Creating a Supply Chain from Scratch: Part 4 – The Bill of Materials: The journey is at least as important as the destination
Co-Founder, Berlin KraftWorks Inc.
In part 3 of this series, I discussed the planning hierarchy and how it can be adapted and used to create both a model through which to structure a supply chain (from both a strategic and executional perspective) as well as how it can be used as a lens to prioritize supply chain activities.
Its critically important to have a set of rules or standards around which to compare and contrast strategy and execution. It is the Bill of Materials (or BOM as it is commonly referred to) that sets these standards. Many early-stage companies believe that supply chain begins once the BOM has been established, but this is a critical error. This is because the BOM doesn’t exist on its own. While the BOM informs supply chain of required materials and specifications, it is the supply chain that informs the BOM itself about what it can viably include. Therefore the BOM serves as the bonding point between two iterative functions: supply chain and product design.
However, it is important to remember that the BOM as a completed data set is merely the result, and a snapshot in the evolution of that data. It will continue to evolve with the product. The journey to get to a completed BOM is at least as important, if not more important, as the BOM itself.
Throughout my career I have seen failed product launches due entirely to designs that have not been informed by critical factors such as: supply availability of specific parts, international trade considerations (logistics, regulations, customs, etc.), and even social/political/economic factors of either the regions of the materials supplied or the regions where the product is being shipped. That’s because a BOM can only represent what goes into something, it cannot represent why or how. It is in fact the journey of iterative exploration of different materials, parts, suppliers, manufacturing methods and supply regions that informs as to the viability of any design consideration, and invariably will influence design towards the lowest risk options while maintaining the overall functional requirements of the design. Sometimes functional requirements cannot be supported after supply chain research, and this is better to discover early on (as opposed to pre-production). Baking-in materials or processes into a design that are impossible to buy or support reliably (humorously referred to as “unobtanium”) is a recipe for failure. Often however, the design viability can be improved drastically with early iterative interactions between design and supply chain.
Perhaps the most important part of the process is the creation of specifications for each and every item which will eventually be included in a BOM. This is as equally important to supply chains as they are to product design. In Design, all the components must act together as a system, ultimately focused on the form, fit, and functional requirements of the end product as dictated by the business case. For every item in the BOM, specific requirements must be spelled out including not just dimensions, and tolerances, but also (for commercially available components) approved brands, models, and manufacturer specifications.
Even more important still, is the understanding of why all those specifications are required, relative to the greater system in which they are to become a part of. It goes farther to support strategic management of materials and supply strategies, also referred to as “Plan for Every Part”. These specifications are always arrived at through continual trial and error, testing and refinement. In supply chain, its impossible to source products, evaluate potential suppliers, or manage inventories or demands, without specifications. It is those specifications which will measure what will be acceptable, and what will not. For this reason, sourcing is often executed after much or all the BOM has been established. However, this is far too late and ensures delays, and risks failure in the development process.
Instead, supply chain must work hand-in-hand with engineering through the design process, considering possible sources, and manufacturers in concert with the engineering effort. Supply chain also needs to engage possible suppliers for advice (particularly for any item made to specification – but not exclusively since “off the shelf” products must also be fully specified and understood) to understand manufacturing limitations and opportunities for efficiency. All of this must be gathered and relayed back to engineering as meaningful data, and engineering can then reciprocate with design iterations that are viable from a supply chain point of view.
The importance of revision control
Of course, as the design is evolving a tremendous amount of time and effort will be lost if there is no mechanism in place to track the evolution as well as documenting every change and the specific reasons for the change. For engineering, this is the process where all the learning and intelligence (IP) around the product is developed and retained. So it is also true with supply chain, as supplier and component strategies depend on understanding the intimate details (and challenges) of every specific part. Supply chain is sometimes affected by revisions, and other times is the cause of revisions (supply problems OR possibilities of better items/technologies become available) but a complete knowledge of the evolution is required to strategize and optimize the supply chain as well as manage day-to-day operations once in production.
Shared ownership is no ownership
While the BOM is the connective tissue between engineering and supply chain, responsibility for the BOM, its revisions and specifications lie squarely with engineering. Why? Because the BOM is the stated design intent of all components relative to the end product (or in other words, relative to the system they must work together in). Design intent cannot be shared jointly by supply chain and engineering, nor should it ever be. Likewise, responsibility for supplier relationships, strategies and sourcing methods lie squarely with supply chain and cannot be shared with engineering. These are, in effect the “design intent” elements of the supply chain system and production execution that must produce those specifications dictated by engineering. While both design intent and supply/execution strategy inform and influence each other, anything less than a clear delineation of ownership will make everything run amuck in short order.
When creating a supply chain from scratch, the finished BOM is only a snapshot in time. The knowledge generation, supply strategies, and overall viability of the supply chain is made or broken by the journey to the BOM, not the BOM itself.
Want to read more in the Creating a Supply Chain from Scratch Series? Click the links below:
Part 1 - Understanding What a Supply Chain is and When to Start Establishing Your Product's Supply Chain
Part 2 - Understanding Chaos and How to Work With It
Part 3 - The Planning Hierarchy: Unlocking the Path Forward
Peter Heuss, P.Eng.
Co-Founder, Berlin KraftWorks Inc.
You’ve created a working design, the next step is to start production, right? The simple answer is unfortunately, no.
Building more than one of anything effectively and efficiently is completely different than building just one. That’s a sweeping statement, but there’s a lot to consider in planning your production. By assuming that you can simply duplicate your initial builds can lead to costly delays, significantly higher manufacturing costs, more frequent redesign, and often considerable post sale costs due to warranty and service issues.
Building one or two units of a new product to prove out a concept is a necessary step in new product development. These first builds, or proof of concepts, help to prove that the idea is viable, can theoretically meet the business goals , and should be developed further. They allow for testing the concepts before spending any significant time and resources on engineering and manufacturing. However, those first units are typically hand crafted, often by the engineers/designers themselves, using whatever parts can be found quickly. Taking great care to make and fit parts, they test out functionality and tweak the design to work and hence, these first builds require a great deal of time and skilled labour to build and commission. Once the first builds are complete, there is a lot more work to do before the product is ready to be built in any volume.
There are a host of considerations that go into a production ready design based around being able to provide a consistent, high-quality product at volume. The business plan will help identify the quantity of units that need to be produced and when. It should also outline the expected cost (profit) goals that will help determine what can and cannot be considered in production.
Custom and Fabricated Parts
Most products are going to be a mix of custom fabricated and purchased parts. If you don’t consider how the custom parts are made, you can design parts that are difficult, expensive, or even impossible to make. You need to select your fabricators and work with them to ensure the designs work for their equipment, tooling, and processes. You can craft a lot of things by hand that can not be made cost effectively in production. Ramping up production over time may also require a series of different designs to suit different manufacturing methods. Machining vs. injection moulding a plastic part is a prime example, you have to consider when does the extra capital cost for moulds make budgetary sense for your unique product.
Additive manufacturing allows designers to get hands-on examples quickly and can be a great development tool. However, 3D printing is currently not a cost-effective process for volume parts and often produces a part that is significantly weaker with poorer surface finishes than other lower cost production options. 3D printing also allows you to create features that aren’t practical, or impossible, to make with other fabrication techniques which will lead to part redesign.
Building Supply Chain Simultaneously with Product Design
Supply chain frequently gets overlooked in the early development. However, sourcing the correct parts from reliable vendors that can be supplied at a reasonable price and in the quantities required throughout the lifetime of a product is critical. Not being able to secure a single chip for example, can mean a PCB can’t be assembled which can delay the entire build and a purchased part that gets discontinued can mean a lot of part redesign to accommodate an alternative.
Logistics and regional requirements can greatly affect your design. If your product contains batteries for instance, there will be special considerations on how you package and ship your product. There are some jurisdictions that will require information on where all of the parts were made and assembled, and that can affect shipping and sales.
It’s crucial that you develop your supply chain as part of the design process (not as a separate activity). Developing your supply chain in collaboration with your product design rather than one after the other not only improves your product design and delivery, but speeds up your time to market. This is a huge topic and we will dive into it further in a future post.
Probably the highest cost of most products will be the assembly. It can also be where the most variability is added to the final product. At the end of the day, every finished product should be as close to identical to the rest as possible, consistency is paramount. Assembly must be as simple and as quick as possible to insure the lowest cost with the fewest quality issues.
The first builds take a great deal of time, skilled labour can do anything with enough time and money, but that’s not the goal behind production. Production has to be the repeated building at the lowest cost to meet the sales requirements (business case).
To optimize assembly, you have to look at each assembly step and ensure that it can be done as simply, safely and as quickly as possible. Parts need to align well without extra effort, tooling should be easy to use and fastening should be common throughout whenever possible. The entire process must be well documented allowing consistent training and the development of quality control standards.
When you have a product idea that can go to production you need to go through the entire DFx process - design for manufacturing, design for assembly, design for test, design for supply chain, design for service before it is truly ready to be made in any volume. Moving from a prototype into production is not a simple journey to navigate and it takes skill sets that are specific to new production introduction. Most companies will need some external support to do it well and efficiently and it’s well worth seeking input early in the process.
Press Release - Microart Services and Berlin KraftWorks Partnership Connects Innovation to Production
Microart Services, an Electronic Manufacturing Services (EMS) provider with four decades of experience, has joined forces with Berlin KraftWorks Inc. (BKW), an engineering firm that helps firms transform ideas into finalized products, to bridge the gap between ideation and volume commercial production.
Both companies recognise the challenges faced by innovators when going from their eureka moment to the commercialisation of that product. Between them they are able to provide a creative genius with support through every aspect of design, engineering, DfM (design for manufacture), supply chain planning and much more. They allow the brand behind the innovation to focus on product ideation and development, knowing they are being guided through each stage of the commercialisation of their solution. They focus on the ultimate goal of delivering a robust solution to the consumer that is both reliable, scalable and economic.
BKW co-founder, Matt Weller said, “there was a meeting of minds with Microart Services, recognising that while there is support for new tech, there is a lack of resources and preparedness for physical manufacturing”. Matt added, “we both see a real need for hands-on assistance, teaching, and a systems approach that aligns engineering and supply chain from innovation through to production.”
Microart CEO, Mark Wood commented, “working with BKW and their customers allows us to get manufacturing practices and supply chain strategy baked in at the design stage”, adding, “the two teams bring immense experience in engineering, design, supply chain design and much more to deliver innovative products to their end user markets with the minimum pain, minimum risk and maximum value”.
As part of their partnership, Microart Services and BKW are providing advice to help innovators get ready for manufacturing and scale in the form of articles and blogs as well as a forthcoming webinar, scheduled for June 29th at 3pm EST. Matt Weller and Peter Heuss of BKW along with Mark Wood of Microart Services will be providing advice in this online and on-demand event hosted and moderated by Forbes and Entrepreneur journalist, Philip Stoten. Spaces are limited, so please register for this must-see event for innovators wishing to bridge the gap between idea and delivery.
Microart Services is an electronic manufacturing and design services company with four decades of experience, providing PCB layout, bare board manufacturing, PCB assembly, testing and box build for proto-type and low-to-mid volume productions. Microart has a reputation as a team that will bend over backwards for customers and possess the experience, skills and grit to get things done! They invest in the latest technology at their two state-of-the-art facilities to deliver the best product outcomes for their customers.
About Berlin KraftWorks Inc.:
Berlin KraftWorks Inc. makes it quicker and easier for companies to get their products to market. By aligning supply chain and engineering our hands-on solutions integrate into the entire process from design, through supply chain, to the end user.
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