Mind the Gap: Why Small Inconsistencies in your Bills of Materials (BOMs) Expose You to Significant Risk

Industry 4.0 is delivering significant competitive advantages for leading-edge manufacturers, enabling them to deliver more intelligent products, increase quality and speed to market, and achieve unprecedented efficiency and productivity across their organizations.

So it’s not surprising that 94% of manufacturing leaders have made digital transformation their top strategic objective, committing an average of 30% of their operations/IT budgets on digital transformation initiatives.

But attitude – a desire for digital transformation – is just one piece of the equation; the other is aptitude, which is the organization’s ability to actually transform itself. Manufacturing leaders are far more pessimistic about their own prospects in this regard: just 1 in 5 feels like their organization is “highly prepared” to successfully execute digital transformation across all aspects of their operations.

As a result, many of today’s manufacturing organizations – particularly those with multi-site, multi-national operations and supply chains – are caught at various phases of internal digital maturity. This inconsistency is problematic for end-to-end processes that depend on a variety of teams and departments in order to function.

For employees that rely on these horizontal processes, it can feel like they have one foot on the dock of the physical world and the other in a digital boat that’s quickly pulling away… with the situation rapidly growing more uncomfortable by the moment.

The Bill (of Materials) Comes Due

Perhaps the best example of this effect is the Bill of Materials (BOM) that nearly every manufacturer relies on to produce physical goods. BOMs capture the exact quantities of raw materials, sub-assemblies, components, sub-components and parts needed to successfully complete a finished good, whether the end product is as simple as a shopping cart or as complex as a commercial aircraft.

Most organizations have two BOMs; an engineering BOM (EBOM) and a manufacturing BOM (MBOM). The EBOM is created during the product development phase using 3D CAD software, so the process and output are entirely digital.

At that point, the manufacturing team edits the EBOM to incorporate elements there is no CAD for. These are often purchased items like black-box designs, grease, and Loctite that are essential for the manufacture of the final product. All these items must be managed and accounted for in the MBOM, right down to the last washer.

Because the EBOM and MBOM sit right in the overlap of the physical and digital worlds, influencing and being influenced by every activity that supports the product’s development, manufacturing and lifecycle.

As a result, your BOMs they are exceedingly vulnerable to discrepancies and disconnects that occur between highly physical processes and highly digital processes anywhere in the product’s lifecycle.
When BOMs aren’t in complete synchronicity, the consequences can be catastrophic, including:

• Complete product recalls, repairs and reissues
• Surprise warranty expenses
• Massive inventories of scrap
• Expedited orders of repair parts and materials
• Insurance claims and class action lawsuits
• Loss of market share
• Inability to meet demand or shipment deadlines
• Long-term negative impact on your brand and reputation

Depending on the type of product being manufactured and the impact of its malfunction, product defects due to BOM inaccuracies can introduce a significant amount of unnecessary enterprise risk – risk substantial enough to put the future of your company at stake.

If the BOM is so critical and the potential impact so disastrous, why do product defects due to BOM inaccuracies happen in the first place?

We’ll discuss that and much more in part two, posting on September 18, 2019

ABOUT THE AUTHOR

Lewis Breeding is a Senior Applications Engineer at Persistent Systems, Ltd. He has more than 25 years of design engineering experience ranging from automation and tooling to Class A surface development. Lewis is a Dassault Systèmes® Certified CATIA™ Expert and is the Data Management and Collaboration Division Manager for the Community of Experts (COE) of Dassault Systèmes solutions.

Lewis has been heavily involved in a variety of successful implementation of CATIA V5 and product lifecycle management (PLM) deployments for customers in the automotive and aerospace industries and has authored a number of methodologies and best practices for these industries based on that experience.