Linking a BOM to stock and purchasing

A BOM turns "we need to build this" into "we need these parts." Stock levels then say what you already have. The gap is what you buy.

When the two are linked in software, you stop doing that sum by hand.

What happens when you start a build

Wikipedia describes a production order that's tied to the BOM. Issuing it may reserve the components that are in stock and raise requisitions for those that aren't.¹ A requisition is a request to buy.

Reserving means the system sets those parts aside so a second order can't count the same stock twice.

That's the whole link. The list says what's needed. Stock says what's on hand. The difference is what you buy.

Why the list has to be right

The ERPNext manual states it plainly: to make accurate purchase requests, you must always maintain correct BOMs.² If a list is short by a part, the system won't ask for it. You'll find out when the build stalls.

In the ERPNext manual you select a source warehouse on each line so inventory can be tracked.² If stock sits in the wrong place in the system, the check goes wrong too.

Using up stock as you build

Some systems take parts out of stock for you when a build finishes. In the ERPNext manual, one setting consumes raw materials automatically, using the quantities in the BOM multiplied by the quantity of finished goods.²

Think about what that means. If the list says four screws and you really use five, stock will drift from the shelf. Count the shelf now and then.

Planning ahead: MRP

Material requirements planning is the formal version. One of its stated aims is that raw materials are on hand for production.³ Another is planning purchasing alongside manufacturing and delivery schedules.³

The BOM is what lets it work backward from a finished product to the parts. For a look at the software types that do this, read Kinds of software that hold a BOM.

Reorder points for parts you always keep

Not everything is bought per order. You might keep common screws on the shelf all the time. For those a reorder point can trigger buying.

The reorder point is the stock level that triggers a replenishment. It's normally calculated as the forecast usage during the lead time plus safety stock.⁴ Lead time is the gap between ordering and receiving, and the article says there is always some time lag.⁴

Safety stock is the extra you hold in case of a surprise. It's your buffer.

So a BOM drives the order-by-order parts. A reorder point covers the shelf staples. Many shops use both.

Checks before you trust it

• Do the BOM quantities match what the build really uses?
• Is each part in the right warehouse in the system?
• Are lead times on the item records real, or just defaults?
• Does someone review the purchase requests before they go out?

The last one matters most. A person who knows the shop can catch an odd request quickly. Software suggests. You decide.

Tools vary in what they reserve and when, so confirm the behavior in your own tool's documentation before relying on it.

If the list itself changes, read about how change records work so reservations and orders don't run off an old version.