How OpenBOM Saves Money and Why Excel is Not Cost-Free

I got a question in support yesterday asking about a “cost-free” BOM management tool. The company was looking at how to automate the process of BOM creation from CAD systems and optimize their downstream BOM process to purchasing. The question about data accuracy was at the top of the list. What caught my special attention is the approach of thinking about BOM management (or PLM, ERP, or other tools) as a cost that they want to eliminate (think “cost-free”). It is not surprising that people are looking for free software, in general. However, when it comes to BOM management, I found many companies take it wrong. Let’s talk about it.

BOM is a center of manufacturing intelligence

In the manufacturing world, efficient bill of materials (BOM) management plays a significant role in streamlining manufacturing processes and reducing production costs. Engineering BOM, manufacturing BOM, list of raw materials and information about suppliers and contract manufacturers make the BOM tool absolutely critical to define your finished product as well as to focus on engineering bill, manufacturing bill and entire product lifecycle management. The increasingly complex nature of manufacturing operations and their inherent need for real-time, collaborative data exchange demand more sophisticated solutions. An accurate BOM can make a difference between having materials online or materials shortages and potentially can stop your entire production process. Your manufacturing terms cannot live without accurate production BOM and an accurate BOM structure of your assembly BOM (multi-level BOM) is absolutely needed for rollup cost analysis and enterprise resource planning.

Think about BOM as a recipe for everything you do and think about how making this recipe not accurate can get you in trouble. Wrong component, wrong quantity, wrong material spec, wrong regulation information. This is just a short list of the most critical things you need to know in order to not make a mistake. Something goes wrong and you order the wrong stuff, getting it too late and missing critical material information that will bring you (and your company) in trouble later on.

Excel Isn’t Cost-Free: The Hidden Costs

Here is how Excel (or any spreadsheet) can take you down. Traditionally, Excel has been a widely used tool for managing BOMs. While Excel is indeed a powerful tool, it’s not specifically designed for managing BOMs, which leads to inefficiencies and hidden costs. Here’s why:

1. Error-prone: Managing complex BOMs on Excel can be prone to human errors. Any oversight or error can lead to costly miscalculations and reworks.
2. Collaboration issues: Excel is not designed for real-time, multi-user collaboration. This can lead to version control issues, resulting in confusion, duplicated efforts, and mistakes.
3. Time-consuming: Excel requires manual data entry, which is time-consuming. Also, it lacks the intuitive features and automation capabilities of dedicated BOM management tools like OpenBOM, leading to productivity losses.
4. Lacks scalability: As your business grows, managing BOMs in Excel becomes increasingly challenging. This lack of scalability can hinder growth and lead to cost inefficiencies.
5. Limited visibility: Excel doesn’t offer real-time tracking of inventory levels or an overview of the supply chain, which can lead to inefficient resource management and unforeseen costs.

OpenBOM Advantage

Here is where OpenBOM shines. OpenBOM is a simple, yet flexible and powerful tool that can help you to get your data under control and eliminate spreadsheets problems. Here are the top 4 things OpenBOM does that will allow you to reduce errors, enhance productivity, save time, and avoid data duplication.

1. Centralize Item Information: All information is under control and exists in the way of online catalogs with Items (managed with Part Number) and all attached data including all business and engineering information (CAD files, secs, etc.). That creates a single source of truth.
2. Re-use and Modularity: Bill of Materials can be easily re-used for efficiency and doesn’t require you to copy existing Excels and re-work them. Using OpenBOM you can create another product by re-using existing modules super fast.
3. Calculations and Rollups: Brining automatic calculations allows you to have a real-time estimation of cost and other KPIs. Especially, since it relies on accurate data managed in a centralized form, you know exactly how much it cost.
4. Avoid Duplication and improve supply chain: With its centralized data storage and access, OpenBOM prevents duplication of efforts, which can often lead to wasted resources. OpenBOM aids in tracking inventory levels, ensuring optimal ordering and efficient inventory management.

What Customers Say?

Check the recent story coming from Vartech Systems developing rugged computers and monitors. VarTech Systems’ rugged computers and monitors are entirely engineered, manufactured, and assembled in their US-based facility in North Carolina. A leader in performance and reliability, their systems and components are designed specifically for demanding, diverse environments and used by industrial leaders worldwide; NASA, General Motors, Caterpillar, and Disney, to name a few. OpenBOM is proud to be an approved technology provider to Vartech Systems since 2020. 

“What we love most about OpenBOM”, Max says, “is the ability to change one thing in our BOM and it shows up everywhere the item or component is used!”

“That may seem a simple claim, but the ability to know that what we build and deliver to our customers has current pricing and components is very important to our business.”

Max explains that as the BOM travels through the company there are at least three important stops along the way, In-House (Engineering), SLM (purchasing), and finally a proprietary in-house bonding procedure that gives Vartech products the ruggedness that customers demand.

What is the most important thing- it saves time and money:

“OpenBOM easily saves us 2 hours a day in engineering time. I remember we caught a $1000 mistake the first month we had OpenBOM.  Our Excel had not been updated.  OpenBOM literally paid for itself that month.”

Navigate here and check more – VarTech Systems Optimizes Efficiency by Saving Two Hours of Engineering Time Daily with OpenBOM.

Conclusion

One mistake you eliminate can cost you more than an annual subscription to OpenBOM. When it happens, you should be happy not to want to use “cost-free” tools, such as Excel or others. This is why BOM management systems are not part of your cost center, they are part of your business tool that gives you immediate ROI with the first mistake you catch.

Transitioning from Excel to OpenBOM for BOM management can significantly enhance efficiency, reduce costs, and promote business growth. While there is an upfront cost of implementing OpenBOM, the saving from mistakes and efficiency gains make your ROI almost instant. OpenBOM’s ability to improve collaboration, reduce errors, and enhance productivity offers a clear edge over traditional spreadsheet methods, making it a worthwhile consideration for modern manufacturing businesses.

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Best, Oleg