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How to Understand the BOM – Bill of Material in APO

January 5, 2008 by Shaun Snapp

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1. Executive Summary
2. Introduction to the BOM
3. What is the BOM?
4. Structure of a BOM
5. Material BOM
6. Alternate BOM
7. When To Create?
8. Single Level BOMs
9. Assembly BOMs
10. Phantom Assembly BOMs
11. What Are Sales Order BOMs?
12. When Should They Be Used?
13. Who Creates It?
14. Interested in Accessing Our Supply Planning Research?
15. References
16. Repairing your MRP System

Executive Summary

The BOM is a critical component in APO.

This includes the structure of the BOM, the material BOM, the alternate
BOM, single level BOMs, assembly BOMs phantom assembly BOMs, and
sales order BOMs.

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Introduction to the BOM

The BOM is one of the most critical master data object in supply chain systems.
You will learn about the di erent types of BOMs.

What is the BOM?

A formally structured list of the components that make up a product or

assembly. The list contains the object number of each component. Depending
upon the industry sector they can also be called recipes or lists of ingredients

Structure of a BOM

The BOM is made up of the following categories of data.

Material
Plant
Revision Level
BOM
Alternative
Usage 
Technical Type
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BOM Group

Material BOM

For standard production and material consumption.

Alternate BOM

One product can be manufactured from alternate combinations of materials

depending upon the quantity to be produced (lot size). The product is
represented by some alternate BOMs. The di erence between alternative BOMs
is only small. Usually, the di erence is in the number of individual components.

When To Create?

When there are multiple ways of making an item. A con gurable PC is a good
example. When you produce the computer to the individual requirements, you
use variant con guration in the SAP system.

Single Level BOMs

Describes one or more assemblies using component quantities. The term single
level BOM will be shortened to BOM. In practice, a single level BOM is often a
collection of standardized assemblies. You can use single level BOM’s to de ne
one time solutions for recurring tasks.

Assembly BOMs

A group of semi- nished products or parts that are assembled and form a
nished product or a component of a nished product.

Phantom Assembly BOMs

These are a logical rather than a functional grouping of materials. These

materials are grouped to form an assembly.

What Are Sales Order BOMs?

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In the course of improving customer focus, it is even more important for

businesses working with make to order production to be able to react quickly
and exibly to the wishes of the customer. The majority of products,
particularly in plant engineering and construction and mechanical engineering
are very complex and customer speci c. In response to customer requirements
post-processing of the BOMs in the construction is often required.

When Should They Be Used?

You use an Order BOM if you want to change the bill of material for a material,
to meet the requirements of a single sales order. Since the changes only a ect
this one sales order, you do not want to change the material BOM.

Who Creates It?

Often created by engineering/design, if you have to redesign an assembly to

ful ll customer requirements.

SAP Supply Planning Research Contact

Interested in Accessing Our Supply Planning Research?

The software space is controlled by vendors, consulting rms and IT analysts

who often provide self-serving and incorrect advice at the top rates.

We have a better track record of being correct than any of the well-known
brands.

If this type of accuracy interests you, contact us and we will be in touch.

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References
Repair MRP Book

Repairing your MRP System

What is the State of MRP?

MRP is in a sorry state in many companies. The author routinely goes into
companies where many of the important master data parameters are simply not
populated. This was not supposed to be the way it is over 40 years into the
introduction of MRP systems.

Getting Serious About MRP Improvement

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Improving MRP means both looking to systematic ways to manage the values that
MRP needs, regardless of the MRP system used. It can also suggest evaluating what
system is being used for MRP and how much it is or is not enabling MRP to be
efficiently used. Most consulting companies are interested in implementing MRP
systems but have shown little interest in tuning MRP systems to work to meet their
potential.

The Most Common Procedure for Supply and Production

Planning?
While there are many alternatives to MRP, MRP, along with its outbound sister
method DRP, is still the most popular method of performing supply, production
planning, and deployment planning. In the experience of the author, almost every
company can benefit from an MRP “tune up.” Many of the techniques that the author
uses on real projects are explained in this book.

Chapters
Chapter 1: Introduction
Chapter 2: The Opportunities to Improve MRP
Chapter 3: Where Supply Planning Fits Within the Supply Chain
Chapter 4: MRP Versus MRP II
Chapter 5: MRP Explained
Chapter 6: Net Requirements and Pegging in MRP
Chapter 7: Where MRP is Applicable
Chapter 8: Specific Steps for Improving MRP
Chapter 9: Conclusion
Appendix A: Calculating MRP

 SAP ERP
 BOM, Grouping - Aggregation, Inventory Management, Lot Size, Master Data
 Introduction to SAP GATP aka Global Available to Promise
 What is the MRP Pro le in SAP ERP?

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