NPI Supply Chain Craft

Practical Techniques for Holistically Taking Over Existing New Product Programs.

Part 3: Create indented BOM manually for an early material tracker (step 4).

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• Part 1: Right mindset & the foundational rules (Steps 1&2)
• Part 2: Program requirements and status (Step 3)
• Part 3: Manual BOM, Bill of Materials (Step 4)
• Part 4: BOM conversion to materials tracker (Step 5)
• Part 5: Priorities and execution (Steps 6&7)
• Part 6: Combo BOM Trackers (Step 8)

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This is a continuation of my blog posts on this subject. Please proceed to Part 1 to read the full article from the start.

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Step 4 – Create an indented BOM manually.

Timing: Aim for a first cut BOM in one day with readily available status information. By first cut, I mean a draft document that will be revised in the days to come.

This status phase covers the “bread-and-butter” activities of ALL Buyers. Basically, you determine all supply shortages, quantities, and need dates for your projects plus any attrition stock. If the final product is now in the production phase, Buyers need only run their MRP software for a system report that automatically reveals what raw materials, components, and assemblies are required and by what dates. This is possible because the design is frozen and important information is already loaded into the system.

Such MRP Input Data include but are not limited to:

• Sales Orders
• Bills of Materials (BOMs)
• Part Number Master Data
• Master Production Schedule
• Manufacturing Routing
• Inventory Status Files

If any of these elements are not yet loaded, it’s because a prerequisite action has not been done. For example, an assembly design has to be frozen and its BOM has to be finalized and released by Engineering to Document Control so that they can enter into the ERP system. A sales order can’t be entered into your ERP system until the customer purchase order has been formally accepted by the Contracts Officer. A new part number can’t have important data (like cost, lead time, etc.) input in the master data file until the BOM it belongs to is released in the ERP system. The master production schedule activation is preceded by the IPT Planner’s work (production planning, routing, scheduling, work orders). Manufacturing routers may require extensive research by the Mechanical Engineer.

Depending on the Development phase, an NPI Buyer may not have the luxury of software-generated shortage reports. There are two ways to handle this: (1) reactively, by waiting until all MRP inputs are loaded so that you can work off a system shortage report like production buyers or (2) proactively, by creating a shortage report manually.

If you take the reactive approach, based on my experience, then NPI Procurement will likely have to carry or overcome the burden of a late program schedule by the time formal purchasing demand is available. Rushed procurement in these conditions will usually cause parts orders within quoted lead time, higher risks of drawing nonconformance, inferior supplier selection, increased unit pricing, and unplanned expedite costs. If you take the proactive approach, however, you’ll be in a better position to not only strategically prevent late part receipts but also promote improved part delivery, cost, quality, and manufacturability. You’ll also help keep the overall project schedule on-time since you’ll be able to raise alarms in advance when pre-purchasing activities are running late.

How to create a Parts Shortage Report manually?

1. Run MRP. Run a shortages report from MRP and see what you’ve got to work with. You should be familiar with program status at this point, so you may be able to decide right away if the results make sense.

• IF shortages appear AND the design is frozen according to Engineering AND all necessary MRP inputs are accurately loaded into the ERP system and activated,
  • THEN the shortages and purchasing messages should be valid and complete. Good to continue with purchasing actions.

• IF shortages do NOT appear at all and the program is still in development, that’s a sign that MRP still needs inputs previously mentioned.
  • THEN you can ask the Planner or Engineering to expedite release of the MRP inputs. If that’s not possible…
  • THEN you can manually create your own shortage report, partially or completely. Details to follow.

• IF shortages DO appear and ALL MRP inputs are not or partially released, don’t assume that you’re good to go. Remember that the design is not yet frozen so there may be inaccurate or missing data.
  • THEN confirm that all the data is accurate (including part number, part description, quantity, need date, and unit of measurement).
  • ALSO confirm that known part numbers are not missing. These might be new or questionable items mentioned during your program review.
  • AND confirm that there aren’t missing part numbers that you DON’T know about. These might be items that were described only (no part number) during your program review or commodities that you would expect to see on your company’s product BOM but are missing from both the MRP report and the system BOM.

Check with the Planner on any items believed to be inaccurate or missing. If you are the acting Planner, then check with the Project or Design Engineer. Engineering can also advise on the possibility of component or assembly part numbers that have yet to be added to the BOM or perhaps even determined.

2. Create BOM Tracker Format (aka Manual Shortage Report). Creating a material shortages list manually means that you are doing what MRP currently cannot do. You will extract information available from your ERP system and the same sources that MRP normally would. When done, you’ll end up with a supply and demand status report in advance of a system-generated one.

I call my version of this a “BOM Tracker” because the format will start off as the preliminary indented (aka multi-level) bill of materials. Later, though, I will use it as a daily or weekly parts tracking tool until I can use MRP reliably. “Preliminary” means that it is a draft and that information within is subject to change. Also, I prefer indented BOMs vs single level BOMs (aka parts lists) because you can (1) see the order in which subassemblies must be built before getting to the final assembly part number and (2) the format ties easier into the project schedule. A drawback is that you can’t see the total quantity for multiple lines of the same part number, but we’ll address that in a later step.

An indented BOM generally has the following level categories. (Level 0 and 1 description may vary across companies).

• Level 0 – Finished Product. The part number/item ordered by your customer.
• Level 1 – Final Assembly. The top level in which completed subassemblies and possible more components are assembled to make the Finished Product.
• Level 2+ – Subassemblies.
• Level 1+ – Components. The parts used to make subassemblies and final assembly.

Expect to see the following minimum information on an indented BOM:

Line	Line number (1,2,3, etc.). Also, can be used as a Reference Number. This is a “must-have”, because you will probably do a lot of sorting and filtering later. This ensure that you can always sort the BOM back to its original order.
Level	This is the hierarchal level (1,2,3, etc.) and is tied to each assembly/subassembly part number. Line 1 should represent the final assembly part number and all components with Level 1 designation are needed at that level.
Prod Cat	Product Category. This would be the commodity type, abbreviated. Examples are machined part, assembly, COTS, molded part, casting, consumable, etc.
Part Nbr	The actual part number may not be known yet at time of prelim BOM creation. Also, this may refer to an internal part number.
Rev	Revision of the drawing (if the item is a custom part number). Before drawings are formally released, you’ll see either a number, an “N/C”, or just a blank field.
Desc	Description of the item. Note that part description should always be in a standardized format.
Qty	Quantity. Be careful! This refers to the quantity per subassembly or final assembly under which a same part number belongs on the BOM. It does not refer to the total quantity of the same part number in the entire BOM. We will add a column later to capture this.
U/M	Unit of Measure. Example abbreviations are “EA” (each), “IN” (inch), and “FT” (feet).
Mfr	Manufacturer. If the component is a commercially available off-the-shelf (COTS), this identifies the manufacturing company’s name.
Mfr P/N	Manufacturer’s Part Number. The part number that you’ll have to source and purchase.

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Part 4 of this blog will take this step further by converting your indented BOM format to a working BOM Materials Tracker.

To be continued. Stay tuned for Part 4!