BILLS OF MATERIAL (CONTINUED)

BILLS OF MATERIAL (CONTINUED)

Brian Willcox CFPIM CIRM

ACTION MRPII

Last time I looked at the more usual build up and use of bills. Now I will go on to other advantages and types of bills.

Common Parts Bill

Another use of the phantom indicator is with a common parts bill. As an example we will use a vacuum cleaner. Although it is the same basic item, a few parts can vary in colour or may be specials for certain customers. A chain store may want their own name on the bag for example. The result is we will have a large number of bills, one for each final product with only very minor differences. In the figure below we can see that out of the 7 items on each bill 6 are the same.

It would make sense to group those common items together for planning purposes, even though the other item is physically needed before the common parts can be assembled. In the case of the vacuum cleaner the odd coloured parts would be the plastic moulding, the handle grip and the bag. In the figure shown we can see how this is done. The common parts are grouped together and given a parent code. This can then be made a phantom to effectively bring all the parts back to the same level.

If a salesman now comes in with a "special" for a big customer, it is not difficult to handle. You call up the common bill and the specials.

Common Parts Bill Full Bills

Should an engineering change note be raised for part number 6, instead of having to action the change in parent bills AA, AB and AC, now only CP needs to be updated. This approach makes the maintenance of the bills a lot simpler thus helps with the BOM accuracy problem.

This concept of modular and common parts bills can be applied to products with complex configurations to simplify the control and planning function. However, in practice, the lower the level in the BOM the options occur, the more complicated is the BOM structuring exercise. This is also known as modularising the bills.

Batch Bills

Where a normal bill of material is for a quantity of one of the parent, a batch bill of material is for a pre-determined quantity. Not all MRPII packages provide this facility. It is extremely useful for the pharmaceutical or food industries.

Here are four typical reasons why companies choose to use batch bills.

Firstly, it may be linked to the pack size of a raw material or ingredient. When the suppliers pack is opened it must all be used or the remnant is disposed off.

Secondly, it is quite common in these industries for one or two ingredients to be used in minute quantities in relation to other ingredients. A bill of material for one tablet might indicate a usage of several milligrams of the base ingredients. For the active ingredient 8 or 10 decimal places would be needed to define accurately the amount required. Most packages cannot handle this problem satisfactorily although many try. The only practical solution is a batch bill for a quantity of a 100 000 for example.

The third reason is often due to a practical reason. The vessel used to produce the product requires to contain a certain minimum quantity for the process to take place and so the BOM is created to make a quantity in line with the vessel size.

The fourth reason is when the quantity of a certain ingredient is specified for a definite batch size and it cannot just be multiplied proportionally for a different batch size. This is not a common problem, but can exist and the only example I have found is the use of yeast in wine making.

These are just some of the typical reasons for batch bills and if these apply to you, then batch bills could well be applicable. A word of warning from those companies that use them. You should take great care when using batch bills as it can be disastrous if there is a mix-up between a quantity of a thousand of an item and a quantity of a thousand batches of the product.

Breeder Bills

The food and chemical industries are typical of people requiring breeder bills. In the process of manufacturing one product they find that they also produce a by product. Most packages have difficulty in handling this and so the concept of breeder bills has been created. APICS have defined it as "a bill of material which recognises and plans the availability and usage of by products in the manufacturing process. The breeder bill allows for complete by product MRP and product/by product costing".

In simple terms the concept is that on the bill of material you define the ingredients you need to issue, (the input items) and also the by products that will be produced. The input items are known as "in items" and the by products as "out items". The item you are actually making or endeavouring to make is the parent. The result is that when you place an order for the parent it will create the demand for the input items as a normal bill of material, but it also creates an order of the right quantity of the "out items" which will be produced when you actually manufacture the parent. This means that from the planned orders you can see in advance what stock of these by products you will be receiving. When the by product is produced, there is an open order against which the production can be booked to stock.

The concept itself is not difficult to follow but very few packages provide it.

There are still many uses of bills of material, the most important being the "planning bill" in its many forms and the way they can be used to resolve the configuration problem and how to assist marketing with forecasting. These I will look at some time in the future.