How the Bill of Material, MTBF and the Product Structure All Tie Together

MTBF and the Product Structure

In our previous post we discussed the different vendors and services offered for reliability testing and prediction. One of the important issues with relation to MTBF management is the product structure. The product structure is the hierarchy (or at least at first glance) of materials that make up an overall product. This has different names depending upon the application. In SAP ECC it is referred to as a Material BOM or an Equipment BOM. In MCA it is referred to as the product indenture network. This survey conducted by Arena Solutions on this topic is quite interesting.

BOM vs. PLM Software

Being able to deal with the BOM in a flexible and distributed manner is increasingly a capability with what is referred to as PLM software. However, that is not right. BOM management is actually a subcategory of the broader term PLM or life-cycle management. Lifecycle management exists in a number of applications in supply chain, as the article below explains.

http://www.scmfocus.com/supplychainmasterdata/2010/10/how-distributed-plm-functionality-in-planning-systems-differs-from-bom-management/

Eric Larkin, Chief Technology Office at Arena Solutions, has some interesting things to say about PLM vs. BOM management.

 

Having powerful and collaborative BOM management software is important for many reasons that include improving the efficiency of product development and building quality into products as well as product costing for contract development. However, it is also important for service parts planning and MTBF. MTBF calculation integrates with the BOM.

ERP for BOM Management

There is increasing evidence that BOM management greatly benefits from specialized software. ERP software manages how the BOM relates to execution and planning, but does not tend to have advanced capabilities with regards to BOM management. (of course Oracle purchased Agile in 2007, a leader in PLM, however, software mergers often kill the aquired company’s innovation and product. Look how little Oracle has done with the PeopleSoft functionality). Here is an interesting quotes regarding ERP for PLM from Arena Solutions.

There is a misconception that Enterprise Resource Planning (ERP) systems can be used to manage all product information after design, including changes and communication. Unfortunately, even though the final production BOMs, the Item Master, and costing information are ultimately loaded into ERP systems, these systems do not have integral processes for ECOs or file management. Therefore they cannot be used to control BOM or item changes or manage associated files. Furthermore, as a tool primarily for internal groups, ERP systems cannot be used by external partners and suppliers to obtain product information. – http://www.arenasolutions.com/images/pdf/rc_docs/whitepapers/Arena_Turning_Great_Designs_Into_Great_Products_Whitepaper.pdf

ERP systems are not designed to be change control or file managementtools, and must be manually updated to reflect approved productchanges. To update and change product information across electrical andmechanical CAD tools and ERP systems, many companies employ spreadsheetsoftware, such as Microsoft® Excel, to manage part changes, SOPs andBOMs and to communicate them to project teams.” – http://www.arenasolutions.com/images/pdf/rc_docs/whitepapers/Arena_WP_Med_Device_Doc_Control.pdf

Reinforcing this statement is the poor track record of SAP PLM. We personally analyzed this “solution” several times only to find that it did not involve new software as much as simply leveraging the old structures with a few bells and whistles added in.

http://www.sap.com/solutions/business-suite/plm/index.epx

(in the past several years, SAP product management and marketing is increasingly following the Oracle model of presenting vapor or stretching pre-existing functionality to fit new solutions)

Spreadsheets for BOM Management

Exporting BOM information to a spreadsheet and managing it there for MTBF and other purposes is not a very competitive solution with the other alternatives that are present. In fact, even using an on line spreadsheet like Google Spreadsheets, while better than using Excel with its isolated files, is still not really capable of managing the complexity of BOMs. Furthermore with the rise of contract manufacturing and distributed product development and manufacturing, islands of data created by Excel are even less useful. Amazingly PLM software is still lightly implemented out in the marketplace.

Graphic from Arena Solutions – taken from an online webinar – not a formal study.

As far as ERP systems, while ERP systems have BOM functionality, it is not the functionality offered by Arena. Rather ERP BOM management was developed in order to support transaction processing. This is quite a bit different from what specialized BOM management software does.

Arena Solutions

Arena Solutions’ website is quite good and for anyone interested in PLM and BOM management we recommend a visit. It is of course selling a service, however it is also very educational and most the statements made on the site are reinforced by our consulting experiences.

http://www.arenasolutions.com

In one of their white papers we found a very good explanation of the needs of modern BOMs.

“As the design progresses toward production, the part-list-like engineering BOM must transition into a detailed manufacturing BOM that includes all the items required to make sub-assemblies and the final product. During this process, numerous project teams contribute to the BOM and item changes (Figure 2). The resulting manufacturing BOM is highly relational and includes various associated data and files, such as design drawings, software files, item files, costing information, compliance status, specification data, and supplier information.” –

http://www.arenasolutions.com/images/pdf/rc_docs/whitepapers/Arena_WP_Beyond_BOM_101.pdf

The Relational Model for BOM Management

One easy way of understanding this is that one sub-component often is part of more than one parent component. Therefore, by using a relational BOM configuration (which is different from a relational database, you can use a relational database, but still follow a restricted hierarchical model in your BOM configuration.), when the sub-component is changed once in one location it affects all parent components immediately. This is the desired end state, that all parent products be instantly updated when a change to a sub-component is rolled out. This relates to all life-stages of a product’s existence. This updated part data is then sent over the planning system where a flag is changed that tells the planning sytem this part should no longer be planned. Having this data updated is as important as the algorithms you use to produce a forecast.

This complexity really requires a software specialized software solution. Furthermore, this is perfect application for a hosted application. (we increasingly wonder why companies continue to ask for software they have to install and manage, particularly when the application is shared.) With hosted applications, as long as the software provides a standardized feed of some type (such as RSS), application integration can be managed completely on line, so a BOM Management – PLM service provider like Arena could be integrated with an on line version of a transaction processing system and the service parts planning system.

Application Screen Shots

Arena has a nice interactive demo on their website, so we decided take a few screen shots. This screen shows the different status of notifications.


Below we have a listing of notifications for particular BOM numbers. We also see the people (users) that have the ability to view or edit or comment on the BOMs.

Below we see the view for Monica Williams, and the materials for which she has notifications. You can see that each of the materials has an event code attached to it.


When we select one of them we get taken into the detail.


Here we can see who is part of the notification distribution list.


Here we have a flowchart of the process status.


Here we can see that suppliers are involved in this process and can log in.


Also, the individual products that make up the BOM are listed as well.


For each product, there is a coding for the items compliance requirements as well whether the prase of the item (if its in production, obsolete, etc..)

If we select the files, we can see all the attachments to each product.


In conclusion, we find this software very compelling. Furthermore they offer a fully hosted solution which they call on-demand. In our consulting experience, Arena is providing answers for a lot of problems that plague BOM management at many a company.

Open Question

One of the questions we do have is where an MTBF value is located. For the purposes of service parts planning, Arena just needs to feedone number per part. Both SAP SPP and MCA can perform their forecasting(if the option is selected) from a simple MTBF value associated withevery product record. This is called leading indicator forecasting inSPP and causal forecasting in MCA. At least MCA has some involved ways of calculating the overall service level, and one ofthe inputs is the MTBF of the underlying items – related to theinventory coverage for each item.This is something that should naturally be maintained in Arena. How this value is obtained is a different topic and is covered here.

http://www.scmfocus.com/servicepartsplanning/2008/12/09/vendors-and-software-for-determining-mtbf/

However as far as how Arena holds the MTBF, we will update this post when we find out.

References

Wikipedia on PLM Arena Solutions

 

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4 thoughts on “How the Bill of Material, MTBF and the Product Structure All Tie Together

  1. Pingback: Supply Chain Software And The Google Model « Supply Chain Innovation

  2. Pingback: Supply Chain Software And The Google Model « Google For Supply Chain

  3. Pingback: Why is Cloud Computing Taking So Long?

  4. Pingback: BOM and MTBF and Product Structure « SPPLAN – Service Parts Planning

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