Although manufacturers have concentrated on driving costs and time out of their supply chains through Web-based integration efforts, a much larger potential for saving time and money and increasing productivity is hidden in the bill of materials (BOM)--i.e., the set of data that defines a product and its components.

By eliminating errors in the original BOM, and adding collaboration to product life-cycle management (PLM) processes as early as possible (starting in the initial concept stage), manufacturers can increase accuracy at a low cost. When corrected in later manufacturing stages, these errors can cost several orders of magnitude more and impact manufacturing schedules.

Meta Group research indicates that roughly 65 percent of all discrete-manufacturing BOMs (80 percent in high-tech, automotive, and aerospace) contain errors (e.g., inaccuracies, inconsistencies, or incomplete data). The negative impact of these errors is exacerbated by inter-enterprise integration. Because the BOM serves as the primary reference for product data, an original error from an OEM is compounded as data is repeatedly translated from one system to another in a highly distributed and complex value chain. This compounded error can add as much as 50 percent to the upfront cost of many complex manufactured items, such as electronics, automobiles, and airplanes.

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The earlier in the design and manufacturing process that these errors are discovered and corrected, the less expensive they are to fix. Yet most enterprises' business process integration efforts do not address this issue. For instance, an error in a part number or specification that is caught in initial design phases of manufacturing costs pennies to fix. If that error is not caught until later in the product life-cycle process, the resulting cost of an engineering change order will be much higher, because the information has already passed between departments and out to trading partners. With each subsequent step in the manufacturing process, we estimate that the cost of a BOM error increases as much as 10 times.

If an error is not identified until the start of volume manufacturing, it can bring a production line to a halt and, in some cases, require redesign and subsequent retooling of that production line. If the product goes into the marketplace with a wrong or faulty part, it could create a major recall or, worse, cause injuries to customers.

In some cases, BOM errors occur because of lack of collaboration between designers or engineers at the OEM and manufacturing service partners. But BOM errors are increasingly caused by mistranslations between systems (e.g., CAD and product data management [PDM], ERP), whether inside a vertically integrated manufacturer or between trading partners. For instance, though a part may be identified by 10-digit numbers, the same component might have one 10-digit number assigned in the manufacturer's CAD/CAM system, a second 10-digit number in its ERP system, a third in its supplier's ordering system, a fourth in that company's manufacturing systems, etc.

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