Bill of Material
A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly as well as the quantity of each item required to make an assembly.
- Parts to make one of the item.
- Each part has one part number.
- Any change to part and it must have a different part number
The major uses of BOM
- Defines product parts by form, fit and function.
- Production planning – what needs to be made or ordered.
- Defines sequence for manufacturing and assembly – what is needed and when.
- Costing – material cost of goods sold, as well as overhead and direct labour.
- Order configuration & Pricing – BOM helps price the end product based on the order configuration (e.g. Cars).
Types and structures of BOM
- Single-level bill (e.g. product tree): parent and its immediate component items - primarily used for assembly of purchased parts.
- Multi-level bill (e.g. indented): parent and its immediate components, as well as the subassemblies and item numbers that goes into the immediate components. Ends out in purchase parts or raw materials.
Routing files/sheet
Information detailing the method of manufacture of a particular item. It includes the operations to be performed, their sequence, the various work centers involved, and the standards for setup and run.
The major uses of routing files/sheet
- The operations required to make the product and the sequence in which those operations are performed.
- A brief description of each operation.
- Equipment, tools, and accessories needed for each operation.
- Setup times: The standard time required for setting up the equipment for each operation.
- Run times: The standard time required to process one unit through each operation.
- Lead times for each operation.
- The Routing Files can be illustrated with a Process Flow Chart (PFC)
Low-level codes
A number that identifies the lowest level in any bill of material which a particular component appears
The use of low-level codes
Used in capacity requirements planning, where MRP is checked against available capacity through two processes:
1. Netting: calculating net requirements of materials by considering the gross requirements, on-hand inventory and scheduled receipts.
2. Exploding: breaking down the production requirements of an item into its components to determine the quantities of these.
Negotiation process
- Planning and preparation: objectives, partner characteristics and boundaries (HOB and BATNA)
Three strategies:
1. Competitive strategy: reserving information, strengthen own position, demanding offer, stand ground etc.
2. Cooperative strategy: willing to give information, some transparency, balanced offer, objective etc.
3. Problem-solving strategy: full transparency, agreed offer, common agreement etc.
The process:
1. Negotiation topics and relations
2. Information-sharing
3. Opening offer
4. Narrowing down agreement opportunities
5. Contracting the agreement and end of negotiation (if no agreement, end on good terms)
Hierarchy of Objectives (HOB)
Defines the primary objectives of the negotiation, and then the secondary and tertiary objectives
Best Alternative to Negotiated Agreement (BATNA)
Best solution if a negotiated agreement isn’t possible. Is made prior to the meeting, as well as the walk-away point. The stronger the BATNA is the less dependable you are to reach a negotiated agreement and you can therefore push the counterpart more without being afraid of them walking away
Zone of Possible Agreement (ZOPA)
Defines the bargaining area, where solutions that both parties can agree to. If offers lie outside this zone, an agreement is not likely
