Page 220 - Orlicky's Material Requirements Planning

CHAPTER 11 Product Definition 199

■ Pseudo-BOMs
■ Interface to order entry

ASSIGNMENT OF IDENTITIES TO
INVENTORY ITEMS
If a BOM is to be used for MRP purposes, each inventory item that it covers must be
uniquely identified. One part number must not identify two or more items that differ
from each other, if ever so slightly. This includes raw materials and subassemblies. The
assignment of subassembly identities tends to be somewhat arbitrary because a new enti-
ty is actually created every time another component is attached in the course of the
assembly process. The product designer, the industrial engineer, the cost accountant, and
the inventory planner might each prefer to assign them differently.

Elimination of Ambiguity
The question is when do unique subassembly numbers have to be assigned for purposes
of MRP and when do they not. In reality, it is not the design of the product but the way
it is being assembled that dictates the assignment of subassembly identities. The unit of
work, or task, is the key here. If a number of components are assembled at a bench and
are then forwarded, as a completed subassembly, to storage or to another bench for fur-
ther assembly, a subassembly number is required. Without it, the MRP system could not
generate orders for these subassemblies and plan their priorities.
Some engineering departments are overly conservative in assigning new part num-
bers, and the classic example of this, encountered quite often, is a raw casting that has the
same part number as the finish-machined casting. This may suit the engineer, but it is dif-
ficult to see how an automated inventory system such as MRP is supposed to distinguish
between two types of items that must be planned and controlled separately. They have
different lead times, different costs, and different dates of need.
Another requirement is that an identifying number define the contents of the item
unambiguously. Thus the same subassembly number must not be used to define two or
more different sets of component items. This sometimes happens when the original
design of a product subsequently becomes subject to variation. Instead of creating a new
BOM for the assembly affected, with its own unique identity, the original BOM is speci-
fied with instructions to substitute, remove, and add certain components. This shortcut
method, called add and delete, represents a vulnerable procedure that is undesirable for
MRP purposes, as will be discussed later.

Levels of Manufacture
The BOM should reflect, through its level structure, the way material flows in and out of
stock. The term stock in this connection does not necessarily mean a stockroom but rather