Bill of Materials Management and The Real Cost Of Not Having Data Strategy

A bill of materials (BOM) is a comprehensive piece of data that includes all the raw materials, parts, and components used in the manufacturing of a product. The BOM is used as a guide to create and track inventory levels, as well as to produce accurate invoices for customers. It’s no surprise then that manufacturers rely heavily on BOMs during the product design, development, production, and maintenance process. 

However, there is one aspect of BOM management that often causes frustration: the use of spreadsheets. Very often, companies leave important things such as BOM management and product data management to Excel or similar spreadsheets. In this blog post, we’ll explore why BOM spreadsheets are such a waste and what is the real cost of not having a solid data strategy in the 21st century. I will offer some tips on how to overcome this challenge. 

Decision Process and Data Availability 

Companies are making decisions all the time. It can be a design decision to use one material or component over another. It can be a decision to choose a specific supplier or it could be a decision to order multiple components upfront to secure some strategic orders. 

What is the most important element of any decision? After talking to thousands of engineers and manufacturing professionals over the past years, I came to the conclusion that the biggest factor that can affect customer decisions is data availability. With data, customers can make a very accurate decision – to order the wrong quantity of materials, forget some important components, choose materials that conform to some specifications and regulations, not to choose a supplier that is not reliable, or not choose a component that had defects in the past and will be discontinued in the next 2 months. 

We produce tons of data 

It comes with zero surprise that manufacturers are producing a lot of data. Companies are collecting data everywhere – design, orders, procurement, customer requirements, etc. However, it is almost universal among all companies we are talking to that data is arriving in a variety of ways and never (!) is stored and managed properly. All manufacturers are operating on a ton of decentralized information. 

Here is a typical conversation I can hear when we see a prospect coming to OpenBOM to talk about what they do- “we create 3D designs, spreadsheets, STEP files, PDFs, and many other files, but it is very hard to manage them”. We don’t have a good way to manage it, so we build spreadsheets, folders, and files with the data. 

What is good data? 

Earlier this month, I was talking about data with Nina Dar, who called herself and her podcast – The Change Troubleshooter. We discussed data and one of the questions Nina asked me was – what is good data? I have to admit, it was a very refreshing question to ask. It took me some time to think about it. Here is my simple conclusion about what is good data and what manufacturing companies should do about it. 

As we produce tons of data, I define three important criteria that can make data good. 

• Easy to access 
• Available in a format that can be consumed 
• Clear for understanding 

Dumping GBs of data in the hard drive can be an easy way to store information, but without other people accessing this information, this data cannot be considered good data. It can not be used. 

Proprietary data formats can make data not available to the consumers – engineers, procurement planners, CMs, and many others. So, keeping data in such a way is a recipe for disaster. You better think about how to make data available. 

Tons of spreadsheet columns can contain a good deal of information, but without proper visualization, search and pattern matches, and queries, the data in these Excel spreadsheets will die before you learn what to do about it. 

Data Difficulty And Decision Process 

Companies are drawing in the data these days. However, the real challenge is how to make this data work for you and how to make this data become easily available and consumable for decision making. Here are three important things that are required to make product information and Bill of Materials work for you. 

• Data Structure
• Data Views 
• Data Visualization

Product information and Bill of Materials are heavily structured. Assemblies, sub-assemblies, components, etc. Placing such highly structured data in Excel removes one of the important elements of data consumption – levels, where used queries, flattened rollups, etc. Without that, the data will be very hard to explore, find, and decide. Example – making a change, how to find all other assemblies, and understanding the impact of the change. 

Another aspect is data views. Honestly, too much data is not good. Any user should be able to see only the data that is needed. However, Excels are bad at doing this. It is a flat-file and it doesn’t give any flexibility to organize flexible user-defined and role-based data access. In the best-case scenario, you will get too much data. In the worst-case scenario, you will let two competing contractors see each other’s offer. Both are really easy to happen when you manage data using Excel. 

Visualization is the key. Texts are hard to understand. Therefore, having spreadsheets with part numbers, descriptions and quantities can make it very hard to consume. Instead, having visual images, previews and other graphic elements can make it really easy. 

Conclusion

Having data in Excel can be an easy, free and simple starting point decision. However, when you recommend to your company to do so, you actually expose yourself and your business to a great level of risks and cost of not having the right information in front of you when you need to make an important decision. 

Understanding the true cost of Excel data management can only be done after you make assessments of all possible mistakes, time, and other hidden costs of not having an appropriate data strategy. 

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Best, Oleg