Bill Of Material (also known as product recipe) is a list of ingredients (materials and subassemblies) and the quantities you use in order to create your product. Recipes can be created for products and their variations. You can create a specific recipe for each product variant.
You can add both materials and subassemblies to your Product Recipes. In Brahmin Solutions, subassemblies are products, not materials. Each product can be a subassembly and also sold to customers simultaneously. There is no difference between products and subassemblies in Brahmin Solutions.
Why use a bill of materials?
Automatic inventory adjustments - Brahmin Solutions will make automatic inventory adjustments based on the list of ingredients for a product (which is based on the Product Recipe by default) when you create and complete Manufacturing Orders.
Manufacturing cost calculations for your products - the cost of your product includes materials and subassembly costs, which are calculated based on the quantity used and the Average Cost of the ingredient in stock. The other main part of the manufacturing cost comes from your Production Operations.
Checking the availability of materials for Manufacturing Orders - when creating Manufacturing Orders, you can immediately see whether the required materials and subassemblies are available in stock. If ingredients are not available, you can conveniently create relevant Purchase Orders for materials or Manufacturing Orders for subassemblies.
Example:
Imagine receiving a sales order for a bicycle and you to start making the product.
Your product recipe for the bicycle includes 1 frame, 2 wheels, and 1 gear system, with Purchase Prices of $200, $50 each, and $120 respectively, and supply delivery times of 2 days, 1 day, and 3 days. In your inventory, you have 2 frames and 1 wheel, but no gear systems.
Please note that the cost of ingredients used in the product is determined by the average cost of materials and subassemblies that are currently in stock. In case an ingredient is not in stock, the average cost is not applicable, and the default purchase price or manufacturing cost of a subassembly is used instead. To make things simpler, let's assume that the average cost matches the purchase price in this example.
The manufacturing cost for your bicycle will include the material costs ($200 + 2*$50 + $120 = $420). Additionally, the cost of Production operations will be added to this manufacturing cost.
Upon creating a Manufacturing order, you'll notice that you have enough frames but insufficient wheels and no gear systems. Therefore, you'll need to place Purchase orders for these materials.
Once the Manufacturing order is completed, your inventory will automatically decrease by the amount of materials used (1 frame, 2 wheels, and 1 gear system) and increase by 1 assembled bicycle.