Friday, January 03, 2014

Baseline Conceptual Models: Part Bill of Material (BOM) Model

Part Bill of Material (BOM) Model:  In the manufacturing world parts are the center of their world.  A part makes up a product that a company would then sell to customers.  A company would design a part by providing a Part Specification.   Each part can be made of one or more parts or raw materials.  A company will make a Planned Bill of Material that lists all the parts that is expected or suggested to be used.  This plan is then sent to each manufacture in which they in turn will provide there own Manufacture Bill of Material back to the company.  This represents what the manufacture has scheduled to use when building the part. A Maintenance Bill of Material may be also given for use by a repair center to aid in repairs of the part.  Each part may have a Part Revision when the design doesn't change the Form, Fit, or Function (Known as the 3 F's).   Each part can have a Substitute Part in which can be swapped out for as a simple substitution.  And each part can have a Related Part that is similar, but not exact and can't be used as a simple part swap.  This model is dependent on Party and Account Model and Part Manufacturing Model.

Types of Parts:  There are many types of parts.  When a part is created it is assigned a Part Number.  When that part is manufactured it is labeled with that part number.   Through the life cycle of a part it can change its part number.  The part number can change from Semi-Finished Good part number to a Finished Good Part Number when the part is completed.  It can change from Finished Good to Non-Functional Unit to Refurbished Unit or Scrapped Unit when the product is returned for repair.   The reason the part number changes is to keep track of the part's condition.  This keeps from accidently selling a scrapped unit to a customer.  It also allows for proper valuation of inventory so that Refurbished or Scrapped Units can be valuated with a monetary value lesser than a Finished Good.  Saves on taxes and what not.
  • Raw Material parts are typically things like steel, wood, silver, silicon, petroleum, or oxygen in which further processing is required to make it into usable part.
  • Sub-Assembly parts are parts that can be used in building another part or can be used to repair a part.
  • Semi-Finished Goods could be parts that are mostly finished but needs to be further processed like specialization or branding to make them a Finished Good.  They can be replacement products without all the fancy packaging to lower costs in repair exchanges. Sometimes I've heard semi-finished goods as being referred to as Brown Box Units.
  • Finished Good parts are usually parts that are considered to be sellable to the end customer. 
  • Digital Good parts are digital bits that are to be placed on a device or some form of medium.
  • Non-Functional Units are parts that are returned for repair.  They are marked with a Non-Functional Unit part number and either placed in a queue for repair or scrapped based on their initial functional evaluation.  Sometimes these Non-Functional Units could be held in inventory until the company decides that replacement demands require allocating resources to repair units.  Its a means of delaying extra costs.  This means that sometimes when you return a product you may not get the same unit back.  It depends on what the product is and how important it is for the customer to get that same product back.  
  • Refurbished Units are parts that have been returned and have been successfully repaired.  They are given a Refurbished Unit part number to signify that this unit has been repaired.   Note that sometimes units are returned at the same time an exchange unit (Refurbished Unit or a Semi-Finished Good) is sent out simultaneously to speed up service for a customer.  This means that an inventory of Refurbished Units can be on hand at any repair or exchange center.    
  • Scrapped Units are parts that are considered non-repairable and are scheduled to be destroyed.  Once these units are destroyed they are removed from inventory tracking and accounting does some form of write-off.
Products vs Parts:  I've made a division in the concepts between Product and Parts.  When a product is defined it may or may not be mapped to a top level part in which has a bill of materials defining all the parts making up that part. The difference between Parts and Products is that a part is a concept relating to the manufacturing world where as products are more for sales and marketing.   Sales and marketing can make products without manufacturing any parts.  And not all parts are of interest to sales and marketing. Sometimes business will define products to market and allow customers to pre-order before engineering has finished the part design and setup for manufacturing and thus no part number is officially assigned yet.  So it is important to keep these two concepts separate.   Also part numbers are not SKUs.  SKUs are a marketing concept and a part number is about the physical part.  Sometimes people get those two things mixed up or combine them.  This would not a good idea.  There could be Many SKUs that represent the same part in which the SKU is marketing to different demographics with different price points.    
Please see (Baseline Conceptual Models Commentary) for further details on what conceptual models are to be used for.

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