Blog 2: The Myth of a Single Bill of Materials!
Through a series of blogs on various topics within the realms of engineering and process optimization, coupled with a sales configurator, Bas Könst from the Netherlands-based Merkato Group unveils its expertise. We kicked off with a blog on modular design, and in this article, we delve into the topic of the Bill of Materials (BOMs).
In manufacturing companies, the term Bill of Materials (BOM) is commonly used, referring to a list of all components included in a product. It’s a pivotal document in the entire manufacturing process.
Is there such a thing as a single BOM? In the context of a sophisticated sales configurator, we talk about multiple BOMs; often a commercial BOM and a technical BOM. These two types of BOMs can coexist within the sales configurator. This blog explores what these BOMs entail and how they function within the sales configurator.
The Structure of BOMs
To grasp why there are two BOMs and how they interrelate, let’s briefly look at what each BOM entails. The commercial BOM roughly lists the various options chosen by the customer. These commercial options have a price. As a customer selects a combination of commercial options, a quote with a sales price is generated by the sales configurator. The technical BOM then contains all the parts needed to build the product. Hence, besides the commercial BOM, the configurator can also generate a technical BOM.
The Relationship Between Technical and Commercial BOMs
Consider a company that sells cars. When the sales department thinks it will sell 2000 cars of two different models, the purchasing department knows how much to buy, thanks to the technical BOM. The sales department sees only a model with different options including specific dimensions and accessories. In contrast, the purchasing department sees the technical specifications of the car and ensures the correct components are bought. A potential customer can choose from different engines. Sales see only the horsepower, but on the technical BOM, several things change; the engine, engine mounts, computer, fuel pump, and much more. Multiple technical modules require a different variant. The configurator accurately calculates this. Thus, a single change in the commercial BOM can lead to a multitude of changes in the technical BOM.
The Importance of Both BOMs
We can thus conclude that a single BOM does not exist. A proficient sales configurator ensures that the commercial and technical BOMs coexist. The commercial BOM provides a clear, functional, and financial overview for the customer and salesperson and forms the basis for quotations. For a company, the technical BOM is internally significant and must be meticulously maintained. The customer, after all, isn’t interested in the technical terms of these components but simply wants to know if the trailer with the heavy-duty option is suitable for the rough terrains in Russia.
Managing the interplay between the different BOMs (Product Structure Management) is thus an essential component of the configurator. Moreover, as previously mentioned, the sales configurator plays a significant role in pricing. In our next blog, you’ll learn more about the various aspects of pricing in your configurator.