Bill of Materials Overview

 MACRO 2000 Bill of Materials

Main Facilities:
Comprehensive Bill of Materials
Full Standard Costing
Comprehensive Formula Calculation Facilities
Estimating System
Product Technical Data Specification
Engineering Instructions
Extensive “What if” facility

Five Main Purposes
To record every resource, be it materials, labour, machine time or any other resource which is required to manufacture a product, or which affects the product cost. This includes intangible resources such as wastage, overheads etc.
To record the cost of each of the components or resources and consequently the total cost.
To record the production capacity and throughput characteristics of each resource
To record product technical data specifications
To record product engineering specifications

Bill of Materials / Standard Costing
The Bill of Materials aspect refers to the material components required to make up a product. The Standard Costing aspect includes all resources, both material and other required to produce the product or which affects the total cost of the product. The principle is identical in both cases except that the Bill of Materials is limited to material components.
From the component and resource details the system can produce complete material breakdowns of each product, complete costings and requirements for materials, labour, machines and other resources, and overheads. It can also record projected profit components.

An essential part of the systems design is that while product structures can be very complicated, they can also be kept very simple. The level of complexity is user controlled and should match the way the users company operates.
Companies requiring a simple breakdown may do so easily, and companies requiring a very detailed breakdown have the facilities to do this
The system enables the following reports to be produced.
Standard Product Structure Reports
Standard Product Costing Reporting.
This facility can be integrated to the Report Writer to allow the user to design his own cost sheets.
Cost versus selling price comparison report.
Trial kitting Inquiry / Reports
Product/Job Material Requirement Reporting
A number of very important reports are produced by linking Bill of Materials data to other systems data.
These include:
Materials requirement planning ex orders, or jobs, or net production plan.
Resource Capacity planning (requirements planning for resources such as machines and labour).
Materials requirement planning ex Production plan.
Actual cost of production versus standard cost of production reports.
Note that these reports may be produced for a specific period of time or may be multi-period time based.

Data Bases
The system uses the following data base files for its main source of information:
The Resource Master File
The Product Master File
The Bill of Materials Structure File
The Bill of Materials Estimating Data Base
Product Engineering Data Base
Product Technical Data Specification Data Base

Each component or resource which can be used is recorded once only e.g. semi-skilled labour could be used in every product produced but the rate of semi-skilled labour is recorded once only in the system. When the rate of semi-skilled labour changes the user will change it once and the system will re-calculate the cost of every product using semi-skilled labour. This principle applies to all types of components and resources.
Possible Resource categories are:-
A Material component stored in a special file used by this system, the Resource Master File. This category of material components are those which are required exclusively for the B.O.M sub-system and not for other sub-systems
A Material component stored in either the Raw Materials Stock File or the Finished Goods Stock File. For systems which include Stock Systems material component data will normally be obtained from the Stock Master Files.
A Labour Component. Labour component details are stored in the Resource Master File. There is no limit to the number or type of labour components that can be stored.
A Machine Component. Machine component details are also stored in the Resource Master File. There is no limit to the number or type of machine components.
A Cost Centre. This can be any user defined group of resources and is normally used to define Production processes.
General contribution towards overhead costs. An amount or percentage can be defined to allow for fixed overheads. The system will optionally allow for a blanket overhead percentage on all jobs.
Job set-up costs. The standard cost of setting up a production run for a particular product.
Profit Mark-up. The system supports profit mark-up calculations, and understands that they are not part of the cost.

Resource Master File
The Resource Master File is used to store details of all material, other resources and activities which can be used in making up a product. The following information is stored for each resource:
Resource Code
Resource Description
Resource Type (material, labour etc)
Unit of measurement (kg, metre, hours, minutes etc)
Cost price per unit
Future unit cost
Effective date of future cost
Number of units of resource available (non-material resources)

Resource Efficiency Rating
Available hours (or capacity) of each unit per production period (resources costed by time)
Resource throughput rating. The facility includes the number of units which can be processed, the unit of measure of throughput, and the time period. .This allows the system to translate throughput measures into time and money.

Where the system uses the Raw Materials Stock System details of raw material components may be stored in either the Stock File or the Resource File. The Resource File is used for two reasons:-
To enable all resources to be identified without limiting the number or type of resource that can be used. Resources can include tangible items (e.g.. materials), cost centres such as manufacturing resources and intangible items such as manufacturing overheads.
To provide a control point where a change to a resource can be recorded once, but which will reflect throughout the entire system. e.g. If the rate for unskilled labour increases a single update in the Resource Master File will cause the increase to be reflected in the cost of all products using the unskilled labour resource.
Note that changes in cost can be input prior to the due date. On due date the new cost will automatically be introduced.

Product Master File
The Product Master File is used to store all main information about the range of products the company is marketing. The file is used not only for the Bill of Materials sub-system but also for all other sub-systems requiring information about the companies product range. Information held on the file is as follows:-
Product Code
Product Group or Range
Product Category
Product Type
Label information
Royalty information
Price information
Cost totals ex Bill of Materials explosion
Point of Manufacture if more than one factory in use
Minimum economic production quantity
Lead time for production of minimum economic quantity
The product code allows for any code (maximum 16 alphanumeric characters) and does not have to be structured.

Bill of Materials Structure File
The Bill of Materials Structure File is used to record the make-up of all jobs requiring to be costed. Major features are:-
A product structure may be set up for a finished product, a particular product or it may be a subset of the final product. For example a product could be defined as a component product, or sub-assembly, or it may be an arbitrary section of the process such as basic manufacturing or packing the finished product.
In defining the structure of a particular product four types of components may be defined:-
Information Items
These are items which are recorded on the Bill, either for information purposes, or for use in formula calculations
Resources such as materials, labour, overheads, etc as stored in the Resource Master File.
Other products or processes which form part of this particular product, but which have their own detailed cost sheet.
Non cost components, such as profit margins.
These can be used for recommended sell price calculations.
Example:- A particular product could require the following components:-
Basic Manufacturing
The Materials would normally be stored on the Raw Materials Master File. The Basic Manufacturing costs would be stored on the Resource Master File. The Finishing and Packing could optionally be stored as separate processes in the Product Structure File. The system would automatically apply the current rate for these operations. If the cost of say packing should change only the packing job costs are changed. All products using packing will automatically reflect the changed cost. This concept allows a simple way of breaking finished goods down to very fine levels of detail without recording all the detail against every product. This in turn allows fast and accurate updating of costs.

Formula Calculations
The system provides a powerful formula calculation facility whereby the rating of a component or the unit cost can be calculated using a user defined formula, which may include other component ratings or costs in the formula
Contribution Cost Calculation Facility
The system includes user defined contribution cost breakdown facilities. This facility allows the user to break the structure of a bill into up to 18 user defined groups. Multiple contribution structures may be defined for different purposes
Job Estimating Facility
Job Estimating Facility allows the user to input job costing information for estimating or quotations. Once the estimate is input the system will perform the standard cost calculation, include profit mark-ups etc and print the completed job estimate. If a cost estimate is adopted for a final product, the estimate can be transferred to a product bill. Essentially the estimating system has all the facilities of the main Bill of Materials system, but stores the data in a separate set of data files. It still retains the facility to transfer information both from and to the main Bill of Materials Files.
Product Technical Data Specifications .
Product manufacture can often require that extremely complex Technical Specifications be recorded. These specifications are not part of the Bill of Materials but are totally necessary to successfully manufacture the product. The Bill of Materials system provides a fully user definable Product Technical Data Specification Data Base which can be defined to provide a single data base for technical data.

“What if” facilities
The system includes a number if “What if” facilities. These include:
Costing at future costs. Future costs can be recorded in the main Stock system and the Resource Master File
Percentage Increases in costs. This allows different types of component (Material, Labour, Overheads) to be allocated cost increase percentage.
The Bills are recosted using the specified percentage to determine the resultant costings

Production Throughput Calculation
Bills often define an item in terms of the production process requirements, whereas the cost is normally derived from the time required on a process costed by the minute or hour.
The Macro system allows bills to specify production process requirements (eg. 10 machine cycles). It uses the throughput data stored on the resource master file to convert the required throughput into time and calculate the cost of the process .

Bill Component Structure Inquiry
Component/Resource detail Inquiry
Exploded Bill Structure Inquiry
this inquiry shows a complete product structure inquiry exploded through all levels of the bill
Bill on-line Explosion. This allows on-line explosion (and reporting) facility for a specific job or a theoretical production quantity. It will also link to the Stock Inquiry and optionally to the Stock Reservation Screen
Component “Where Used” inquiry
Contribution Cost Breakdown inquiry

Resource Master File Listing
Product Master File Listing
Single Level Product Structure Report.
This report shows the make-up of each standard product at the top level only i.e. where a component of a product is another product or job, the component product is not broken down in to its components. The report shows the cost of each component, the total standard cost and the selling price. The report lists the entire structure of a product both material and non-material. The Report Writer can be used to design user specified costing reports.
Exploded Bill of Material Structure Report.
This report is similar in concept to the Single Level Report except that the structure in broken down to the lowest level of detail and reports only on material components. This report provides a full exploded view of the physical make-up of any job or product.
Summarised Single Level Bill Structure Report
Single Level Where Used Report
This report shows in which product a particular resource is used. This report is used to determine the impact of a change in specification, price or availability of a particular resource. Note that this report does not show the amount of a price change. This will be reflected by either the Single Level or the exploded Bill Report.
Bill of Material Standard Cost versus Selling Price Variance Report.
This report compares standard costs as calculated by the system to the selling price and calculates both positive or negative profit percentages.
Bill of Material Component Cost versus Stock Master Cost variance report
Product Contribution Breakdown Report
Product or Job Materials Requirement Report