Maintaining all of the important business processes in one specific place and keeping track of them can be a time-consuming effort in an organization. From the procurement of raw ingredients to the actual sale of the finished product, a plethora of documents recording each stage are provided. However, there is something in ERP solutions like SAP Business One that alleviates all of the production difficulties and solves the challenges. This function improves the overall efficiency and accuracy of the manufacturing process. This is a bill of materials for SAP Business One(BoM).
In general, when an organization begins the process of making a product, it obtains the raw materials needed to get started. A Production Order is a document that contains all of the information of the materials and steps, as well as the timeframe in which they must be completed. SAP Business One now generates a Bill of Materials for the materials required for production, which the user may access in SAP. The Bill of Materials is organized hierarchically, listing all of the raw materials as well as all of the other components required to build and complete the product.
However, if the solution is not an integrated ERP system, creating a Bill of Materials can be a challenging task. Because of the difficulties connected with manual data entry and older systems, the entire production flow is more prone to errors.
What is the Purpose of a Bill of Material (BOM)?
A bill of material is a detailed, properly organized list of all the parts that go into making a product or assembly. Each component’s material number, as well as the quantity and unit of measure, are listed on the list.
- Single-level and multi-level BOMs are both possible. For example, a completed material would have semi-finished materials as components, which would then have raw materials as components on the following level.
- Depending on the lot sizes, validity dates, and production processes, multiple alternative BOMs for a product may exist.
- BOM is utilized in semi-finished production planning and raw material purchase planning.
- BOMs are also used in standard cost calculations for finished products, where the cost is rolled up from raw to semi-finish, and finally to finished product.
- Material BOM and equipment BOM can both be created in the PP module.
Bill of Materials (BOM) Types
In SAP Business One, there are four different types of bills of materials:
- Production Bill of Materials:
A Production Bill of Materials, which is generated in SAP, is necessary for any typical production order. The Production Bill of Material lists all of the finished parent and child item components needed to complete the product (complementary items with the main product). Component states can also be transformed into final products.
- Sales Bill of Materials
A Sales Bill of Material is generated when the parent item is solely recorded as a sales item and not as an inventory item. When the parent item in the sales document is selected, all of the child items become sub-items. A user can change the number of existing child items in a Sales BoM, but they can’t delete or add new child or sub-items to an existing package in the sales document. A good example would be a printer, with the printer as the parent item and all of the printer’s necessary components being under the child item category.
- Assembly Bill of Materials
We can observe a collection of individual goods in a set with a specific price in Assembly BoM. Assembly Bill of Materials is similar to Sales Bill of Materials, with one exception: the end product is controlled as a sales item rather than an inventory item. In addition, unlike in Sales BoM, where child components appear as sub-items when the final product appears in Assembly BoM, just the finished parent product is shown.
- Template Bill of Materials
Template BoM has no limitations and is very adaptable. Both the parent and child items might be any sort of item. The parent item is listed first, followed by the child goods in this sort of Bill of Material, which can be used for both purchases and sales. With or without other components, these things can be readily swapped, updated, or eliminated.
SAP’s Improved Manufacturing Process allows you to better Understand and Increase Profitability
Costings can be included in Bills of Materials, which add up in the system to give you a better sense of how much things cost to create.
You can select a fixed cost for machine setup and a standard per minute/hour fee for running time. You can then spread those expenditures among multiple GL accounts, for example, if you want to reclaim the cost of a new machine through another expense account.
With SAP Business One, it’s possible to keep prices consistent across all BoMs. Each item has a price, which is frequently dependent on its cost. The system can maintain track of an item’s previous cost price as well as its moving average cost.
Because BoMs in SAP Business One enable accurate and authentic costings, you may find that the margin on production for some goods is excessively low while reviewing your operation. It’s simple to execute price increases (for example, a 10% increase) based on the criteria you provide and apply them to all relevant BoMs.
Irrespective of whether your company deals in discrete, process, assembly or custom fabrication, you’ll need an ERP system that handles the Bill of Materials and helps with better planning. SAP Business One makes managing materials, procedures, and overall productivity a breeze.
SAP Business One is an ideal ERP system for small and medium-sized businesses (SMEs) that helps them maintain a profitable profit margin in the market. Experts at SilverTouch will assist clients in streamlining all processes and challenges such as changing customer demands, planning, costing, quality control, real-time access to critical information, intense competition, real-time inventory tracking, and supplier coordination to boost revenue. Please contact us right away.
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