150% BOM: Buy Two, Get One Free

Sometimes Bill of Material (BOM) terminology can be rather confusing. Case in point:  “the 150% BOM”. What does that even mean? It’s a rather enigmatic term when you think about it, so let's bring some clarity to the concept and practice.

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A 150% BOM isn't sorely in need of some fitness training or sadly overdrawn at the bank. In fact, a 150% BOM is just another name for a variant structure, or more specifically, a configurable BOM. Configurable BOMs have one or more optional components and/or modular subassemblies, which, when properly set, define a specific variation of a product. In effect, a configurable BOM is many possible BOMs loaded into just one product structure. When left unconfigured, the BOM contains more parts and subassemblies than needed, i.e. more than 100%. Hence, the term 150% BOM. So why 150% and not 110% or 117.32%? That's just the we way we roll in BOM town.

Choosing between time-to-market and configurability

Why have configurable BOMs at all? In a more traditional manufacturing  environment, you are forced to choose between time-to-market and product configurability, using either Make-To-Stock or Make-To-Order strategies:

Make-To-Stock (MTS): When time-to-market reigns supreme

  • Individual product variants are treated almost like separate products, BOMs engineered in parallel.
  • Products are advance manufactured in quantities according to anticipated demand.
  • A good strategy if your resident market wizard wields a rather handy crystal ball.
  • Fast and efficient, but inflexible if your crystal ball turns out to be defective.

Make-To-order (MTO): When product configurability is king

  • Engineering and BOMs are adjusted with each incoming order to satisfy a customer's particular needs.
  • Permits potentially limitless configurability and outright customization.
  • A good strategy if every customer has different needs.
  • Inefficient, slow-to-deliver, and often times, rather hectic for supply chains.

So what happens when you have unpredictable, impatient customers who demand configurability? Neither of the above strategies can cope.

150% BOM to the rescue

BOM League, Assemble!  The 150% BOM is all about making configurability cost and time effective. Configurable BOMs are essential to a manufacturing strategy called Assemble-to-Order (ATO). ATO is a proven tactic that aims to balance product configurability with market speed, and has long been popularized in the automotive and PC industries. If you've ever ordered a car or a laptop to your taste, then you've witnessed this process from the consumer end. ATO involves planning for configurability ahead of time, by establishing specific nodes in the BOM as configuration nodes. Nodes can be individual components or entire subassemblies. Some nodes may be purely optional, others may require at least one selection with a default choice and still others may be dependent on each other. Ever wonder about trim levels and option groups are all about at the car dealership? They are variant dependencies that balance consumer choice with engineered modularity and supply chain capability. Individual component/subassemblies are manufactured ahead of time, but final assembly occurs with an customer order. Variant dependencies are captured within a "configurator" tool which these days be placed right on a web page or within a Point of Sale (POS) system for easy access.

Assemble-to-Order (ATO) provides the distinct advantage of balance not achievable with MTS or MTO:

  • Maintains efficiency at the component level , and rapid time-to-market.
  • Since final assembly only occurs with an order, flexibility is maintained without keeping excessive stock.
  • Engineers manage the modularity, while the actual configuration of a particular order can be accomplished entirely outside of engineering.
  • New options can be introduced at preconfigured nodes without creating large amounts of rework.

The Configurable Future

Personalization is a growing consumer trend these days and a solid differentiator for market leaders. Consumer demand for configurability is driving ATO strategies into a variety of new industries; expect that trend to continue. In some cases, configurators are exposed directly to the consumer - ordered a pair of sneakers from Nike lately? If you’re amongst the increasing number of engineers working on customizable on-demand products, variant design with 150% BOMs can help you do it.

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