Keeping Bills of Materials updated internally and with vendors

When purchasing complex components or outsourcing some level of manufacturing, the devil is in the details. A few overlooked specifications or design updates and companies are looking at lost time, confusion and rework or worse: missed deadlines, scrap and lost profit.

With such a simple process, so many things can go wrong. We’ve built a list of how those important details could be missed as well as what companies can do to build a more robust system to manage their bills of materials.

But first, have the right software to manage the process

When there’s a large number of products or components being outsourced or there’s a lot of complexity to the product itself, a robust Materials Requirements Planning (MRP) system is typically used. These systems offer a centralized platform that consolidates information pertaining to BOMs, inventory levels, and production schedules. This centralized structure enables both manufacturers and vendors to access the latest and most accurate data from a singular source. 

Material requirements planning systems contribute to improved accuracy in production through taking care of standard calculations. This helps support manufacturers in providing vendors with precise and up-to-date information. Additionally, MRP systems assist in demand forecasting, production planning, order management, and help automate the creation of purchase orders based on BOM and production requirements. The optimization of inventory levels, traceability and compliance tracking, and the analysis of historical data contribute to a more efficient and reliable collaboration between manufacturers and vendors within the supply chain.

Perhaps the most important benefit MRP systems like Aligni MRP bring to the outsourcing process is highly integrated communication capabilities. Real-time updates provided by MRP systems reduce the risk of errors and enhance communication efficiency by automating the exchange of information. Going further, supplier collaboration features in MRP systems like Aligni allow vendors to access relevant information securely, fostering transparency and collaborative decision-making. This makes sure information is up to date for everyone involved.

Ten common issues that arise in sharing BOMs

Sharing Bills of Materials (BOMs) with vendors is a common practice in manufacturing products. However, several issues may arise during this process, and it’s important to be aware of them to ensure smooth collaboration and accurate production. 

1. Managing Version Control

Keeping track of the latest version of the BOM is crucial to avoid errors and discrepancies in the production process. Changes in design or specifications should be communicated clearly and promptly.

2. Preserving data accuracy

Ensuring the accuracy of the information in the BOM is essential. Any errors, inaccuracies, or missing data can lead to production delays, waste, or the delivery of faulty products.

3. Maintaining confidentiality and security

BOMs often contain sensitive and proprietary information. Ensuring the security of the data and maintaining confidentiality is vital to protect intellectual property and prevent unauthorized access.

4. Managing communication challenges

Effective communication is key. Miscommunication or lack of clarity about specifications, quantities, or other details can lead to misunderstandings and impact the quality of the final product.

5. Format Compatibility

Vendors may use different software or systems. Ensuring that the BOM format is compatible with the vendor’s systems is important to avoid conversion errors or data loss during the transfer. This can even come down to whether the information can easily be transferred to their systems without much potential for error.

6. Attenuation to language and cultural differences

If vendors and manufacturers are located in different regions or countries, language and cultural differences may create communication barriers. This can lead to misunderstandings and impact the interpretation of BOM details.

7. Lead Time and Scheduling

Late or incomplete delivery of the BOM can affect the vendor’s production scheduling and lead to delays in the overall supply chain. This can be an issue where changes to a vendor’s timeline are not communicated back to the buyer. Timely and comprehensive sharing of information is crucial.

8. Staying abreast of component availability and substitutions

Availability of components may change over time. Vendors may need to substitute certain materials due to shortages or other reasons. Clear communication about such substitutions and their potential impact on the final product is important.

9. Maintaining regulatory compliance

Different regions and industries may have specific regulatory requirements. Ensuring that the BOM complies with relevant regulations is crucial to avoid legal issues and ensure the product’s marketability.

10. Cost Estimation and Negotiation

Vendors may need to provide cost estimates based on the BOM. Negotiating prices and terms requires clear communication and a thorough understanding of the BOM details.

Smoothing out the process

Minimizing challenges when sharing Bills of Materials (BOMs) with vendors necessitates meticulous planning, efficient communication, and the establishment of robust processes. To achieve this, several strategies can be employed. The best place to start is fostering collaboration with vendors from the early design stages. Establishing clear communication channels between internal teams and vendors as well as designating a point of contact for queries helps ensure regular updates. This encourages open and effective communication while addressing potential issues proactively, rather than working through late-stage issues that could have been solved earlier in the process.

Standardizing the format of BOMs enhances clarity and compatibility, reducing errors and misunderstandings during the handoff to vendors. Utilizing clear language and potentially translations to reduce language barriers commonly found in international collaborations. Detailed documentation, including specifications and drawings, accompanying the BOM, aids vendors in better understanding requirements and reduces the risk of misinterpretation. Finally, implementing a version control system to manage change is essential for tracking updates to the BOM, allowing both parties to work with the latest information. 

Management of the product information and vendor management processes needs to be an ongoing effort. Regular reviews of communication and collaboration processes, coupled with the identification and resolution of recurring issues, contribute to continuous improvement and streamline BOM sharing. Providing training to personnel involved in the BOM-sharing process ensures an understanding of the importance of accurate and timely communication, along with awareness of potential challenges and best practices. 

Even with a solid set of processes in place to manage BOMs and their communication to suppliers and contract manufacturers, issues still tend to happen. Developing contingency plans for disruptions, such as component shortages, and clearly outlining communication and resolution procedures help minimize the impact on production. Lastly, establishing clear terms and agreements in contracts with vendors, defining roles and expectations, serves to prevent misunderstandings and contributes to a more effective BOM-sharing process. 

Bringing it all together

Better management of bills of materials between customers and suppliers comes down to making sure everyone is working off the same revision level of data, as well as having the necessary communication processes in place. By adopting the comprehensive strategies listed above and using a purpose-built software system to execute them, a streamlined and efficient approach to sharing BOMs with vendors can be achieved, reducing the likelihood of errors and delays in the production and supply chain.

If you’re looking to move beyond managing bills of materials with spreadsheets and emails, it’s time to sign up for Aligni MRP!