Page 218 - Orlicky's Material Requirements Planning

C HAP TE R 11

Product Definition

Throughout the discussions in previous chapters it has been assumed that a master pro-
duction schedule (MPS) exists to which a material requirements planning (MRP) system
can be geared and that such a schedule states the overall plan of production completely
and unambiguously. Implied in this assumption is a bill of material (BOM) that defines
the product line not only from the customer’s (and final assembly) point of view but also
in a way that is suitable for purposes of procurement, fabrication, and subassembly. In
other words, if an MRP system is to function properly, the product must be defined in
such a way as to make it possible to express a valid MPS in terms of BOM numbers, that
is, assembled-item numbers.
Unlike the order-point approach, MRP works with products and the relationships of
their component items using the BOM as the basis for planning. MRP thus puts the BOM
to a wholly new use, and the BOM acquires a new function. In addition to serving as part
of product specifications, it becomes a framework on which the entire planning process
depends. In some cases, however, the BOM maintained by the engineering department is
not usable for purposes of MRP without a certain amount of modification.
As an important input to the MRP system, the BOM must be accurate and up to date
if the system’s outputs are to be valid. In addition, it must be unambiguous and so struc-
tured as to lend itself to MRP. The mere existence of a BOM is no guarantee that an MRP
system can function properly. The BOM is essentially an engineering document, and its
traditional function has been to define the product from the design point of view. With
the advent of MRP, the product may have to be redefined so as to fit the needs of plan-
ning and manufacturing. Such redefinition is termed structuring or restructuring of the
BOM. As companies change their manufacturing approach, the expectation is that BOMs
also will be restructured. For example, it is common for companies embracing lean con-
cepts to remove levels from their BOMs in a process called flattening the BOM.
The term BOM structure pertains to the arrangement of component-item data with-
in the BOM file rather than to the organization of this file on a storage medium or in a
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