Page 111 - Orlicky's Material Requirements Planning

90 PART 2 Concepts

■ A material planning BOM. Development of a valid, realistic MPS for products that
offer several options to customers requires a very different BOM from those
issued by engineering and those needed by production. Material planning for
many varieties of the same basic product, for tooling and similar related materi-
als, and for make-to-order products made from a few standard subassemblies
requires specially structured BOMs. This subject is covered in Chapter 11.
■ A cost-accounting BOM. This is often simplified by using one part number for
many painted or plated parts and for other components with variations not
affecting costs or inventory valuation.
■ A BOM describing the actual item made. This can be different from all other BOMs
for the item owing to process considerations.
Thus the existence of a BOM containing such information is also required at plan-
ning time. The BOM must not merely list all the components of a given product but must
be structured so as to reflect the way the product is actually made, in steps from raw
material to compo nent part to subassembly to assembly to end item.
There is only one legitimate reason why the manufacturing BOM should differ from
the way products are actually built: Last-minute design changes issued by engineering as
the products were being built were not yet picked up in the computer files. Strenuous
efforts should be made to keep such time delays to a minimum. BOMs showing products
actually made are often different from planning BOMs. This can be caused by legitimate
differences: What was planned was not what was built. Too often, however, the reason
these BOM types are different is lack of data accuracy in the formal files. Each group
using a BOM attempts to keep its own version; inevitably, differences creep in.
The five types of BOMs are all needed. This does not mean that five different BOM
computer files are necessary; BOM processor programs can code the basic data to link
components and produce a BOM for each specific purpose. The term bill of material is used
interchangeably for that covering a single parent and its components (called a single-level
BOM), for more complex multilevel BOMs, and for the entire BOM computer file.
Another prerequisite to MRP is the availability of inventory records for all items
under the system’s control that contain in ventory-status data and so-called planning fac-
tors, as discussed in the next few chapters. An assumption or, rather, a precondition for
effective opera tion of the system is file data integrity in terms of inventory status and the
BOM. This is not a system assumption—an MRP system can func tion with faulty data
and still generate outputs that are technically correct relative to the data supplied to the
system—but an operational assumption. File data must be accurate, complete, and up-to-
date if the MRP system is to prove successful or even useful. The requirement of file data
integrity may seem self-evident, but there are two points to be made in this connection.
First, the fact is that typically the two files in question are chronically in poor shape
under any system preceding the installation of MRP. And second, under an order-point
sys tem, it does not overly matter that inventory records are unreliable and that BOMs are
inaccurate, incomplete, or out of date. Order point acts merely as an order-launching sys-
tem (a push system), and it must be com plemented by an expediting (pull) system in