Multi-Level BOMs Explained for Product-Making Businesses

Running a product-making business is a challenging affair. 

Managing your administration, marketing, and sales points is tricky and time-consuming, and that’s before you even delve into the actual manufacturing side of your business.   

If you want to get your factory 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. 

And that is your multi-level BOM. 

A multi-level BOM is a vital ingredient for manufacturing, especially for makers who use multiple sub-assemblies to produce their finished goods.   

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

3. Multi-level BOM.  

Although, for this article, we’re going to look into multi-level BOMs as it is regularly used by manufacturers who use several subassemblies to make their items.  

Be you someone who manufacturers bicycles or wheelbarrows, this is going to be an important read as we’re going to investigate what is a subassembly, multi-level BOMs, and the best tools for storing and handling the manufacturing at a BOM level.  

So, let’s delve into the world of multi-level BOMs.  

What Is a Multi-Level BOM? 

A multi-level 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/half product, components, and materials that goes into making it.

So, each BOM level will detail all the components that are directly or indirectly used in the making of a parent item.  

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

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.  

So, the purpose of having your multi-level BOM sorted is:   

1. 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; and 

2. If your manufacturing business is scaling, it becomes necessary to breakdown 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 subassembly if you’re going to get more control over your multi-level BOMs.  

What Is a Subassembly?

What is a subassembly? This can be simply described as several components put together to make a unit, which can then be used as a part for a larger assembly, or a finished product.  

A subassembly can also function as a finished product too, which can be sold separately to customers or used to finish the construction of another product.  

It’s important to know what is a subassembly, as this is a key part of developing your multi-level BOM.

This means you’ll need intimate knowledge of your materials, components, and subassemblies to carefully develop your indented bill of materials.  

What Are Subassembly Examples?

As mentioned earlier in the article, subassembly examples will look like a family tree comprised of your raw materials, components, and subassemblies.  

At the top of your tree will be your finished good (or parent product/level 0), and branching off from there will be all your subassemblies and their relation to the parent product.    

Subassembly examples, for a bicycle, will look something like this:  

As you can already see, intricate subassembly examples go into great detail to show what exactly goes into the finished product, their inventory levels, and the workflow that needs to be followed to make that product.

It is possible to save and keep a multi-level BOM excel sheet, but as you can imagine, it is difficult to add in your potential product variants.

Plus, 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.   

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

Smart Manufacturing Software for Multi-Level BOM Management

Adopting a smart manufacturing software, like the one offered by Katana, into your product-making business is going to help you with getting more control over your multi-level BOMs. 

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

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.

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 dashboard 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 dashboard, 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, and we’ll need to create a manufacturing order (or place an order from the supplier in the case of the frame) for each of the subassemblies.  

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 product-making 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:  

Conclusion

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.  

And that’s all for now.

We hope that you found this article useful, and feel free to get in touch, we’re more than happy to answer any of your questions. 

Don’t be a stranger, and until next time, happy manufacturing.