Page 194 - DMGT525_MATERIALS_MANAGEMENT

Unit 14: Computers in Materials Management

1. Bill of Materials Technique, Notes
2. Past Consumption Analysis Technique.

Bill of Materials Technique

A bill of materials indicates the name, part number, and usage of each component and the sub-
assembly in which it is to be used. Each product has a bill of materials since each of the products
has its own requirements dependent on its design and according to the engineering design and
the components consisting of standard parts needed for a particular product to be manufactured.

Example: If a chair is to be prepared it can be split into (i) legs, (ii) arms, (iii) seat, and (iv)
back rest. Each of the parts of the chair will have separate specifications and naturally each may
have its own manufacturing design.
According to the specifications and design the bill of materials will be drawn on such composite
information for the product—the chair in this case. In a bill of materials for a product, the
components required are listed with their complete specifications so that the materials required
may be procured according to the specifications.
When any of the units of the organization receives a work order or a production programme is
finalized, the concerned foreman prepares the list of all the materials required for the execution
of the order or manufacturing of the product as per production programme. The list of materials
so prepared is known as a bill of materials which includes all the details as regards quality,
quantity, code number, drawing number and other necessary specifications, etc.

Task Search over the internet and make a format for bills of material.

Once the production programme is finalized each product is exploded into its basic requirements
with the help of its bill of materials. The number required per item is multiplied by the number
to be produced in order to arrive at the total requirement. The total requirements are further
adjusted for various losses. Rejections should also be provided for. Every care should be taken
to visualize all types of contingencies and adequate provisions should be made for them.
Provisions for buffer stock and lead-time consumption should also be made. Taking all these
provisions into consideration the bill of materials should be drawn for each component and
then through multiplication process total requirement should be obtained.
The bill of materials-known as BOM is the simplest technique of materials planning. BOM with
required lead time and necessary contingency provision which eventually turns into indents for
procurement also acts as a guide to delivery and inventory requirements. A BOM, therefore,
helps in keeping watch over the delivery of matching equipments, spare parts, and components
and also over material directly going into production. It enables the evaluation of the progress
of the project undertaken and ensures the flow of needed materials.

Notes A bill of material is helpful in avoiding the locking of funds unnecessarily by
proper scheduling the orders, delivery and arrival of materials, such as avoidance of
capital blockade, saves the diverting of the working capital and reduces the inventory
carrying cost to a larger extent.

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