Utilizing Bill of Materials (BOM) in SAP Business One

• In this example, we look at the company OC WoodTrend, which produces custom wooden doors and cabinets.
• 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.
• For complex manufacturing, OC WoodTrend defines sequenced stages with date dependencies.
• In addition, OC WoodTrend sells different kits of build-it-yourself furniture. These kits are composed of precut wooden plates, screws, and hinges. Each kit has a Bill of Materials, even though it is not used in the manufacturing process.

Let us try to understand the Bill of Materials concept by using the following example:To manufacture an engraved wooden door, we need two items: a plain wooden door and a handle.

In addition, we need to engrave a decoration pattern. To do this, we need two resources: a lathe machine and a Machine Operator employee.

These items and resources are combined in the decorative wooden door Bill of Materials.

When starting the production process, this Bill of Materials is copied into a Production Order.

In real life production, Bills of Materials often have several levels. In our example, the wooden door component can also be a Bill of Materials.

Note that the finished goods are also defined as items (master data) in the system.

A Bill of Materials may have several levels. A component item can also be an item produced from another Bill of Materials. In our example, the wooden door is a produced item from a second level of Bill of Materials that has two items and one resource.

To start a production process, this Bill of Materials is copied to a Production Order.

This is what the Decorative Wooden Door Bill of Materials looks like in the system.

We can see that the decorative door is a combination of:

1 wooden door,

1 handle,

A total of 3 cycles of the Lathe Machine

And 1 Machine Operator hour (2X0.5 hours).

At WoodTrend, warehouse 02 has been defined as the shop floor area and is indicated in the document rows.

When this Bill of Materials was created, the production manager added a text row (number 4) indicating production instructions to rotate the door 180 degrees.

We can also see that the Lathe Machine appears in two rows. In row number 3, the machine is activated for 2 cycles. Then, there is an instruction to rotate the door, and only after that the machine is activated for another cycle.

We can also choose the arrow buttons on the right side of the window, to change the order of the rows in the Bill of Materials.

At the bottom of the window, we can define the product price manually or generate it automatically according to the component prices, taken from the selected price list, and resource cost.

OC WoodTrend manufactures a range of different cabinets. Bills of materials for cabinets include both machine and employee type resources. These resources can affect the production time of the manufacturing stage.

Each stage can be dependent on its adjacent stage (either the stage before or the stage after), such that the start date or end date of a certain stage affects the start date or end date of the next stage. The routing procedure allows automatic calculation of the start date and end date of stages according to the production time of each stage. Refer to the Production Process training to learn more about routing date calculation.

Each stage has a route stage header and a route sequence number. The first row of the stage is the header, which contains a description for the stage. A row is set as the header once the Route Stage type is chosen. All rows that follow the header relate to the same stage and have the same route sequence number.

The image illustrates a routed bill of materials of a cabinet item and shows two stages. In the first stage, wooden plates are cut using a cutting machine, handled by a machine operator. Only after this stage is completed can the production procedure continue to the next stage: painting of the plates.Then, note that there is 1 waiting day for the paint to dry after the stage is completed.

The route sequence number sets the order of appearance in the bill of materials.

To change the placement of the entire stage, choose a different sequence number in the header row. When you do this, all associated route sequence numbers are changed as well.

When any other row is moved from one stage to the other, the row inherits the new stage route sequence number.

Let us talk briefly 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 bottom of the Bill of Materials, can be derived from the component's total unit price (multiply by row quantity). To copy the total unit price, we choose the down arrow, 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 header of the Bill of Materials.

SAP Business One 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 → Update Item Prices Globally window.

A phantom item is a sub-assembly in the Bill of Materials that does not actually exist in 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.

When copying the Bill of Materials to the Production Order, the phantom Bill of Materials components are copied as well.

In the graphics we see a Bill of Materials for a skateboard . The 4 wheels of the skateboard are a phantom item. When the skateboard Bill of Materials is copied to the Production Order, the components tire, rim, and screws will appear, but not the wheels.

Requirements of Bill of Materials can vary between different departments at the same company. The engineering department could create a multi-level Bill of Materials to define an engine, for example The manufacturing department could then include this Bill of Materials as a single phantom item.

Note that it is not possible to add route stage lines to a BoM containing a phantom item.

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

We have already learned about the production BOM, so let us have a look at the other three types: Sales, Assembly and Template BOMs.

All three of these 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, OC WoodTrend sells build-it-yourself furniture kits. The produced 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 produced 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 finished product 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 finished product 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.

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

For the assembly and sales BOMs, the finished product has to be a sales item.

Templates can have each of the three attributes (purchased, sales, and inventory items). The finished product of the production BOM has to 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.

The Components Management window allows mass changes in multiple existing bills of materials simultaneously.

You can:

• Add new components to selected bills of materials
• Delete specific components from selected bills of materials
• Change parameters (such as quantity, warehouse, issue method, and so on) for selected bill of material components
• Change route sequence
• Replace bill of material components
• Update header data

Note that bill of material lines include items, resources, route stages, and text rows.

Once you choose the relevant management task in the dropdown list, the fields to edit and type of possible changes are adjusted according to the selected action.

• A production bill of materials is a list of items and (possibly) resources that are consumed in the production process.
• A routed production BOM is composed of sequenced stages, where each stage has a header and components that have the same route sequence number.
• A BOM may have several levels; in this case one or more of the item components is also a BOM.
• The Bill of Materials Component Management window allows you to make changes to multiple BOMs simultaneously.
• In addition to the production BOM, there are three other types of bills of materials that are available for use in marketing document: sales, assembly, and template BOMs.