01 — Items & BOMs
Build a Bill of Materials that matches how you actually make things.
A BOM is the spine of every other manufacturing workflow. If it is wrong, work orders launch with the wrong components, stock burns down on the wrong items, and purchasing chases the wrong materials. Get the BOM right and most other problems shrink.
- List every component used to make the item — including consumables that are easy to forget.
- Capture quantity, unit of measure and any substitution rules explicitly.
- Version BOMs when designs change so historical jobs stay traceable.
- For assemblies-of-assemblies, link the sub-BOM rather than duplicating components.
Finished goods break down into sub-assemblies, components and consumables. Every level carries quantity, supplier and substitution rules — so a single demand record drives every downstream decision.
Sales demand record · SKU EM-220
Sub-BOM · 1 per unit
Sub-BOM · 1 per unit
- Qty1
- Lead14d
- Qty2
- Lead21d
Substitute available
- Qty1
- Lead7d
- Qty4
- Lead5d
- Finished good carries the demand record from the sales side.
- Assemblies link the right sub-BOM rather than duplicating components.
- Components hold supplier, lead time and substitution rules; readiness shows in colour.
02 — Components & suppliers
Tie every component to a supplier, cost and lead time.
A component without a supplier is a component you cannot replenish quickly. A component without a known cost is a job you cannot price accurately. Make supplier, cost and lead time part of the component record, not something the buyer holds in their head.
- Set primary and secondary suppliers per component, with last-paid cost.
- Record lead time and minimum order quantity explicitly.
- Track substitutes per component, with the rule for when they are allowed.
- Capture certifications, datasheets and supplier part numbers where required.
03 — Demand → work orders
Release work orders from real demand, not from feeling.
Work orders should be a decision rooted in sales demand, forecast and stock on hand — not a Monday-morning instinct. The flow from demand to work order is where capacity, materials and timing meet.
- Build a demand view that combines confirmed orders, forecast and re-stock targets.
- Check finished-goods stock before releasing — do not make what you already have.
- Group work orders by family or work-cell to reduce setup time.
- Sequence releases against material availability and station capacity.
04 — Material readiness
Check material readiness before you release.
A work order released without material readiness is a job that will stall. The cost of releasing the wrong jobs is hidden — operators do work that cannot complete, materials are consumed unevenly, and finished goods slip. A pre-release readiness check is a small habit with a large payoff.
- For each component, mark its status: ready, blocked, on order, substitute available.
- Surface shortages before the work order is released — not after the job starts.
- For long-lead components, flag risk earlier so purchasing can react.
- Document substitutions when they are used so cost and traceability are correct.
05 — Work order states
Track work orders through real states.
A work order should move through a defined sequence — release, pick, start, output, scrap, complete — not float in a vague “in progress” bucket. Each state gives operators and managers a precise question to answer about a job.
- Release: materials reserved, station scheduled, paperwork issued.
- Pick: components moved from stock to the work cell.
- Start: actual production begins; clock starts ticking.
- Output and scrap: count of good units and waste, recorded per run.
- Complete: finished goods received into stock; cost rolled up.
Every work order walks the same path. Each state has an owner, a check, and a piece of data it captures. Skip a state and the variance shows up at month-end — not when you can still act on it.
-
1
Released
Materials reserved · station scheduled.
-
2
Picked
Components moved to the work cell.
-
3
Started
Production began. Clock running.
-
4
Output
Good units counted per run.
-
5
Scrap
Waste recorded with a reason code.
-
6
Completed
Stock updated · cost rolled up.
- Released & Completed are owner gates — clear inputs and clear outputs.
- Scrap always has a reason code so variance is investigable, not just totalled.
- Output is recorded per run, not at end-of-day, so yield trends show up in time to act.
06 — Work cells & queues
Give each work cell its own queue.
A production floor with one shared queue is a production floor where everyone is busy and nothing is on time. Each work cell should see the queue it owns — what is next, what is waiting on materials, what is at risk.
- Define work cells around the actual machine, station or team — not the org chart.
- Build a queue per cell with priority, due date and material status.
- Surface multi-operation routes so handoffs are visible, not assumed.
- Make late-start risk visible so supervisors can rebalance.
07 — Output, scrap & yield
Record output and scrap as you go.
Output and scrap recorded at the end of the day are guesses. Recorded against the run, they are facts — facts you can act on the next day. Yield reporting tells you whether a process is drifting before the cost variance shows up at month-end.
- Record output as it happens, not from memory.
- Capture scrap reason codes — material defect, setup loss, operator error, machine drift.
- Calculate yield per run; surface trends across runs of the same item.
- Tie scrap back to the component, batch and supplier where relevant.
08 — Cost & variance
Roll up cost against the BOM, not against the invoice.
A job that finishes on time but over cost is a job that lost money quietly. Standard cost (what the BOM says) versus actual cost (what the run consumed) is the conversation every production team should be able to have — without an accountant in the room.
- Roll up standard cost from the BOM at release.
- Roll up actual cost from issued components and labour at completion.
- Surface variance per work order and per item family.
- Investigate variance over threshold — pattern, not single events.
09 — Purchasing pressure
Buy from demand, not from habit.
Purchasing decisions in manufacturing should be driven by demand — what is on order, what is forecast, what is being released — not from the buyer’s memory of how it usually goes. A material watchlist that updates as work orders release is worth more than any monthly review.
- Build a material shortage view that updates as work orders release.
- Group purchase orders by supplier with lead-time awareness.
- Receive against the purchase order so component cost and traceability are correct.
- Track late deliveries against supplier performance, not just against the line.
10 — Reporting
Daily reports for the floor, weekly reports for the office.
Production reporting is two audiences. The floor needs daily — what shipped, what scrapped, what is at risk. The office needs weekly — yield trends, cost variance, supplier performance, capacity bottlenecks. Build both, not one.
- Daily: jobs completed, scrap rate, on-time vs late, materials at risk.
- Weekly: yield by item, cost variance, supplier OTIF, capacity by work cell.
- Keep reports drillable to the work order, component or operator.
- For multi-site production, build branch rollups that compare like-for-like.
11 — Rollout
Pilot the BOM and one product family first.
Trying to migrate every BOM and every work order in one go is how migrations stall. Pick one product family, one work cell, one shift — and run the new flow alongside the old one until the data agrees. Then expand.
- Pick a product family with a clean BOM and a recognisable demand pattern.
- Run the new flow for one work cell or one shift first.
- Reconcile output, scrap, stock and cost against the legacy view for at least a fortnight.
- Expand by work cell, then by product family — not all at once.
SUMMARY
The shape of it.
A manufacturing operation works when demand, BOM, materials and production reference the same record. The fastest win for most teams is not new machinery — it is closing the loop between what is being sold, what is being built and what is being bought. This guide is the structure for closing that loop.