Creating and following the bill of materials at a custom-design manufacturing company is one of the most important aspects of a project – and also one of the most difficult.
Unlike iterative manufacturers that rarely need to change their production lines, engineer-to-order companies are constantly designing innovative new products and processes. Although this lack of consistency is what fuels the custom-design sector, an inaccurate or fluctuating bill of materials leads to confusion, and can act as the catalyst for pushing a project over budget or past its deadline.
Custom-design manufacturers rely on the BOM for a variety of reasons, from purchasing to completing the final product. But with all the moving pieces involved in the engineer-to-order process, crafting an accurate BOM on the first attempt can be near impossible. Unless the manufacturer has the means to track the granular price aspects of the BOM and modify it in real time when needed, it can cause serious backlogs in ordering, or create a situation where too many materials are ordered, leaving the company with too much inventory and not enough shop space.
The BOM is the lifeblood of the product and it should be as thorough and specific as possible. As noted by Prototype 2 Production, a forum dedicated to the manufacturing process, anyone – regardless of whether they work at the company, has seen the working files or even speaks the same language – should be able to recreate the product based purely on the BOM.
Although it will take additional upfront costs to ensure each BOM is sufficiently filled out, taking the necessary time to create a robust bill as early as possible will ultimately save problems and time down the road. Greater specificity ensures all parties know precisely what materials to order and what will be needed to complete the project. Without enough details, team members will waste time double- and cross-checking the list to make sure it’s accurate.
This is fine when time is of plenty or when you are mass producing. Engineer to order organizations are closer to prototypers, building just a handful of units, often just 1. The business cannot afford for engineering to completely perfect the entire BOM. It creates a bottleneck, followed by an avalanche of work for purchasing, and then manufacturing. This downstream chaos effect is costly both in terms of money, but also time.
Shifting goal posts
Due to the nature of engineer-to-order manufacturing companies that create unique and one-of-a-kind products, once the design has moved from the research and development phase and into production, staff in the plant may end up identifying an area of the process that needs to be modified. Sometimes this involves the engineering team tinkering with the original drawings and BOM, and other times it may require the engineers to return to the drawing board to solve a major, unforeseen problem. However, in both instances, the company’s purchasers need to issue new purchase orders for new demand, cancel items they haven’t received yet, try to return parts they no longer need or put them in the corner with all the other leftover parts that hopefully can be used one day, but probably never will. As these goal posts shift, engineer-to-order manufacturers need to be flexible enough to quickly pivot to changes in orders.
Projecting real-time costs
Costing a design-build project can be a series of trials and errors of estimations and projections that may or may not actually pan out the way the company originally intended. Since an engineer-to-order manufacturer typically creates products that have not previously ever existed to meet client specifications, it can be difficult to accurately forecast the final cost. However, without accurate real-time costing, the company could fail to hit the mark on projected profits, which throws off the business’s goals and milestones.
These murky projections can cause friction during the bidding process. As price competition pushes down estimates and bids, custom-design manufacturers without real-time access to the BOM can find themselves underbidding a job.
“Murky cost projections can cause friction during the bidding process.”
The custom-design manufacturing sector relies on fulfilling the wishes of clients who have very niche demands. Because these companies build unique products based on the customer’s visions and needs, it’s imperative that the enterprises can bring that mental picture to life. Further, it’s nearly impossible to fully bridge the gap between the client’s mind and the engineer’s mind, meaning miscommunications, misunderstandings and miscalculations of resources may arise.
With high expectations and standards for the final product, customers may routinely request that the custom-design manufacturer make changes during the design process. These alterations can impact the entire production line, steering it off course. Sometimes, the customer may want changes once the design has been issued to purchasing and manufacturing has been finished.
Planning enterprise resources
Due to the list of problems that may arise with inaccurate or changing BOMs, custom-design manufacturers need the ability to track and monitor this constantly fluctuating list in real time. Further, as noted by Beyond PLM, a blog dedicated to information and comments on engineering and manufacturing software, custom-design companies need to be able to reconcile multiple BOMs while also supporting changes to processes during production.
Total ETO reduces the inevitable bottleneck that arises between the engineering and purchasing teams. Total ETO allows the engineering and purchasing teams to transfer all this crucial data to everyone involved on the project. The software’s unique “hold and release” system increases a custom-design company’s control on the release of BOM items and assemblies to purchasing. With real-time costing, and the ability to modify or change the BOM at any time during the design process, engineer-to-order companies can optimize their material usage and cut back on overstocking.
Learn more about Total ETO by requesting a demo today.