Production BOM

A production bill of materials (BOM) defines the steps of your production process; what happens in what order, how long each step takes, and what components and resources are required. You will need to create production BOMs for finished products before you can generate and schedule production orders, and plan capacity.

If you have a simple production process, such as assembling t-shirts into a multipack, it's better to use the assembly BOM. Assembly BOM uses components and overheads, but does not account for production time or resource capacity.

In this article we'll cover the basics of creating a production BOM with components, resources, and work centers.

Prerequisites

• Advanced Manufacturing must be included in or added on to your subscription.

• You will need to create BOM components as products if they are not already part of your inventory.

• You should have set up the Factory Calendar.

• You should have defined your shop floor and logistics path.

• You should have set up your work centers and bins.

• You should have set up the resource capacity and cost for the resources used in the BOM.

Overview of the production process

A production order is an order for the total number of product units to manufacture. For example, we have a production order for 100kg of ground coffee.

Production runs break up the production order into the quantity that will be manufactured at one time. For example, our production order of 100kg can split into two production runs of 50kg, five production runs of 20kg, or a single production run of 100kg.

An operation is a single step in a production process. For example, to go from coffee beans to ground coffee, you must roast and then grind the beans; roasting and grinding are both operations.

Within an operation, you may need multiple cycles to process all components. Each cycle takes time. For example, your machine can only grind 10kg of coffee at a time, and this takes 5 minutes. You would need two cycles and 10 minutes to complete the grinding operation for a production run of 20kg, while you would need five cycles and 25 minutes to complete the grinding operation for a production run of 50kg.

Cin7 Core will use the cycle time for each operation, the number of cycles, the number of operations, and the production run quantity to calculate how long you need to complete the production order and accurately calculate your costs.

Add a production BOM to a product

A production BOM is a set of instructions for a finished product. Once you have added a BOM to a product, you can manufacture it by generating production orders. You will be able to change the components, resources, and quantities from the default instructions while carrying out a production order. See our example production BOM if you want to see what this looks like when complete.

1. Select Inventory from the main menu, then Products.

2. Create a new product or select an existing product.

3. Select Production BOM for Bill of materials.

4. Enter the Quantity to produce. This is the quantity of finished products that will be made from the component quantity included in the BOM. You can make a BOM for a single product, or you can enter the component quantities you use for a larger batch of the finished product.
   

5. Select a Component issue method.

   • Manual issues components before production starts and tracks components and quantities more accurately.

   • Backflushing issues components after production is completed based on the output quantity. It is often used for low cost parts in predictable manufacturing processes.

6. You may have the option to turn on Product tracing here. This is for finished goods that require you to know exactly which batch or serialized component ends up in which batch of a finished product. You don’t need to trace exactly which fabric goes into a t-shirt, but you would want to know which chemicals go into a medicine.

7. If this is the first BOM you have created for this product, by default it will be BOM version 1. Each product can have multiple BOM versions.

8. In the Settings tab, you can edit many production BOM settings such as manufacturing buffer time, lead time for components, delivery location for finished products and more. Please see Production BOM settings for more information.

9. Press +Operationto start.

10. Enter the operation Name.

11. Select the operation type:

    • Manufacturing operations take the inputs closer to the finished product. Depending on the amount of finshed goods required, cycle time and costs will fluctuate.

    • Setup operations are used for when the cycle time does not vary with the amount of finished goods. This is typically a set up step, such as calibration. Components for this type of operation are allocated when the operation is started.

    • Quality control operations are used to inspect products or components. Depending on the amount of finshed goods required, cycle time and costs will fluctuate.

    • Co-manufacturing operations are carried out by a third-party. See Co-manufacturing for more information.

12. Enter Cycle time and Units per cycle for the first operation. For example, if you have a coffee grinding machine that can grind 10kg of coffee at a time and takes 10 minutes, your cycle time is 10 minutes and your units per cycle are 10kg.

13. Edit the operation sequence if required. By default, the field will be filled with the next number in the sequence

    • .Cin7 Core can manage complex production sequences with branches, merges, parallel operations, and more.

14. Select a work center where the operation will take place. This will make sure that components are delivered to the right place and outputs and finished products are taken to the correct destination.

15. Click Add more items next to the operation number to open the components and resources table.

16. First, select the Type of entry.

    • Notes give short text information about a production operation.

    • Attachmentsare documents or images.

    • Componentsare items from your inventory stock that are consumed in the operation.

    • Resources (e.g. tools, machines, people) are not consumed by the operation, but have capacity and incur costs.

    • Finished products are any product that is generated during the production process which is then added to the inventory to be sold or used in other operations.

    • Inputs are produced in the current operation and then consumed in another operation of the same BOM.

    • Outputs are produced in another operation of the same BOM and consumed in the current operation.

17. Enter the other grid fields (SKU, quantity, wastage etc.).

18. Check the read-only fields for each operation look correct:

    • Total cost is automatically from the approximate cost of resources and components for the whole operation.

    • Unit is taken from the component's product record (this is not applicable to resources)

19. Once the operation is complete, click Add operation to add the next step. Repeat until the production BOM is completed.

20. If applicable, define the finished products output and cost of wastage.

21. Save your changes to finish.
         

Production BOM entry types

Each entry for a production BOM operation can be one of several different types. The type determines whether the entry is for informational purposes only, whether the entry item is consumed during the operation or whether the entry is an output of the operation.

Informational

Notes give short text information about a production operation. Notes have a limit of 200 characters. Multiple note entries can be added to an operation.

Attachments attach instructional files and documents to a production operation. Attachments have a limit of 32 MB and can be of any file type except .exe. Multiple attachment entries can be added to an operation.

Production inputs

Components are items from your inventory stock. This could be a simple product, an assembled product, or another finished product. Components are consumed by the production operation. Components are allocated to a production order from your inventory once the production order is released.

Resources are the tools, machines, people, etc that are required in order to carry out production. Resources have capacity determined by their operational hours and costs that are dependent on the amount of time they are used. Resource capacity is consumed by the production operation. Resource capacity is allocated to a production order once the production order is planned. Resources are not applicable to co-manufacturing operations.

Inputs define a semi-finished or intermediate product consumed by a production operation. A product can only be added as an input if it has already been defined as an output of a previous operation of the same BOM. Inputs and outputs allow for better transparency and tracking of wastage of intermediate products during production.

Production outputs

Finished products in Cin7 Core are any product that is generated during the production process which is then added to the inventory to be sold or used in other operations. A production BOM can contain one or more finished products. If the production BOM is for a single product, it is not necessary to define finished products in the BOM. If the production BOM is for multiple products, each finished product must be defined explicitly in the operation that produces it.

Outputs define a semi-finished or intermediate product generated by a production operation. Outputs are then used as inputs in other production operations in the same production BOM. Inputs and outputs allow for better transparency and tracking of wastage of intermediate products during production.

Finished products and outputs must be Stock items, unless the operation type is co-manufacturing.

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Defining finished products output

The Finished products output section of the production BOM shows:

• Which finished products are manufactured from this BOM

• Estimated production costs

• How the costs of production are split between multiple products

• Where finished products should be delivered after the production run or production order are completed.

Some of these, like splitting production costs, are only relevant if you are making multiple finished products from the same BOM.

Finished products

The Product column lists all finished products that have been specified in the production BOM. If your BOM makes only one finished product, Cin7 Core will assume it is completed when the production run is completed.

If your BOM produces multiple finished products, you will need to add each one to the production operation where it is finished. Once you have added a finished product to any operation, it will appear in the finished product output section automatically.

Estimated production costs

The Estimated total cost and Cost per unit are automatically calculated from the approximate cost of resources and components required for the sum of all operations. Component costs are estimated using average cost (an average of all purchase costs for an item). Resource costs are estimated according to the planned use time.

Actual costs of finished goods are calculated using the costing method of each component, while actual resource costs will be updated to reflect the actual production time.

Splitting production costs

This is relevant if you have multiple finished products in the same production BOM. When several products are produced as a result of one production process, some costs are shared by more than one product, while others apply to one product only.

The costing methods use the sales price of the finished product to calculate the split costs; you can select the costing method and the sales price tier here.

Finished products delivery

Use the Delivery to column to specify where finished products should be sent after production is complete. This will generate transfer orders from the work center output location to the Delivery to location when the production run or production order is completed.

If there is no delivery location in the production BOM or production order, transfers will go to the Demand location from the logistics path.

You can choose if or when to transfer finished products to storage from your production process settings. You won't see this column if you have selected not to transfer.

Defining the cost of wastage

In the course of production some wastage can appear. These can include intermediate or semi-finished products which are unsuitable for production or finished goods which are unsuitable for sale. You can either post waste costs to an expense account or include them as part of your production costs, which is controlled from your production process settings.

When wastage is posted to an expense account, you will see the Cost of wastage section of a production BOM. Finished products, inputs, and outputs are automatically added to this grid. You can then select the price tier you want to use for the wastage cost.

Nested production BOMs

Nested production BOMs contain assembled products or finished products from another production BOM as components. See Nested Production BOM for more information.

Editing a production BOM

You can rearrange components, resources, notes, attachments with one step or operation. Objects cannot be moved from one operation into another. Operations can be dragged and dropped above or below another operation to change the sequence numbering.

You can edit the Operation sequence, Name, Cycle time, Units per cycle time and Work center. Cin7 Core applies the edited values to production runs that have not been started yet. Production runs in progress are not affected. Changing these values can affect your resource capacity, but will not automatically update the capacity planner or scheduler, you will receive a notification about affected orders so you can manually replan capacity or reschedule orders.

Editing component and resource quantities, replacing components and resources

Editing component or resource quantities or replacing components and resources causes changes in Production Orders, Production Runs, Capacity Planner and Scheduler.

Replanning is possible only for Production Orders in Planned status. A user needs to Reload updated BOM into the order to cause re-planning.

Editing the Quantity field causes the re-planning of the component/resource. Replacing a resource or component means that this resource or component is deleted from the Production BOM, and a new resource or component is added. In both cases, the following changes are executed:

• Capacity/resource availability is checked to see if the newly added component/resource is available for the Production Order.

• Reversed allocation of the new components/resources is executed and reflected in the corresponding reports (Availability report, Capacity Planner, etc.).

• Production Order operations involving the new and removed resources are re-scheduled.

It is possible to replace the component/resource in already started operations. Changes will affect all operations going forward. Production Runs already in progress will not be affected. We recommend that the user checks the Scheduler to ensure production deadlines have not been broken for affected orders.

Deleting components and resources

Deleting of components is the same as for editing. The user should reload the BOM to the Production Order. However, reloading a BOM (and thus editing the BOM) is possible only for Planned orders. Thus, it is not possible to edit the BOM for orders in Released or Work in Progress status. Reversed allocation of the new components/resources is executed and reflected in the corresponding reports (Availability report, Capacity Planner, etc.). You will receive a warning message notifying you which orders are affected.

Editing wastage %, wastage quantity, and cost

You can't change the cost per unit for components or resources from the production BOM. You must edit the cost per unit for the corresponding component or resource.

You can edit the Wastage % or wastage quantity for components. Increasing the wastage % or quantity increases the number of components allocated to the operation, in the same way as increasing the component quantity directly. Decreasing the wastage % or quantity has the opposite effect.

Clone an existing production BOM

Once you have one production BOM for a finished product, you can clone it to save time creating BOMs for similar products.

1. Create a new product or select an existing product.

2. On the Production BOM tab, select a finished product to clone.

3. Click Clone BOM.

4. Make any changes to resources, components, or operations if necessary.

5. Save your changes to finish.

More production BOM features

You can then try these articles if you need to increase the complexity of your production process within Cin7 Core:

• Implement parallel operations and complex operation sequences; where the production sequence may split into multiple branches, require operations to take place simultaneously, and merge branches together.

• Create BOMs for more than one finished product, where a single production process creates primary products, coproducts, byproducts, or joint production products.

• Use inputs and outputs to define virtual intermediate products of production operations for use in later operations. Intermediate products can make it easier to accurately record wastage and track production processes where many people work on different parts.

• Outsource part or all of the manufacturing process of a product to a third-party with co-manufacturing.

• Create make-to-order BOMS for customizable products, for example a ring customized with different metals and gemstones. Customers can select their custom options when ordering and the production BOM is automatically updated to manufacture the order.

• Create product family BOMs to quickly auto-generate production BOMs for each variant in a family.

• Use BOM versions to make the same product in different ways and with different components.

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