MACHINING SUPERVISION LEVEL IV

UNIT OF COMPETENCY

Manage Product Cost Estimation and Bill of

Materials

PRE. BY HAILE DEMSASH 2015 E.C

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 Plan and prepare for work
1.1.Identify and clarify the work to be performed
Identify and clarify the work to be performed Bill of Materials offers full control of manufacturing
requirements, from start to finish. Before starting the manufacturing process a trial build can be
performed. This calculates whether there are enough stock components to complete the required
quantity of the final assembly, and identifies any shortfalls so that only the required numbers of
components are ordered. As the manufacturing process begins with the works order, the stock can be
allocated and issued and, when the works order is completed, the finished assembly can be updated
with the build quantity.
Routing (a way taken in getting from a starting point to a destination) may be defined as the selection
of path which each part of the product will follow while being transformed from raw materials to
finished products. Path of the product will also give sequence of operation to be adopted while being
manufactured. In other way, routing means determination of most advantageous path to be followed
from department to department and machine to machine till raw material gets its final shape, which
involves the following steps:
1. Type of work to be done on product or its parts.
2. Operation required doing the work.
3. Sequence of operation required.
4. Where the work will be done.
5. A proper classification about the personnel required and the machine for doing the work.
Techniques of Routing; while converting raw material into required goods different operations are to
be performed and the selection of a particular path of operations for each piece is termed as ‘Routing’.
This selection of a particular path, i.e. sequence of operations must be the best and cheapest to have the
lowest cost of the final product. The various routing techniques are:
1. Route card: This card always accompanies with the job throughout all operations. This indicates the
material used during manufacturing and their progress from one operation to another. In addition to this
the details of scrap and good work produced are also recorded.
2. Work sheet: It contains a. Specifications to be followed while manufacturing. b. Instructions
regarding routing of every part with identification number of machines and work place of operation.
This sheet is made for manufacturing as well as for maintenance. Specifications: refers to a precise
statement that formulizes the requirements of the customer. It may relate to a product, process or a
service. Example: Specifications of an axle block are Inside Dia. = 2 ± 0.1 cm, Outside Dia. = 4 ± 0.2
cm and Length = 10 ± 0.5 cm.
3. Route sheet: It deals with specific production order. Generally, it is made from operation sheets.
One sheet is required for each part or component of the order. This includes the following:

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 Number and other identification of order
Symbol and identification of part
Number of pieces to be made
Number of pieces in each lot—if put through in lots
Operation data which includes: i. List of operation on the part ii. Department in which operations are
to be performed iii. Machine to be used for each operation iv. Fixed sequence of operation, if any a.
Rate at which job must be completed, determined from the operation sheet.
Drawing Identification: Drawings and product components are normally identified by number and
name. Each organization has its own system of numbering drawings. One system assigns numbers in
sequence as drawings are prepared. A different system of numbering detail drawings consists of digits
that define the shape and nominal dimensions. This eases the task of locating an existing part drawing
that may serve the purpose and thus reduces the likelihood of multiple drawings of nearly identical
parts.
Detail Drawings; A complete description of the shape of a part is provided by the views, sections, and
specifications on a detail drawing. A simple part, such as a right-circular cylinder, may require only one
view. A complex part, such as an engine cylinder block, may require several views and many sections
for an adequate description of the geometry. The output of a production department consists of
specifications for a product or a process. Much of the output is in the form of drawings that convey
instructions for the manufacturing of components, the assembly of components etc. Additional
information is provided by parts lists and written specifications for assembly and testing of the product.
Materials and supplies constitute the most important assets in most of the business enterprises. The
success of the business, besides other factors, depends to a great extent on the efficient storage and
material control.
- Material pilferage, deterioration of materials and careless handling of stores lead to reduced profits.
- Even losses can be incurred by concerns in which the store-room is available to all employees without
check as to the qualities and purpose for which materials are to be used. Requirements of a material
control system are:
- Proper coordination of departments such as purchase, receiving, testing, storage, accounting, etc.
 Making economy in purchase and use of materials.
 operating an internal check to verify all transactions involving materials, supplies, equipment,
 Storing materials and supplies properly in a safe place.
 Operating a system of continuous inventory to find at any time the amount and value of each kind of
material in stock.
 Setting of quantity standards.
 Operating a system to see that right material is available to department at the time of its need.
 keeping proper records of all material transactions

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Basic classification of materials
There are different approaches or methods of classifying stock store items. This are:
A. General classification
B. ABC classification
C. Classification according to manufacturing process
D. Classification of inventories
A. General Classification Material may be classified or grouped according to their general nature, use
or condition.
1. Raw materials: purchased and processed to convert them in to components finished products.
2. Indirect items or non-productive materials: they do not form part of the finished products, but did the
manufacturing process.
3. Work in process: material parts, components, sup assemblies that are being processed or assumable
in to finished products
4. Finished products: the final product, units/assemblies that have been manufactured and complete and
ready for delivery to the customer.
B. ABC classification for effective control of inventory it is normal to find that all stock items fall into
the following broad classifications
1. Classification under A: it is included the top 10% store items Accounting for the highest inventory
investment ,which is about 70% of the total annual inventory or store cost
2. Classification under B: it is included about 20% of the items, which account for a moderate share of
the expenditure on stock or store items. This usually forms 20 - 25% of the total amount of
investment /cost of store.
3. Classification under C: this is included the largest remaining items which account for a small
fraction of the total investment usually about 10% on the stores
C. Classification according to the manufacturing
1. Process stock: stocks, which are yet to be taken in to the manufacturing, process on production. This
are sub divided in to
 raw materials
 bought out parts and assemblies
 Consignment (batch) stock
 Materials purchased but not received
 reserved stock; set out side for a particular order or job
2. Intermediate stock: parts or assemblies manufactured within the factory for use in the final product.

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3. Finished goods or productions
D. Classification of inventories
 production inventories
 inventories include maintenance, operative and repair suppliers or parts
 In –process inventory
 Finished goods inventory
 Material in transit.
Materials Requisition Form Before materials can be used on a job, a materials requisition form - a
form that lists the quantity and cost of the direct materials used on a specific job- must be filled out.
This form is used to control the physical flow of materials out of inventory and into production. It also
provides the information needed to record the cost of raw materials in the accounting system. The
following table shows sample of materials requisition form.

5-P Work Plan

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Definitions
Strategies
 Preparation: Tactics that provide the groundwork and enable partnerships to work toward the
activates.
Examples: partnership building/maintenance, assessment, generating resources, strategic planning,
community visioning.
 Promotion: Tactics intended to educate the public and policy-makers and increase the presence of
active living messages and cues to action.
Examples: advertising, media relations, special events, internet, direct mail, branding, grassroots
education, public service announcements.
 Programs: Organized efforts to encourage and provide greater opportunities for the activates.
 Policy: Tactics intended to influence changes in public policies and standards as well as organizational
practices.
Examples: advocacy, relationship building with policy-makers, presentations to policy boards,
influencing school policies, working with grocers to provide healthier foods.
 Physical Projects: Tactics intended to directly influence the physical environment, facilities, or provide
equipment.
Examples: enhancement of existing facilities, providing playground equipment, providing equipment
for preparing healthy food, community gardens.
1.2.Prepare time schedule of specific work to be performed
Scheduling Definitions
 Routing: The operations to be performed, their sequence, the work centers, & the time standards
 Bottleneck. (obstacle) A resource whose capacity is less than the demand placed on it
 Due date: When the job is supposed to be finished
 Slack: The time that a job can be delayed
 Queue time : A waiting line
Scheduling Work - Work Loading
 Infinite loading:
 Ignores capacity constraints, but helps identify bottlenecks in a proposed schedule to
enable proactive management
 Finite loading:
 Allows only as much work to be assigned as can be done with available capacity – but
doesn’t prepare for inevitable slippage
 Job Design specifies work activities of an individual or group
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  Jobs are designed by answering questions like:
 What is the job’s description?
 What is the purpose of the job?
 Where is the job done?
 Who does the job?
 What background, training, or skills are required to do the job?
Introduction

Production: production is the process by which goods are created. Production can also be defined as a
means of converting the raw materials into finished products by performing a set of manufacturing
operation in a pre-determined sequence that transforms material from a given to a desired form.

Planning: planning means preparing scheme in advance before the actual work is started. It may also
be defined as the pre-determination of future achievement to meet the desired objectives. Planning
begins with analysis of the given data, on the basis of which a scheme for the utilization of the firm’s
resources can be outlined so that the desired target efficiently attained. Before starting the production, it
is necessary to decide in advance what to produce, how much to produce, where to produce and where
to sell. Therefore production planning is the pre-determination of future achievements in type of
product, volume or quantity of production, quality, time, price in manufacture and resources required.

Production planning is concerned with:

(1) Deciding which products to make, how many of each, and when they should be completed;

(2) Scheduling the delivery and/or production of the parts and products; and

(3) Planning the manpower and equipment resources needed to accomplish the production plan.

Activities within the scope of production planning include:

Aggregate production planning. This involves planning the production output levels for major product
lines produced by the firm. These plans must he coordinated among various functions in the firm,
including product design, production, marketing, and sales.

Master production planning. The aggregate production plan must he converted into a master production
schedule (MPS) which is a specific plan of the quantities to be produced of individual models within
each product line.

Material requirements planning (MRP) is a planning technique, usually implemented by computer that
translates the MPS of end products into a detailed schedule for the raw materials and parts used in those
end products.

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Capacity planning. Is concerned with determining the labor and equipment resources needed to achieve
the master schedule.

Control: control means the supervision of all the relevant operations with the help of control
mechanism that feeds back the progress of the work. Controlling is made by comparing the actual
performance with the present standards and deviations are analyzed. The control mechanism is also
responsible for subsequently adjusting, modifying, and redefining plans and targets, in order to ensure
attainment of pre-specified production goals, in the most efficient and effective manner. is concerned
with determining whether the necessary resources to implement the production plan have been
provided, and if not, it attempts to take corrective action to address the deficiencies. As its name
suggests, production control includes various systems and techniques for controlling production and
inventory in the factory.

Combining the three terms together as Production planning and control (PPC), may be defined as
direction and co-ordination of the firm’s material physical facilities towards the attainment of pre-
specified production goals, in the most efficient and economic manner. PPC comprise the planning,
routing, scheduling, dispatching and follow up functions in the productive process, so organized that
the movement of material, performance of machines and operations of labor, however subdivided, are
directed and coordinated as to quantify , quality time and place.

Planning and control in PPC must themselves be integrated functions. It is insufficient to plan
production if there is no control of the factory resources to achieve the plan. And it is ineffective to
control production if there is no plan against which to compare factory progress. Both planning and
control must be accomplished, and they must be coordinated with each other and with other functions
in the manufacturing firm. The following paragraph explains what is involved in each of the two
functions

Aggregate production planning and the master production schedule

Aggregate planning is a high-level corporate planning activity. The aggregate production plan indicates
production output levels for the major product lines of the company. The aggregate plan must he
coordinated with the plans of the sales and marketing departments. Because the aggregate production
plan includes products that are currently in production, it must also consider the present and future
inventory levels of those products and their component parts. The production quantities of the major
product lines listed in the aggregate plan must be converted into a very specific schedule of individual
products, known as the master production schedule (MPS). It is a list of the products to be
manufactured, when they should be completed and delivered and in what quantities. The demand is
based on both forecasts and actual customer orders to date.

To assemble the end items, the subcomponents must be ready on time. The time it takes to get
subcomponents must be ready on time. The time it takes to get subcomponents is called their lead time.

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MRP takes these lead and assembly times in to account in determining when to release work orders and
purchase requisitions.
Material Requirement Planning (MRP)

Before the start of manufacturing process or a service facility, it is necessary to have required materials
in hand. If the material is not available in time, entire efforts of starting the manufacturing will go
waste. Therefore, materials management department should make prior estimation of materials
requirement and proper planning is done, so that right material is available at right time.

Material requirement planning (MRP) is a computational technique that converts the master schedule
for end products into a detailed schedule for the raw materials and components used in the end
products. The detailed schedule identifies the quantities of each raw material and component item. It
also indicates when each item must be ordered and delivered to meet the master schedule for final
products.

MRP is a means for answering the following questions:

- ‘What materials, parts or components are needed’?
- ‘How much’?
- ‘When it is needed’?
The main Objective of MRP is:
- Getting the right materials
- At the right place and
- At the right time
Also seeks to achieve the following objectives:
- Ensure the availability of materials, components, and products for planned production and for
customer delivery, Plan manufacturing activities, delivery schedules, and purchasing activities.
It enables managers:
 Determine the quantities of each component for a given order size
 To know when to release orders for each component
 To be alerted when items need attention
MRP systems use four pieces of information to determine what material should be ordered and
when.
These are:
1. Master Production Schedule
2. Bill of Materials
3. Inventory Data and

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4. Lead Time
It is the significant input that drives MRP in the following ways:
 It helps to describe:
• What is to be made,
• when each product is scheduled to be manufactured;
 Helps to ensure good material availability
 may consist of both customer orders & demand forecasts
Types of Resource Planning Systems
• Material Requirements Planning (MRP)
– A set of techniques that uses bill of material data, inventory data, and the master
production schedule to calculate time-phased requirements for materials. Recommends
release of replenishment orders and rescheduling of open orders as conditions
(priorities) change.
MRP’s Objectives
• What to Order
• How Much to Order
• When to Order
• When to Schedule Delivery

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Material Requirements Planning
Inputs
• Master schedule: States which end items to produce, when, and in what quantities.
• Bill of materials: Raw materials, parts, subassemblies, and assemblies needed to produce one
unit of a product (Single vs. multiple level).
• Product structure tree: Visual depiction of a bill of materials, with all components listed by
levels
• Inventory status/transactions: Location, quantity, ins, outs, picks, changes.
• Planning Factors: Lead time, scrap allowance, yield factors, lot sizes, safety stock/safety lead
time

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A Final Point
• MRP focuses on materials ONLY and DOES NOT guarantee that the plan can be implemented
from a capacity/resource perspective. To close the loop, it’s necessary to do capacity
requirements planning (CRP).
Capacity Requirements Planning
• The process of determining short-range capacity requirements from MRP outputs
• Load reports/profiles show known and expected future capacity requirements vs. expected
capacity availability.
Types of Resource Planning Systems
• Manufacturing Resource Planning (MRP II)
– A method for the effective planning of all resources of a manufacturing company.
Provides simulation capability to answer “what-if” capability and is made up of a variety
of planning functions, each linked together. Output from these functions is linked with
other business functions and financial reports. An extension of MRP.
• Enterprise Resource Planning (ERP)
–A method for the effective planning and control of all resources needed to take, make,
ship, and account for customer orders. Differs from typical MRP II in technical
requirements such as graphical user interface, relational database, 4GL languages, client-
server architecture and open-system portability
Dependent and independent demand

To prepare MPR table you must know the difference between Depended and independent demands the
distinction between dependent demand and independent demand is important in MRP. Dependent
demand means that demand for the item is directly related to the demand of for some other item
(component) usually a final product. The dependency derives from the fact that the item is a
component of the other product. Independent demand means its finished products that demand for a
product is unrelated to demand for other items. Final products and spare parts are examples of items
whose demand is independent. Independent demand patterns must usually be forecasted.

Elements of material requirement planning

MRP is composed of three data elements

1. Master production schedule (MPS) –specify quantity and delivery of finished

2. Bill of material (BOM) – specify components and quantity

3. Inventory master file- specify material on hand, lead times, orders

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INTRODUCTION
Bill of Materials

LO.1 Bill of Materials: Determines components, quantities and lead times

A listing of all of the raw materials, parts, (component)

A bill of materials (BoM) is a list of the parts or components that are required to build a product. The
BoM provides the manufacturer's part number (MPN) and the quantity needed for each component. At
its most complexes, a BoM is a multi-level document that provides build data for multiple sub-
assemblies (products within products) and includes for each item: part number, approved manufacturers
list (AML), mechanical characteristics and a whole range of component descriptors. It may also include
attached reference files, such as part specifications, CAD files and schematics. Originally used
internally within a company, the BoM served as a way to track product changes and maintain an
accurate list of required components. As manufacturing has become increasingly distributed, however,
the BoM has taken on even greater importance. It serves as the primary reference file for product data
when transferring product information from the original equipment manufacturer (OEM) to the
electronic manufacturing services (EMS) provider and from the EMS to its vendors and suppliers. As
outsourcing expands the number of companies involved in the manufacturing process for a particular
product, the need for accuracy in the BoM is critical. According to the International, BoM errors
typically fall within three categories: completeness, consistency and correctness.
Completeness - Incomplete data is the most common BoM defect. Critical pieces of information that
are often omitted include quantity, part description, and reference designation and approved
manufacturers list (AML). Missing AMLs reportedly cause the majority of problems.
Consistency - Information in the BoM sometimes conflicts with information provided in engineering
drawings and design files. For example, quantities may not match -- there may be 10 locations for a
particular component indicated on a board, but the BoM only specifies nine. Another consistency
problem is format. The format of the BoM, even though it is from the same customer, can change from
one transmission to the next, making it difficult to match and confirm data. Language is another
stumbling block because it, too, can vary from BoM to BoM.
Correctness - Incorrect data is a serious problem. Common errors include invalid manufacturer or
supplier information, obsolete data and incorrect part numbers (i.e., the manufacturer's parts number
(MPN) given does not match the description of the part or the MPN is not recognized by the
manufacturer/supplier). Again, approved manufacturer's lists (AML) seem to be the predominant
problem. Additional errors can result from receipt of information in hard copy format, which requires
manual re-entry of data, an error-prone and time-consuming task.

Creating a Bill of Materials

All manufacturers building products, regardless of their industry, get started by creating a bill of
materials (BOM). The BOM, which is essentially a comprehensive list of parts, items, assemblies and
sub-assemblies, can be understood as the recipe and shopping list for creating a final product. A BOM

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explains what to buy, how to buy and where to buy, and includes instructions for how to assemble the
product.

Because the bill of materials pulls together all sorts of product information, it is common that several
disciplines (design and engineering, document control, operations, manufacturing, purchasing, contract
manufacturers and more) will consume data contained within the BOM record to get the job done right.
The BOM guides positive results from business activities like parts sourcing, outsourcing and
manufacturing, so it is important to create a BOM that is well organized, correct and up-to-date.
And for companies that outsource manufacturing activities, it is especially important to create an
accurate and revision-controlled bill of materials. Any time the BOM is handed off to a contract
manufacturer (CM) or supplier, it should be correct and complete otherwise you can expect production
delays.
What to include in an effective bill of materials
Because one of the main functions of the BOM is to ensure that the product is built right, it is best to
include specific pieces of product data in the BOM record. Whether you are creating your first bill of
materials or are looking for ways to improve how you create a bill of materials, here is a high level list
of information to include in your BOM record:
BOM Level—Assign each part or assembly a number to detail where it fits in the hierarchy of the
BOM. This allows anyone with an understanding of the BOM structure to quickly decipher the BOM.
Part Number—Assign a part number to each part or assembly in order to reference and identify parts
quickly.
Part Name—Record the unique name of each part or assembly. This will help you identify parts more
easily.
Phase—Record what stage each part is at in its lifecycle. For parts in production, it is common to use a
term like ‘In Production’ to indicate the stage of the part. New parts that have not yet been approved
can be classified as 'Unreleased' or 'In Design'. This is helpful during new product introduction (NPI)
because it allows you to easily track progress and create realistic project timelines.
Description—Provide a detailed description of each part that will help you and others distinguish
between similar parts and identify specific parts more easily.

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Quantity—Record the number of parts to be used in each assembly or subassembly to help guide
purchasing and manufacturing decisions and activities.
Unit of Measure—Classify the measurement in which a part will be used or purchased. It is common
to use ‘each’, but standard measures like inches, feet, ounces and drops are also suitable classifications.
Be consistent across all similar part types because the information will help make sure the right
quantities are procured and delivered to the production line.
Procurement Type—Document how each part is purchased or made (i.e. off-the-shelf or made-to-
specification) to create efficiencies in manufacturing, planning and procurement activities.
Reference Designators—If your product contains printed circuit board assemblies (PCBAs), you
should include reference designators that detail where the part fits on the board in your BOM.
Capturing this information in the BOM can save time and help you avoid confusion down the road.
BOM Notes—capture other relevant notes to keep everyone who interacts with your BOM on the same
page.
Documenting all this information in your BOM will keep business activities and manufacturing tasks
on target. In addition to capturing this information, you should also consider the following questions
when creating a bill of materials.

4 key questions you must answer before creating a bill of materials

a. Will you document consumables in your BOM record? (Consumable and non-
consumable)incompletedata
Many manufacturers second-guess the decision to include glue, wires, fasteners and other non-
modeled parts like labels and boxes in their BOM record. But if the part does not make it into your
BOM, it might not make it into your product. So take the time to document these parts.
b. How will you attach files to your BOM record?
As you create your BOM, keep records of supporting documentation like CAD drawings, part
datasheets and work instructions. It is best to also associate these files with their specific BOM level
items.
c. Who is going to use the BOM record?

It is important to include as many details as possible in your BOM. You may never interact face-to-face with
some of the people utilizing your BOM, so it should convey all the information they might need throughout the
product’s lifecycle.

d. How will you reconcile your BOM record?

Your BOM record may go through several iterations during the design phase, so you should have a way
to distinguish between multiple BOM record versions. That way, when it is time for production, you
can be sure each person who uses your BOM is consulting the correct version.

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Product Structure
The product structure provides a hierarchical classification of the items which form a product. With the
product structure, the understanding of the components which compose a product as well as their
attributes can be represented. The product structure shows the material, component parts subassemblies
and other items in a hierarchical structure that represents the grouping of items on an assembly drawing
or the grouping of items that come together at a stage in the manufacturing process.
Later in the development cycle, engineering parts lists or drawing parts lists are used to create a version
of the product structure to support manufacturing. This standalone product structure is called the bill of
materials.

Product structure
A bill of material is a formally structured list for an object (semi-finished or finished product) which
lists all the component parts of the object with the name, reference number, quantity, and unit of
measure of each component. A bill of material can only refer to a quantity greater than or equal to one
of an object. It is a product data structure, which captures the end products, its assemblies, their
quantities and relationships.
There are usually two kinds of bills of materials needed for a product: engineering and
manufacturing BOM. The engineering BOM normally lists items according to their relationships
with parent product as represented on assembly drawings. But this may not be sufficient to show
the grouping of parts at each stage of the production process nor include all of the data needed to
support manufacturing or procurement. These requirements may force the arrangement of the product
structure to be different in order to assure manufacturability. Thus, engineering and manufacturing will
usually have different valid views for the same product.
Manufacturing Requirements Planning (MRP) systems typically rely on a Bill of Materials (BOM)
and the product structure for their information. In theory, the BOM can and should be produced
automatically by the CAD system but in practice there is usually human intervention or even re-entry.
The main reasons are:

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  The difficulty of tracking changes to the BOM (product structure) and effectivity dates and
transferring this data back to the design system. Many changes, such as different suppliers for
fasteners, do not affect the design form, fit and function and are therefore only made and stored
in the manufacturing systems.
 The need in manufacturing to view the product structure differently. It is often necessary to
batch similar components from different products together for mass production or efficient
purchasing.
An accurate BOM supports efficient manufacturing processes
Creating a bill of materials is not only a necessary step in the product development process; it is also
what makes your product design a reality. Before you create a BOM record, it is important to consider
who will utilize the information and how you will maintain and manage all associated product
documentation like part datasheets and CAD files. Develop more efficient manufacturing practices by
capturing detailed part information when creating a bill of materials.
For manufactured items, the BOM lists all the raw materials, piece parts, and other components
required to complete a single unit of an end-item. An equipment bill of material (EBOM) lists all of the
components of an asset, including its assemblies and sub-assemblies. With a reliable EBOM, a planner
is able to determine exactly what parts are needed; and in an emergency situation, the EBOM provides
valuable information to craftsmen and others to ensure that the right parts are identified and procured.
Below are some guidelines for ensuring availability and accuracy of the EBOM data required to support
work order planning and execution. This information provides materials management with one of the
critical tools required to assure an adequate supply of materials while maintaining optimum inventory
levels.

EBOM structures
Figure 2.2 below shows a product structure for a generic item called “product 1.” as shown in the
graphic, “product 1” has several assemblies, subassemblies, and components, with different quantities
of each required. This structure could easily represent a typical manufactured item, or in this particular
case, even an equipment asset.

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 Firgue 2.2. Equipment Bill Of Material
There are several different forms that the associated EBOM could take, but the two most common are:
• Single-level (“Spare Parts List”)
• Multi-level ( “Indented Product Structure”)
Examples of each are shown below.

Single-level EBOM
Figure 2 below represents a simple single-level EBOM for “Product 1.” In this type of BOM, each
individual part that makes up the asset is shown only once, with the total quantity required to complete
the entire asset. This type of BOM is convenient for exploding material requirements for manufactured
items, where production requirements can be calculated from a Master Production Schedule. For
equipment, however, this product structure does not show the actual parent/child relationships of
assemblies, subassemblies, and components. This might lead a Maintenance Planner to erroneously
conclude that anytime this asset needed to be repaired or replaced, all the items on the BOM might be
required. This is clearly not the case if only a particular part of the asset needs to be repaired or
replaced.

Figure 2.3. Single-level BOM for “Product 1”

Multi-level EBOM
Figure 3 shows a multi-level BOM that provides a better level of detail for equipment assets. In this
type of BOM, the same total material requirements are shown, but the product structure is indented
to show Parent/child relationships between the components, subassemblies, and assemblies.
Because of these parent/child relationships, an indented product structure takes a little more effort to
create and enter into the Computerized Maintenance Management System (CMMS). However, it
provides a greater level of specificity when determining exactly which materials are required to repair
or replace a particular part of the asset.

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Figure 2 contains a bill of materials for Product 1 in which the total usage of each item is collected into
a single list for the product. This kind of list is convenient for the master production schedule but
results in the duplication assemblies. This implies that each product bill that uses assembly must be
changed whenever there is a change in assembly. Furthermore, since lead times of intermediate
assemblies cannot be determined, parts are ordered too early the first time they are encountered in the
product structure.

Figure . Summarized Bill of materials (BOM)

Other arrangements used in arranging the bill of materials is by indenting the product data as shown in
Figure 3. One disadvantage of this method is that all components of an assembly are repeated each time
the assembly is used, resulting in massive duplication of data.

Figure Indented bills of materials

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One solution to the duplication problem is by holding each assembly only once in ‘single level’ bill of
materials as shown in Figure 4. In this approach it identifies only the components used by one level
and a required subassembly. This means that engineering changes can be made in only one place.

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Assembly Diagram & Product Structure Tree

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