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FAQ : What should you include on the bill of material?

Everything which is consumed in the manufacture of the part should be on the bill of material unless :

  1. It has insignificant cost and
  2. It is readily available and
  3. There are no quality or safety reasons for inclusion or
  4. Use of the part is not proportional to throughput.

This simple rule causes more discussion within designers and planners than almost anything else (except maybe part numbering systems). The alternative to not putting direct material on the bill of material is to use re-order points. This, pre-MRP, technique is hard to maintain and does not result in matched sets of parts available when you need them. You have to order the material so why not put it on the bill of material? There is administrative effort to put it on the bill but once this has been done it is easier for everyone.

If there is a shortage of a part or it is in short supply, it is important to be able to find out where the part is used which is only possible for parts on the bill of material. It is also important to know where a part is used if a supplier changes the specification for a part or it has a quality concession or there is a safety problem. Parts on the bill of material will be in the part's rolled up cost rather than accounted for by an inaccurate allocation of indirect material.

Finally, before a work order is released to the factory, it is best practice to check that all the parts required are available. Only parts on the bill of material can be checked.

If the usage of the part is uncertain because it is small or variable, such as glue, the quantity per on the bill of material should be a reasonable guess. All the above reasons for inclusion of a part on the bill of material will still apply.

It is quite acceptable to bulk issue parts that are on the bill of material or, preferably, re-supply using kanbans (see World Class Manufacturing e-book).

Because fixed tooling is not consumed, it should not be on the bill of material for the product that uses it although there can be a bill of material for maintenance or for manufacturing the tool. It is possible to put tools that wear out on the bill of material, particularly if the wear is predictable and proportional to use. By this means replacement tooling is ordered at the right time. It is also possible to plan routine calibration in the same way.

The need for fixed tooling should be shown on the routing file. The routing file is used for capacity planning. The routing should also be printed, along with the bill of material, on the work order. It is the responsibility of the operational departments to check this information and feed back are discrepancies for resolution by the relevant technical department.

Jargon Warning - If you are not familiar with any of the terms used above, you can look them up in the free Jargon Buster on this site or, for more details, purchase the book "Business Excellence". Business Excellence is available in e-book format in addition to the paperback and is a component of the ERP Class "A" toolkit which you can also purchase and download from this site. Click here for more details.