Bill Of Materials - What Is It And How To Use It For Inventory ManagementBill of materials is a list of inventory, parts and components that you will be using to create an assembly. Bill of materials includes inventory SKU / part number, required quantity of each part and unit of measure. You need bill of materials for the automation of the raw inventory and parts tracking, for the inventory needs forecasting and inventory purchase planning.
Inventory management system uses bill of materials to automatically adjust inventory stock when new assemblies are built on the shop floor. Based on the bill of materials you can calculate how many assemblies you can build from on hand inventory. When you receive a new work order, an inventory management software gives you a list of inventory to order, based on the inventory in stock and bill of materials for the assemblies in the work order.
For the serialized assemblies inventory parts SKU is not enough - you need to know lot number or serial number of the parts used in each assembly. QR Inventory software helps you automate building of the serialized assemblies and achieve traceability using a generic BOM inventory list. When building a serialized assembly on the shop floor, you scan a lot number / serial number of the used components againt a generic bill of materials.
How To Build Bill Of Materials For The Different Assembly TypesBill of materials for the generic and serialized assemblies in QR Inventory software - how are they different.
What are inventory type and asset type assemblies? Can we use bill of materials for all assembly types?The difference between inventory and asset type assembly is very similar to the difference between assets and inventory.
Inventory type assemblies is something that you build from the generic (non-serialized) inventory according to the bill of materials. Bill of materials for the inventory type assemblies includes inventory SKUs / part numbers and required quantity. You can create a multi-level bill of materials that includes both generic inventory and sub-assemblies. Inventory type assemblies can be your finished product, but often they are intermediate products that you are using in the larger, custom made asset type assemblies.
Asset type assemblies are serialized assemblies that you need to track individually. Each asset type assembly has a unique ID / serial number that you use to track it's building and history. Bill of materials inventory list for the serialized assemblies consists of the generic components names, and can be applied to the multiple serialized assemblies with the same composition. When building an asset type, serialized assembly you scan a lot number / serial number of the component used in each assembly against the generic name in the bill of materials.
When should we use asset type assemblies with the generic bill of materials?You should use asset-type assemblies and the bill of materials with the generic components names in the following situations:
- You manufacture custom unique products for the clients on demand.
- You need traceability for the raw inventory and finished products. You need to know serial numbers / lot number of the components in each assembly.
- You need to track serialized assembly components for the warranty, service and repair purposes.
- You are a food manufacturer and require a complete product traceability, including ingredients, final products and products distribution.
- You build an assembly in steps and need to track work in progress inventory and work order status.
When should we use inventory type assemblies with the bill of materials that includes inventory SKUs?Inventory type assemblies with the bill of materials consisting of the inventory SKUs and quantity are generally used in the following situations:
- For the generic sub-assemblies that you need to include into a larger serialized assembly.
- You produce generic products that do not require individual tracking or traceability.
Bill Of Materials Management In The QR Inventory SoftwareHow to create and manage bill of materials and link it to the assemblies in the QR Inventory software.
How do I create and manage bill of materials for the inventory type assemblies?You create a bill of materials for the generic, inventory type assemblies by selecting inventory SKUs / part numbers from the inventory list and entring required quantity. After bill of materials is created, you can manage it via the QR Inventory software web dashboard. You can add, update or remove components from the bill of materials as needed. Each inventory type assembly is linked to its bill of materials. Bill of materials for the inventory type assemblies is used to automatically adjust inventory levels when you are physically building assemblies on the shop floor, and for the forecast of inventory stock needed to build the specified number of assemblies.
How do I create and manage bill of materials for the asset type assemblies?For the asset type assemblies you may know the generic composition, but you do not know the lot numbers / serial numbers of the components for each serialized assembly before you actually build it. Sometimes you know exactly the generic inventory list and quantity that should be used. In other cases inventory quantity may vary depending on the desired output quantity (e.g. 100 lbs of dough will require different quantity of ingredients than 10 lbs). Therefore, you have two options for managing bill of materials for the serialized assemblies:
- Bill of materials consisting of the generic inventory and components names - no SKUs.
If you are dealing with the serialized assemblies with the pre-determined composition and components quantity you can create a
bill of materials as a generic composition list.
The bill of materials for the serialized assemblies includes a description and quantity of the inventory that need to be included in the assembly
(e.g. 2 bolts, 3 nuts, right engine, left engine). When physically building an assembly on the shop floor, an employee
pulls bill of materials on a smartphone screen and use barcode scanning to specify actual lot numbers / serial numbers of the used inventory.
You can apply this generic bill of materials to the multiple serialized assemblies with the same composition.
- Ad Hoc assemblies building. If you cannot tell beforehand the exact inventory and / or quantity of materials that will be used, or may use different lot numbers of the same ingredient, use ad hoc assembly building. Ad hoc serialized assemblies are not linked to the bill of materials. When physically building an assembly shop floor employees use a smartphone and barcode scanning to add inventory to the assembly and specify added quantity for each ingredient lot number.
BOM Based Assemblies Building With Barcode ScanningUsing bill of materials for the assemblies building on the shop floor. Tracking assemblies building in real time with a smartphone and barcode scanning in the QR Inventory mobile application.
I created an assembly, but I don't see it in my inventory. Why?When you create a new assembly, you create a listing that describes an assembly and associated bill of materials (BOM). At this point you do not have this assembly in your inventory. When you physically build an assembly and record it as an inventory transaction in QR Inventory mobile application then assembly (ies) are added to your inventory, and used components are subtracted from the inventory stock.
Do I have to scan each inventory line item that I add to an assembly?For the asset type assemblies - yes, you need to use barcode scanning to specify lot number / serial number of each component or ingredient. For the inventory type assembly the used inventory SKUs are pre-determined by the bill of materials, so you do not have to. You can decide if you prefer to:
- Scan each inventory line item that you add to the assembly(ies) and enter quantity. If you do this, QR Inventory software automatically determines how many assemblies you had built based on the bill of materials. Created assemblies are added to the inventory stock, and used components are subtracted from the inventory stock. In order to build assemblies this way, your Build Assembly transaction should be of type transfer.
- Scan completed assembly and specify quantity. If you do this, QR Inventory software automatically determines quantity of used inventory components based on the bill of materials. QR Inventory subtracts used components from the inventory stock, and adds assembly(ies) to the inventory. In order to build assemblies this way, your Build Assembly transaction should be of type in.
In any case, QR Inventory software automatically manages inventory stock of the finished assemblies and used components based on the bill of materials.
How do I track assemblies distribution to the clients for traceability?You can track assemblies movement with the smartphone and barcode scanning, in the same way you are tracking inventory and assets. Create an inventory transaction Ship To Client, and create transaction properties to record a client name, tracking number(s), notes and any other parameters you need.
What if I need to distribute one batch to the multiple clients? Or use one batch of an intermediate product in the multiple final products?When you are dealing with the food inventory, medical inventory or lab samples you may need to create batches of the different size / weight, and then use these batches for the multiple products or ship a batch to the different clients.
To deal with this situation you should create each batch as an asset type assembly. Then, after the batch is created and all inventory components are added, use "Split Assembly Into Units" option (in the assembly list click Update, then click Split Assembly Into Units button on the bottom and enter quantity of units. This will convert the batch into the inventory type assembly with the specified quantity, and will divide all inventory ingredients proportionally. At this point you can use separate units of this batch in the other assemblies, or for the shipment to the different clients.