Manufacturing management can be headache-inducing, especially when you have to contend with multiple products, production schedules and material inputs. It is notoriously easy to run out of raw materials and equipment capacity or mistakenly over-order and end up with excessive supply inventories and idle capacity. At a minimum, the process can be extremely confusing and stressful to handle.
Modern Enterprise Resource Planning (ERP) software offers a solution. Acumatica cloud ERP, for example, provides Bill of Material (BOM) and routing software that defines engineering and financial views of a product’s structure. Users can efficiently plan and manage inventory, cost and manufacturing processes while maintaining full revision control.
How Does it Work?
To understand how BOM and routing software works, consider the example of a company that manufacturers multiple types of candy. A single candy product, like a chocolate “kiss” might require 1 gram of sugar and 3 grams of cocoa powder. With the BOM software, a manufacturing manager can establish a minimum production batch of, say, 10,000 kisses. This translates into 10 kilograms of sugar and 30 kilograms of cocoa for the batch.
So far, this looks pretty easy, right? Not really. Imagine that the kisses are just one of three dozen different kinds of candy being produced in the factory. All require sugar. Some need chocolate. Each also requires a different kind of packaging. A production run of 10,000 kisses will “pull” demand for bags and boxes, depending on the customer’s packaging specifications.
The aggregate sugar and cocoa orders from the scheduled production runs translate into procurement processes. The plant needs to order enough sugar and cocoa to stay in production without running out of raw materials. Each vendor has its terms, e.g. they only accept minimum orders of 1,000 pounds of sugar, with payment in net 30 days, and so forth.
Benefits of Manufacturing BOM and Routing Software for Your Company
The BOM and routing software correlates all this information and keeps the plant running efficiently. It enables the management to stay on schedule without running out of inputs or packaging. The software gives them the ability to coordinate orders with vendors so they don’t end up with excess supply inventories. Integration with accounting and financial software in the Acumatica suite gives managers an overview of the profit, loss and cash flow aspects of the operation.
The Acumatica BOM and routing software connects materials with work instructions and allocates overhead costs. It provides multiple levels of the BOM for engineering and costed views of an entire product structure. These features are essential in all but the simplest manufacturing operations. Allocation of overhead to production runs, for example, is necessary for ensuring that non-variable expenses are included in the profit calculation for any given product. Other notable functions in the Acumatica package include revision control, effectivity and expiration dates, cost rollups and flexible copy BOM.
In summary, benefits include:
- Connect materials, work instructions and overhead costs to an operation to accommodate time-phased release of materials.
- Multiple levels of bills of material for both engineering and costed views of the entire product structure.
- Calculate costs at average, standard and actual cost. Add tooling costs and overhead costs, both fixed and variable.
We work with manufacturers in implementing manufacturing ERP software with BOM and routing capabilities. To learn more about how Acumatica Manufacturing edition can help make your operations run more efficiently and profitably, contact us for a free consultation and product demo.