Bill of Materials - Flow of Processing



The Flow of Processing section is helpful when learning to operate the software for the first time, and should serve as the operator’s guideline for the Bill of Materials module operation after the installation period. This section should be read along with the Operations section to gain a full understanding of how the Bill of Materials module works.


Flow of Daily Processing

While not a procedure that is required for daily operation of the Bill of Materials module, it is very important to make sure that the bill of materials definitions are kept current. Make it a habit to check the material lists and operation steps of each bill regularly for correctness and accuracy. Delete outdated or obsolete bills of material from the system to avoid confusion and simplify the reports produced by the module. Also, remember to periodically review the labor rate and overhead factors in the Bill of Materials Operation Code Maintenance task to make sure they also are current.


Keep in mind that it is common to have multiple versions of a bill, as happens when revisions to a bill are being made, or when costing new variations or prototypes of a product. It is a good idea to use an effective date for operations, materials, and subcontracts, far enough in the future to allow for development of the prototype.



Bill of Materials processing reports should be run as needed to help keep track of the bill of materials information. The Bill of Materials reports needed for processing are:


Packing List

Print the packing lists as needed. Packing lists may be printed for all or selected bill numbers, and they are often used as a check list of component parts required in the finished product. The packing list is useful in a packaging or boxing operation to help insure that the proper items are packed for shipment.

Material Where Used Listing

Print the Where Used Listing as needed. This report may be printed for all components or only for selected components, and shows the bills of material in which they are used. The Where Used Listing is particularly useful when it becomes necessary to change or substitute a component part, and the user needs to know everywhere that part is used. Note: the Component Item Replacement task located on the  Bill of Materials/Maintenance Menu can automate the substitution. The Where Used Listing also helps in standardizing part usage throughout several bills by showing the bills in which the items are part of an assembly.

Operation Where Used Listing

Print the Operation Where Used Listing as needed. This report may be printed for all or selected operations codes and the bills of material in which they are used. The Operations Where Used Listing is especially useful in analyzing labor steps that are common to several assembly processes.

Bill of Materials Indented Bills

The Indented Bill of Materials Report lists of all levels of a bill or a range of bill numbers, including the cost of materials, operations, and subcontracts. This report gives an overview of the bills and helps in quality control. It may be run for up to nine levels of the bill and optionally display the cost information.

Bill of Materials Detail Listing

Prints the material and operation information for each bill number. A range of bill numbers can be specified or all bills may be selected.

BOM Costing Report

As each bill is processed, the bill is first exploded. The cost of each component is retrieved from the Inventory Master File. The cost of the final bill and the lower assemblies is made up of the material and operation information and printed on the report.  A range of bill numbers can be specified or all bills may be selected. The report shows what the cost would be if the current costs were updated to the Inventory Master File. The BOM Inventory Costing Update may now be run to perform that update (Update is located on the Bill of Materials/Maintenance Menu). It is always a good idea to print the costing report before performing the update!


Order/Production Process

Order/Production Entry task allows automatic selection of Bill of Materials items from the sales order file. Enter a production date, customer and order number.


Order/Production Register prints a listing of all entries created in the Order/Production Entry task. When the register is updated, entries will be created in the Inventory Production Entry file and may be subsequently edited there. Note: no general ledger postings result from the Order/Production Register Update. Follow the Inventory Production Register/Update procedures (below) to complete the entries.


Inventory Production

Inventory Production records the distribution of items that are to be assembled, or have been assembled. It relieves the component parts and adds to the finished goods inventory automatically. It is a process that must be performed by someone who is responsible for the effect of the bill of materials on the entire inventory system.


The Inventory Production Entry task may be operated in two different modes, pre production processing and post production processing. For a complete explanation of these terms, please refer to the Inventory Production Entry task in the AddonSoftware Help documentation.


Because the Bill of Materials module may be used to control a variety of assembly and packaging operations, the user may apply considerable ingenuity in adapting the software to the company’s specific needs.


Gather the Information for Data Entry

In general, the first step in inventory production processing is accomplished as follows:  


Collect all production or assembly information daily, or as frequently as finished items are produced. File the production records in a file marked “Production/Assembly to be Posted.” Each transaction should be identified with a unique reference number (see below).


When a batch of production/assembly source documents have been collected, prepare them for entry. For each transaction the following information will be needed:


  • The warehouse where the production entry is to be recorded.

  • The exact item/bill number for each item produced.

  • The correct production date for the item produced. This date may be used to mean different things depending on the need. It is the date used for general ledger and inventory posting.

  • Verification of whether there have been any cost changes that apply to the inventory items.

  • A unique reference number for each transaction. This may be a work order number, sales order number, customer purchase order number, or another internal control number.

  • Determination of whether to automatically add the finished item(s) to inventory as part of the Inventory Production Register update. Component items are always relieved. Mark the Update Flag checkbox to also add the finished item(s) to inventory.

Before posting the production transactions, make an adding machine tape of production total numbers on the source documents. Use Unit Cost times Item Quantity to figure the totals.


Perform Inventory Production Entry

Enter the production and assembly information using the Inventory Production Entry task, recording the reference number for each transaction. Mark each source document “Posted to Computer” as it is entered.


If the finished items are not to be updated to the Inventory Master File (i.e., if the Update Flag checkbox is not marked), note this on the source document(s). Later, when ready to add the finished items to inventory, use the Inventory Transaction Entry task in the Inventory Control module to record the entry.


Print the Inventory Production Register

Print the Inventory Production Register after all production/assembly information has been entered. The Inventory Production Register shows all transactions entered through the Inventory Production Entry task since the last Inventory Production Register update.


Check the register carefully and balance the tape of totals created from the source documents. If any changes must be made, return to the Inventory Production Entry task and recall the transaction by warehouse number, production date, bill number, or item number. Make the changes and reprint the Inventory Production Register, discarding the original.


Perform the Inventory Production Register Update

When the Inventory Production Register is in balance with the tape totals and General Ledger postings are correct, proceed with the update. The Inventory Production Register update process does the following:

  • For each bill of materials being processed, the component parts are automatically relieved from the Inventory Master File. The component part costs in the Inventory Master File are not changed by the update.

  • For each inventory production entry for which the Update flag field was set to Y, the production quantity is added to the appropriate item number in the Inventory Master File.

  • The Finished Goods or Work in Process accounts are debited (depending on the setting of Update flag), and the Raw Material Expense, Direct Labor Expense, and Overhead Expense accounts are credited.

After the update is complete, file the paperwork as follows:

  • File the source documents appropriately.

  • File the register in a folder marked “Inventory Production Register” under the correct month.


Print the Daily Detail Register

If the AddonSoftware General Ledger module is installed, the accounting department will regularly print the Daily Detail Register and update the general ledger with all Bill of Materials entries and other transactions.


The Daily Detail Register is an option of the General Ledger module. Instructions for operating the task can be found in the Flow of Processing section of the AddonSoftware Help documentation.



Processing Checklist

Periodic Maintenance

____Review and update bill of materials definitions

____Check the material and overhead factors in the Bill of Materials parameters


Special Reporting as Required

____Bill of Materials Detail Listing

____Bill of Materials Packing List

____Bill of Materials Where Used Listing

____Bill of Materials Operation Where Used Listing


Inventory Production Process

____Perform the Order/Production Entry/Register/Update (optional)

____Gather complete and accurate source documents

____Perform Inventory Production Entry

____Print Inventory Production Register

____Perform Inventory Production Register update

____Print the Daily Detail Register



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