The manufacturing bill of materials (MBOM) is a document that lists all the assemblies and components needed to build a finished product and is organized to support product assembly. The data from the manufacturing BOM are derived from the engineering bill of materials (EBOM), but they frequently contain more information than EBOM since they provide thorough instructions on how to use each part when manufacturing your product. It may include information like specific manufacturing processes to use, specific materials to source, and kitting (i.e., the bundling of all finished products, accessories, documents, etc., into a package). It facilitates the final conversion of an idea into a tangible product.
What should be included in an effective MBOM
An accurate, effective, and comprehensive MBOM enhances the speed of operations and is essential for a smooth production process. If you're just getting started with manufacturing products, this can seem really daunting to get right. In addition to the properties contained in the engineering BOM (as discussed in our blog “Anatomy of a good engineering bill of materials”), this section will discuss additional properties that you need to include in your MBOM.
Minimum package quantity/minimum order quantity
This refers to the required minimum quantity of parts. This is either the number of parts that are packaged (in a bag, box, etc.) or the minimal order quantity needed by your factory to produce custom parts. Waste and expense growth may result from not accounting for this. For example, if you only need 5 of a part, but you have to order 100, you now have to pay for 95 extra parts.
Labor price refers to the cost of labor needed to construct, package, kit, and transport your goods from the factory. This is an important component of the BOM since it affects the overall cost of manufacturing a product. The labor cost in a BOM is likely to change depending on a number of variables, including shifts in labor costs, productivity levels, and the availability of skilled personnel. To guarantee accurate cost calculations, it is crucial to regularly evaluate and update the labor price in the BOM.
This is the length of time needed to obtain parts from the supplier, and will determine (in most cases) when you can start manufacturing the finished product. The lead time for each item in the BOM will vary depending on factors such as availability, shipping time, and any customizations required. Accurately calculating lead times will ensure that production schedules can be met and delays can be minimized.
Duty, taxes, and tariffs
These are expenses incurred during product or component shipping. This may have an impact on buying choices (e.g., the cheapest vendor may not be the cheapest if you have to pay high tariffs to import those parts). It's crucial to include these additional expenses when drafting an MBOM to precisely determine the product's overall cost. It also enables you to make informed decisions regarding pricing, sourcing materials, and shipping products to various countries.
Fulfillment cost refers to the expenses incurred in receiving, storing, and shipping inventory after it has been produced. Including fulfillment costs in the MBOM can help you to better understand and manage the total cost of production.
Cost of goods sold, and manufacturer's value-add
These represent the total cost you'll be required to pay the factory. By integrating cost of goods sold (COGS) and the manufacturer's value-add (MVA) in the MBOM, you can accurately track the direct costs associated with producing each finished good, providing a more complete view of the true cost of production. Understanding a breakdown of the manufacturer's value-add from your factory will also help you understand how and where their fee is being spent, and can help you and the factory stay aligned and on target.
Operational cost of goods sold
This refers to the total expense incurred in producing and delivering an item to the client. This is, in some sense, most crucial final value from your BOM that you should communicate with investors and integrate in financial models.
Why your MBOM must be complete and accurate
Your MBOM is a roadmap to manufacture your product and is usually considered a controlled document within the context of your contract with your manufacturer. As a result, a poorly prepared MBOM can be very costly to your company and can hinder the smooth flow of the manufacturing process. On the other hand, a well-written MBOM positively impacts the entire production process and can help ensure your manufacturing and supply chain partners can deliver on time and on budget. Below are some benefits of having a complete and accurate MBOM:
Better decision-making and planning
A good MBOM includes detailed instructions on what, where, and how to obtain all the materials and parts needed to construct the product. With that, you will be able to adjust project scope as necessary to fit the existing budget and make better choices on how to deliver the product to the customer cost-effectively and efficiently.
Prevents shortage and eliminates waste
Having a detailed list of the components and their quantities can help prevent running out of supplies needed for product assembly or maintenance. This is especially helpful in the present supply chain shortage situation, where it is challenging to regularly obtain materials and parts. Meanwhile, when the wrong components or quantities are ordered, you will either have extra parts that must be stored in inventory or unusable components that must be returned. Fixing these errors costs time and money, and this could significantly affect your business’ bottom line.
Facilitates smooth NPI process
A good MBOM gives you clear direction on what action steps to take to streamline the production operations. A company's capacity to successfully design, construct, scale up, and introduce a new product largely depends on the correctness and completeness of the MBOM.
Getting your MBOM right
Now that we've talked at length about why an accurate and complete MBOM is so important, let's talk about how we get there. Below are some tips and best practices for creating and managing accurate and complete MBOMs to make sure your manufacturing is on time, on budget, and on spec:
Every component, material, cost, and process or step required to manufacture the product matters. There may be non-modeled items such as glue or packaging materials that need to be included in the BOM, even if they are not typically thought of as individual components. It's also important to include any non-physical items e.g. firmware revisions, user document revisions, etc that may be necessary if the factory is responsible for loading firmware or packaging user document with the product. Unlike an EBOM, which is more flexible and allows for changes throughout the design and manufacturing process, an MBOM prioritizes predictability. So, you want to trade flexibility for predictability here.
Ensure data accuracy
Any errors or omissions on the MBOM can have serious consequences to the production process. Inaccurate data can lead to quality issues with the final product. If the wrong materials are used or incorrect assembly instructions are followed, the product may not meet the required specifications. Or, to put it simply, if your MBOM is wrong, your product may be wrong. Other consequences may also include process delays and disruptions and excess inventory or shortages of critical materials.
Any changes made to the BOM could potentially impact the quality, fit, functionality, and cost of the final manufactured product. A reliable document control process should be established to ensure that all changes made to the BOM are carefully documented and tracked. This process should be clearly defined and communicated to all stakeholders involved in the manufacturing process (even if the agreed-upon process is "it's done by my contract manufacturer").
Tracking revisions to the BOM could involve maintaining a detailed record of all changes made, including the date of the change, who made the change, and the reason for the change. This record should be kept up to date and readily accessible to anyone who needs to reference it.
Start with a good EBOM
A good EBOM is a fundamental element for creating an accurate MBOM. If your EBOM is bad, your MBOM likely won't be much better. Using the EBOM as a starting point ensures that the MBOM reflects the actual product design and enables efficient manufacturing processes. (If you're interested in learning about the different elements that make up an effective EBOM, we recommend taking a look at our blog post on Anatomy of a good engineering bill of materials.) Therefore, it is crucial to invest tools, such as Bommer, and processes that will help you create a high-quality EBOM.
Spend less time on your MBOM with Bommer
With the correct approach, many of the challenges associated with creating accurate and comprehensive MBOMs can be overcome. Starting with a good EBOM will get you off on the right foot. Bommer plugs into CAD to make it easy to populate and export your EBOM, saving engineering time and reducing potential for common errors like miscounting, omitting parts, or mistyping a critical-to-quality property.
Want to try Bommer out for yourself? Contact us for a demo!