Multi-level BOMs explained for product-making businesses

A multi level bill of materials (BOM – sometimes referred to as an indented bill of materials) is a bill of materials that details exactly how you build your product which includes each sub-assembly, components, and materials that goes into making it.

In your multi level BOM, the hierarchical BOM structures will show your finished product at the top, including your SKU’s, part descriptions, quantities, costs, and any additional specifications.

Multi level BOMs are a vital ingredient for manufacturing, especially for manufacturers who use multiple sub-assemblies to produce their finished goods.

But before we continue, there are different types of BOMs you should be aware of. The BOM structures appear as:

1. Modular BOM
2. Configurable BOM
3. Multi level BOM

In this article, we’re going to go explore the world of multi level BOMs, and everything you need to know to get more control over them. But, if you think you have a pretty good grasp on them, we’d recommend skipping to the smart manufacturing software chapter.

Structure of a Multi Level BOM

The structure of a multi level BOM resembles a family tree and maps out all components and sub-assemblies for a product.

Each BOM level will detail all the components that are directly or indirectly used in the production of a parent item.

The purchased parts and raw materials can also be found within a BOM level, which will look something like a BOM tree.

Importance and purpose of multi-level BOM

If you want to get your operation set up with the smoothest production flow possible, there’s a lot you need to do, as to not bog down your production later.

This includes finding the best manufacturing routes and optimizing your manufacturing inventory management. However, there’s one document that is essential to have ready, long before you even begin production.

A bill of materials (BOM), or product recipe, is the DNA of a manufacturer’s product.

The purpose of having your multi level BOM is:

1. Overview of Assemblies: To have greater details and specificity on the parent and sub-assemblies in the product, and their exact relationship between the sub-assemblies and the finished product.
2. Prevent Errors when Dealing with Sub-Assemblies: If your manufacturing business is scaling, it becomes necessary to break down your products into sub-assemblies, and them into smaller sub-assemblies and components, and so on, which will be essential in preventing errors and help accurately tracking parts.

As you can already see, it is important to know what is a sub-assembly if you’re going to get more control over your multi level BOMs.

Is Excel the best option to manage Multi Level BOMs

It is possible to save and keep a multi level BOM spreadsheet. A spreadsheet may seem like the obvious choice to manage your multi level bill of materials, but is it the best?

1. Prone to Errors
   From copy/paste errors to more complex macro and script issues, BOMs kept in inefficient Excel spreadsheets can easily be plagued with issues and will need to be constantly updated manually, which will take up a lot of your resources. Not only does it waste time, but it can also mean that key business decisions are being made based on inaccurate data.
2. Difficult to Add Variants
   It is difficult to add in your potential product variants. When a product has multiple variants, it can be complicated to manage in Excel as the number of resolved BOM’s will grow exponentially with the number of variants, very quickly becoming impossible to manage.
3. Calculating Costs and Quantities
   Calculating totals in Excel may seem simple, and it is for flat or single-level BOMs. However, when dealing with multi level BOMs it is more complicated. Calculating costs and quantities for multi level BOMs requires extensive setup, complex formulas, and VLOOKUPs – to name just a few. This takes valuable time away from other important tasks and with increased complexity, it can result in errors.
4. Creating a Multi Level (Indented) BOM is Complicated
   Creating a multi level BOM in Excel is not impossible but can be complicated. You need to be able to find a way to indicate a level of hierarchy across parts and sub-assemblies. The reason that this is so difficult is that:
   1. If you need to add or remove any parts from your existing multi level BOM, you can easily make human errors. For example, are you inserting the new value in the right places, or if removing a sub-assembly have you also accidentally deleted all the associated parts as well? Small mistakes can lead to huge errors if you are making a business decision based on incorrect data.
   2. The sorting function in Excel is incredibly useful but it can also cause major problems. For example, sorting columns can mess up your key columns and delay your production process.
   3. When manufacturing various products, they will often use the same parts. Managing multiple instances of a part across products across different levels of the BOM hierarchy can cause serious issues in Excel. For example, if you update the part number for a part for one product, will all instances of the part in the BOM be updated?

So, if Excel or any other type of spreadsheet documentation isn’t reliable, what options are there for manufacturing businesses looking to get more control over their multi level BOMs?

ERP manufacturing software for multi level BOM management

Adopting an ERP manufacturing software, like the one offered by Katana, into your manufacturing business is going to mean more control over your multi level BOMs.

Katana, a bill of materials software developed by manufacturers, for manufacturers, centralizes your entire business (from your sales channels to manufacturing operations) to one, ridiculously easy to read, visual platform.

But, more importantly, Katana gives manufacturers the tools to get more control over their multi level BOMs, with accurate costings for seven layers deep into their BOM level.

So how does Katana achieve this? Let’s use the subassembly examples of a bicycle manufacturer.

How to create a bill of materials in Katana?

Within Katana, when creating your BOMs, you’ll need to simply input your subassemblies as a product, which will later be used in the BOM for your finished product.

As you can see above, the frame, gears, and wheels appear as individual products but will be used as the ingredients for making the bicycle.

However, if you select the materials tab, you can see all the components which have been used to make those subassemblies.

So, to begin adding in your subassemblies, simply follow these steps:

1. Select the ‘+’ symbol at the top of the platform and at the drop-down menu, select ‘New product card’

2. Here, you can input the subassemblies’ information, including the sale costs, ingredient costs, operation costs, quantities, the required materials/components, and the production process to make the subassembly.

3. Once you have done this for each subassembly, you can now create the BOM for your finished product.

Open a ‘New product card’ again, and this time when you’re imputing your ‘Product recipe / BOM’ instead of adding new material or using saved materials, select your subassemblies (which will appear as a product) and begin designing your multi-level BOM.

And that’s it, it’s that simple to add multi-level BOMs!

However, we should mention that Katana doesn’t take the traditional approach of an indented bill of materials structure.

Instead, what will happen is if a sales order is generated, Katana’s unique auto-booking system will automatically allocate available finished goods to the order, so you can fulfill it as soon as possible.

Although, if no bicycles are available, you’ll need to click on the sales order to find more information as to why it’s not available:

As you can see above, there are no finished bicycles in stock, and the subassemblies aren’t expected to be ready anytime soon.

You’ll simply need to generate a manufacturing order (MO) by selecting “Make…” and select if you wish to ‘Make in batch’ or ‘make to order’

If you then go over to the MO screen by selecting ‘MAKE’ at the top of the platform, you can select the MO to get more information on the production status.

In the above example, we don’t have the ingredients (subassemblies) to begin production. We’ll need to create a manufacturing order (or place an order from the supplier in the frame) for each subassembly.

Once you’ve created those MO’s, if you return to the make screen, you can check on the status of each of your assembly’s production status.

However, you’ve probably noticed that Katana schedules production by the older MO first, which might appear confusing if your first MO is dependent on the status of another MO.

But, have no fear, Katana’s nifty drag-and-drop system allows you to easily reorganize your workflow, and better still, if some materials are used in two MO’s, Katana will automatically reallocate your material, so the prioritized order can be fulfilled first.

And a long story short, that’s how Katana helps manufacturing businesses get more control over their multi-level BOMs.

To find out more about how BOMs work in Katana, please take the opportunity to check out the video below:

Multi-level BOMs can be a tricky element of your business to handle.

And looking at the indented bill of materials example, it’s largely due to a manufacturer having to follow, not only the production of their finished goods but their subassemblies too.

You’re going to need to keep up stock levels and develop a smooth production flow for a multi-level BOM to make sure that your production floor doesn’t come to a complete halt due to being understocked or a bottleneck occurring when creating a subassembly.

Fortunately, Katana is the all-in-one solution to help you avoid bad multi-level BOM management.

But, also allows you to quickly and easily get an entire overview of your business for improved management and production scheduling.

And if you’ve been using QuickBooks Online to monitor your business, no worries! Katana can integrate with your QuickBooks account, allowing you to improve your QuickBooks inventory management.

Don’t believe us? See for yourself! Katana offers a 14-day free trial, so you can experience firsthand how it can help you become a more disciplined manufacturer.