherit contract manufacturers and program values from their parent level, unless values are explicitly assigned at the child level.

BOM Roll-Ups and Costing Levels

By default, SAP Ariba rolls-up cost at the leaf or part level. You can set the costing level for an assembly to Yes, meaning that the price for the assembly is used for the BOM roll-up. Setting the costing level for the assembly to Yes also sets the costing level for all the sub-assemblies and parts beneath it in the BOM to No.

Screenshot depicting the Set costing level button on the Product Sourcing dashboard.

You can view the BOM hierarchy from the quote level and up using the BOM buy view filter. The BOM buy view filter displays the BOM buy view one level at a time and enables buyers to expand the complete BOM view.

You can manually set the costing level for items and assemblies. When you set the costing level, the cost is rolled up for the item but not any child items below it. If it is not set, the cost is rolled up for the item and any child items below it. Your organization might set the costing level for an assembly that has a price which already includes the costs of child items.

SAP Ariba automatically sets the costing level at the assembly level if you receive a quote, or if pricing exists, either estimated or contracted. This also sets the costing level for assemblies in all existing BOMs to Yes and all assemblies and parts under it to No in all the BOMs in which the assembly exists. You can manually override the automatic settings and SAP Ariba will not change manual updates to the costing level.

Note

When automatic BOM costing level functionality is enabled, the ability to manually set costing levels for items and assemblies is disabled. Contact SAP Ariba Support to enable this feature and configure the part types you want to automatically set as costing levels.

Placeholder parts

Placeholder parts enable buyers to initiate sourcing activities and collect prices even if the details of a part are not finalized. When the actual parts are available, you can replace the placeholder parts with the actual parts and copy the price information from the placeholder part to the actual part. When you replace placeholder parts with actual parts, you can also create purchasing info records for the actual parts. You can search for placeholder parts and edit and delete placeholder parts.

When you replace placeholder parts with actual parts, the price is copied only for suppliers that are part of the actual parts. That is, if there are two suppliers for which the price information is available in the placeholder part and the actual part has only one of those two suppliers, price is copied only for the supplier that is present in both the placeholder part and the actual part.

Screenshot showing the Create placeholder item option in the Item 360 View.

Lesson Summary

  • A Bill of Materials (BOM) lists components, quantities, and structure required to manufacture a finished product.
  • BOM functionality includes hierarchical views, user assignments, status filtering, security settings, and subassembly creation for collaboration.
  • Costing levels in BOMs control cost roll-up for assemblies and parts, which can be manually or automatically configured.
  • Placeholder parts in BOMs support sourcing activities and are replaceable with finalized parts while maintaining pricing details.

Learning

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