Bill of Materials Management When the BOM Lives in Three Places.

3 days ago

6 min read

Updated: 3 days ago

Ask a light manufacturer where the bill of materials is and you will get three answers, each of them true. Engineering has it, in the CAD system or in a spreadsheet exported from the CAD system. Purchasing has it, in the accounting or inventory system where each component has a cost and a supplier. The floor has it, printed on a traveller, or in the work order system, or in the head of the person who has built the product for six years.

Three copies of one document, edited by three departments at three speeds. This post is about what that costs, why the usual answer, buying a product lifecycle management system, is usually the wrong one for a company of this size, and what the right answer looks like when the BOM is treated as a join problem rather than a software problem.

How three copies happen.

Nobody sets out to have three bills of materials. It happens because each department needs the BOM to do something different, and the tool that does that thing holds its own copy.

Bill of Materials Management When the BOM Lives in Three Places.

Engineering needs the BOM to describe the product: which parts, which revisions, which sub-assemblies, which drawings. The CAD system holds this, and it is the copy that changes first, because engineering changes are where every change starts.

Purchasing needs the BOM to cost the product and buy the parts: which supplier, which price, which lead time, which minimum order. The inventory or accounting system holds this, because that is where the costs and the suppliers are, and it is the copy the finance team believes.

The floor needs the BOM to build the product: which parts to pull, in what order, with which operations. The work order system, the MES if there is one, or the traveller holds this, and it is the copy that is right about what actually gets built, including the substitutions the floor made because the specified part was out of stock.

Each copy is right about its own job. The trouble is the changes. An engineering change is made in CAD. Someone emails purchasing. Purchasing updates the cost copy when they get to it. Nobody tells the floor, or the floor is told and keeps building the old way because the parts for it are in the bin. Three months later the three copies describe three slightly different products, and the differences are the cost.

What it costs.

The costs of a drifting BOM are all operational and they are all quiet until one of them is not.

Parts bought to the wrong revision. Purchasing buys from its copy. Engineering changed a component two revisions ago. The parts arrive, the floor cannot use them, and the money is in a bin.
Costs that are wrong by an amount nobody knows. The product cost in accounting is built from the purchasing copy. If that copy is missing a component the floor added, or carries one engineering removed, every margin figure for that product is wrong, and it is wrong in a direction nobody can name.
Builds that stop. The floor pulls parts for a work order and one is missing because it was never on the purchasing copy. The build waits for a rush order, which costs more than the part, and the customer date moves.
Quoting from memory. A new order for a variant is quoted from the last quote plus a guess, because building the cost from a BOM nobody trusts takes longer than the customer will wait.
The person who knows. Every company with three copies has one person who knows which is right. That person is the actual BOM system, and they are the single biggest risk in the business.

We have written about the same shape of problem for inventory, where the count lives in three places, and the mechanism is the same: not a bad system, but a record with no master.

Why a PLM is usually the wrong answer.

The reflex, when the drift becomes visible, is to buy a product lifecycle management system, because PLM is the category built to own the BOM. For an engineering-led company with hundreds of active products and formal change control, it is the right category.

For a light manufacturer with a few dozen products, a small engineering function and a floor that runs on work orders, it usually is not, for two reasons. The first is that a PLM adds a fourth copy unless the other three are connected to it, and connecting them is the project you were trying to avoid. The second is that the PLM is built for the engineering copy, and the copies that cause the money to leak are the other two.

The same applies, in the other direction, to an ERP bought to fix the BOM. An ERP holds a BOM well, but it holds the purchasing copy, and unless engineering's changes flow into it and the floor's substitutions flow back, it is a fourth copy with a bigger licence.

The join answer.

The answer is the one we described in system of record versus source of truth: decide which copy is the master for each fact, and build the joins that carry each fact from its master to the copies that need it. For a BOM that comes down to three decisions.

Engineering owns the structure.

Which parts, which sub-assemblies, which revision is current: these facts are born in engineering and engineering's copy is the master for them. The join carries every released change from the CAD system, or from the controlled spreadsheet if that is what engineering uses, to the purchasing copy, with the revision and the effective date, so that purchasing is never buying to a revision engineering has retired. This is the join that stops parts being bought to the wrong drawing.

Purchasing owns the cost and the source.

Supplier, price, lead time and minimum order are purchasing's facts, and the inventory or accounting system is their master. The join carries the current cost of each component back to wherever quotes are built, so a quote is built from the cost that will actually be paid. This is the join that makes a margin figure mean something.

The floor owns what was actually built.

Substitutions, scrap and the operations actually performed are the floor's facts, and the work order is their master. The join carries them back: a substitution the floor made on a work order becomes a flag on the engineering copy, so the next revision can decide whether to make it permanent, and it becomes an adjustment on the cost copy, so the actual cost of the build is known. This is the join almost nobody builds, and it is the one that turns the floor from the last to know into the source of the best information the company has.

What this looks like in practice.

For the manufacturers we work with, the master copies are usually already there. The CAD system or the engineering spreadsheet stays. The inventory and accounting system stays; for many it is Zoho Inventory and Zoho Books, for some it is QuickBooks with something alongside. The work order system stays, or, where the floor has nothing but paper, a small one is built.

The joins are the project. The engineering-to-purchasing join comes first, because it stops the most expensive mistake. The cost-to-quote join comes second, because it makes the margin real. The floor-to-engineering join comes last, because it needs the other two, and because it changes how engineering works, which takes longer than any software.

We start with a no-risk discovery: a few days to read the three copies against each other, count the differences, and put a number on what the differences cost last quarter in wrong purchases, stopped builds and quotes built from guesses. You get a written plan and a guaranteed estimate for the joins, in the order above. If the plan says your company is the one that genuinely needs a PLM, it says so.

The short version.

A light manufacturer has one BOM and three copies, and the copies drift because each one is the master for the facts its department creates. The cost is wrong purchases, wrong costs, stopped builds and one person who knows which copy is right. Do not buy a fourth copy. Decide which copy owns which fact, build the three joins that carry each fact to the copies that need it, and build them in the order that stops the bleeding first.

Find out where your orders, inventory and invoices stop agreeing.

In a no-risk discovery we follow an order from sale to shipment to invoice across your systems and show where it breaks and what one connected system would change. You pay only if you proceed. Or see how we approach it.

Book the no-risk discovery