Bill of Materials: Necessary or Just Nice to Have?

Do we really need bills of material (BOMs) for spare parts management?

Back in my university days I serviced my own car – a Datsun 180B. Servicing my own car was a function of both economic necessity (I was studying full time and working part time) and technical interest (I was studying mechanical engineering). Back then cars were simpler than they are today and my servicing consisted mostly of plugs, points, oil, brakes, hoses and so on. Although on one occasion I did replace the head gasket.

During this time I relied absolutely on my trusty workshop manual. This manual had all the technical specs, exploded diagrams showing how things fitted together and importantly a complete list of the spare parts and their part number. For me, this bill of materials was absolutely necessary.

Bill of Materials and Spare Parts Management

Fast forward to today and in my work helping companies improve their spare parts management I regularly hear people say that they must finalize their bills of materials before they can take action on reviewing and optimizing their spare parts holdings.

The logic is that if you know exactly what you have in service and how many and where they are you can the make better informed decisions on spare parts management. But does this really make any sense?

For maintenance work, of course it makes sense – just as it did for me servicing my trusty old Datsun. After all how can you determine your maintenance program if you don’t know what you have to maintain and what parts they contain. But for spare parts management and optimization it may not make as much sense as many people think. This may be a case of theory overtaking pragmatism.

Consider what happens in the real world.

Some one at some point in time has decided which spare parts should, and should not, be held in inventory. We may or may not have any insight into how those decisions were made.
If the holding level for a part was too low and a stock out occurred then it is almost certain that the stock level for that part was subsequently increased (along with many other similar parts that did not stock out). That seems to be human nature.
If the holding level for a part was set too high then it is most likely that the initial purchase of those parts is still sitting on the shelf.

Depending on the optimization process you apply you may not really need more information on where those parts are used, you may just need to understand the issues that drive you to hold too many or too few items. This is where theory and pragmatism part ways.

If you choose to go down the path of software optimization (a theoretical approach) you probably do need to ensure that your BOMS are up to date. However, if you apply a pragmatic and process based approach such as the Inventory Cash Release process then the BOMS are less important. This type of approach forces you to look at the issues that drive your spare parts holdings.

These issues are not related to how many machines you have that use the part, they are almost universally related to the processes in place for spare parts management. These include: the basis of decision making (emotional, logical or data based), supplier relations, commercial arrangements, supply chain, procurement, planning, team behavior, and accountability. These are the most obvious examples.

From direct experience I can say that without a doubt these issues have far greater effect on your spare parts holdings than knowing whether you have X machines that use part Y. Of course the number of machines requiring a part will be an influence on the required holding levels, as it impacts demand, however, for the vast majority of companies their spare parts levels are far more influenced by the issues listed above and addressing these is the best approach for reviews and optimization.