Managing Your Supply Chain With BOMs and SAP Business One

There is no question that managing your supply chain can be a challenging process. With so many moving parts it can be difficult to keep track of products moving out of production, into assembly, and through to its final destination. By using an enterprise resource planning (ERP) application such as SAP Business One, and the Bill of Materials (BOM) feature within the application, business owners can be assured the entire production process will be much more efficient.

The supply chain structure for many small to midsized enterprises (SMEs) can vary, with some being more complex than others. For many businesses, the process begins with raw materials and the creation of a production order, which contains all the materials, steps and processes required to produce a particular product. All materials necessary for a particular production order can be found in the BOM, that can be generated by SAP Business One.

Why are BOMs Important

Bill of Materials is a detailed, hierarchical list of component parts, sub-assemblies and materials, along with their respective quantities, that are required to produce and manufacture an end product. This list of ingredients assists businesses in their supply chain activities — everything from purchasing to inventory management. Having this data on hand allows managers to better understand components they may need for order placement, or inventory replenishment. Issues can arise, however, when there is inaccurate information. This can occur when there is manual data entry of BOM items and the production process is complex. If the data is not consistent or incomplete there could be invalid supplier information, incorrect part numbers and/or quantities might not match.

SAP Business One and BOMs

As a business grows and procedures become more multifaceted, an integrated ERP system such as SAP Business One becomes very important in the generation of BOMs. There are various types of BOMs in SAP Business One, each with different functions contributing to the production process.

The four BOM types generated through SAP Business One are:

1. Template Bill of Material

This type of BOM can be used in both production and sales documents. It has no real restrictions and is flexible. The parent and child can be any type of item.

2. Production Bill of Material

For all Materials Requirements Plannining (MRP) runs and standard production orders, a Production BOM is available.

3. Sales Bill of Material

This is used for sales documents where the parent item is listed only as a sales item, not an inventory item.

4. Assembly Bill of Material

This is similar to the Sales BOM and represents a collection of individual items in a set with a specific price.

SAP Business One supports all basic requirements for production activities allowing business owners to more effectively manage BOMs. Businesses need to manage inventory across multiple locations, record and track inventory movements and calculate shortages or surplus inventory. Once BOMs have been created and defined through SAP Business One, production orders can be created and released, while component and resource needs, costs, and materials availability are automatically added to work orders. This automated process, and access to accurate real time data, ensures a timely and efficient production process.

For more information about SAP Business One, BOMs and Supply Chain Management, download the Product Brief, Warehouse and Production Management with SAP Business One.