Aug 14 2018
I shared the BOM rap post with the TPS Principles and Practices group on LinkedIn, in order to tap into the TPS knowledge in this group, and this is what I learned from Todd McCann, Carey Boggess, Jeff Merriss, Hein Winkelaar, and Gary D. Stewart.
My thanks to all for their valuable input on the control of BOMs within Toyota and the uses BOM data is put to. What these responses did not address, however, is the information model for the BOMs, including what items are in and how BOMs are structured at Toyota, as opposed to other companies.
Control of the BOM in TPS
Much of this discussion is about revision management, which is an issue with all master data, not just BOMs and, as such, deserves a separate treatment.
In-house Specification Management System
Carey Boggess, PMP: The specifications for a vehicle are housed in a system built in-house called PSMS (Product Specification Management System) and maintained by engineers. Having been on the receiving end of the parts requirements file generated each month, I can tell you that issues with specifications were rare after a model was launched and in production for a time.
There were always some issues while in pre-production, and there were usually a few issues uncovered during the first few days of a launch, but they were usually quickly visible and corrected quickly. It was rare to have one be a major impact to the supply chain.
Here is what I have seen as the best article about Toyota BOMs. This entire website has the best real world descriptions of detailed Toyota processes.
Role of Production Control
Jeff Merriss: At Toyota, it is Production Control that maintains the BOM, to reference ‘The Lord of the Rings’, Production Control is the one ring that controls them all. Production Control coordinates all changes and implementation timing between design, supplier, quality, end user,etc…
The Production Control group controls the parts list and the engineering change levels. Each department has their role to play. Production Control is the control department that insures all departments are in compliance before implementing change
Jeff’s answer seems to imply that the Production Control department at Toyota controls every data item attached to the gozinto structure, including what is not directly related to production control functions. Assembly instructions, quality specs, and contracts with external suppliers, for example, are attached to nodes in the gozinto network by owned by other groups.
The Toyota website calls TPS a “Production Control System.” Production Control (生産管理), in Japan, encompasses all of manufacturing management, including the organization of production; in the US and Europe, Production Control is limited to numbers work: production planning and scheduling, tallying production results and WIP levels, etc.
It’s a staff function, with no direct role in running production or engineering. The operators, supervisors and line managers report to a production manager, not to Production Control.
Managing BOMs or other master data requires a different set of IT skills than Production Control as conceived in the US or Europe. Oracle calls it technical data management and some companies use this name to designate the group that does this work.
There, I believe that the equivalent of what Jeff is saying is to put technical data management under the responsibility of the top manufacturing executive at the corporate level. It has to be at the corporate level if a product is to have the same BOM when made in different plants.
As another author pointed out, the only way to have accurate BOMs is for management to demand it. The responses suggest that Toyota’s management demands it.
Jeff Merriss: There is absolute adherence to the process of controlling Engineering Change Implementations. I have seen a few times where a supplier or designer has worked around the process. The reaction by Toyota were similar to crushing an ant with a hammer. High level meetings between the Toyota and the Suppliers to ensure this doesn’t happen again. There is no 98% rule at Toyota, it is 100% with no exceptions.
Gary D. Stewart: If you are trying to separate out what you see as the “production” BOM – then you will never get to fully understand the role of BOMs in Toyota.
As others have mentioned the BOM is a RIGID STANDARD that is used in many ways across the entire Toyota business systems.
This is why the “crushing an ant with a hammer” comment is correct – you don’t just stuff up the production BOM – you stuff a whole lot of other uses developed from the BOM across many areas of Toyota.
Uses of the BOM in TPS
Several of the responses were about uses of BOM data that I had not heard of before.
Todd McCann: Based on my knowledge of BOMs and use for material planning, production planning, logistics planning etc, there is one element of use that I know of in Toyota for BOMs, the Jikotei-Kanketsu
When failure of conformity arises the BOM acts as a resource back to origins of materials, methods, standards, and processes which allow causal analysis to come forward with ease.
I worked in a nuclear power plant implementing TPS at the tool level. They had traceability paperwork for materials that were used for Safety Systems back to the mine or other source of origin. The NRC required this as a minimum standard.
The JKK system enables anyone who applies it a data set from which to find sources of variables and cause of something that happened or could potentially happen.
I don’t see any problem with their BOMs
I have worked with indented BOMs and many shapes and sizes. The one “issue” I had with some of the manufacturers with whom I worked was the old adage, less is more and most people didn’t know how to read one. Except those who created them.
Todd’s understanding of the concept of BOM seems to include methods, standards, and processes. I am trying to separate them, so that we can address the issues of the BOMs without crosstalk from the other types of master data. Todd brings up traceability, which is achieved through revision management and is relevant to all master data. But I had not made the connection with JKK.
Hein Winkelaar: I was trained by JIPM to think of the BOM as one of 3 gemstones to optimize the business in TPS:
A : OEE is the relative usefull utilization (%)
B : TAKT is the capacity rate (unit/time)
C : BOM is the financial translation of time and money ($/time)
Where BOM shows the financial lagging indicator… because BOM is a consolidated financial projection of future planning…
I remember my Sensei looked at our BOM and asked one question: “How often do you update your BOM?”
The reply of our CFO : “Once a year, at our yearly budget cycle”… made him ask the next question, that opened my eyes: “Why only once a year??”
I found it odd to see a BOM described as a “financial translation of time and money.” It’s not consistent with a BOM or Bill of Materials being a product’s structure of subassemblies, materials and components.
Financial data is attached to BOMs for Purchasing or Accounting purposes, but don’t play much of a role in generating a Master Production Schedule.
Gary D. Stewart: Hein Winkelaar gives you the best clue. The basic BOM is extended to become a gentani of cost that forms the whole basis for Cost Reduction planning of the current vehicle – and cost target planning for the design of the next vehicle. And yes it even extends out to become the financial forecasting system for the entire profit planning for Toyota. So stuffing up the BOM is a serious, serious, crime for which there will be major ramifications.
Hein is also correct when he implies this BOM based system is not once a year but continuously updated throughout the year.
This is also why Jeff points out that there is a sole department responsible for total control of the base BOM. It is also why Carey said there are rarely problems with the BOM and specifications even during a new vehicle introduction.
And the BOM also is used as a problem solving tool as Todd mentioned. The BOM is so vital to how Toyota works as an entire entity that it gets serious attention when anything at all goes wrong.
To come back to your original question: the complex way Toyota’s BOM is used so differently to the way most businesses use it – will mean that most people will fail to understand that BOM’s are not just “production” BOM’s as exist in most other”normal” businesses.
And most ERP systems do not use BOM’s in the same way Toyota does -which is why Carey talked about an in-house system.
When I create a gentani of cost from a firm’s BOM – I have never found a single BOM to be correct out of the hundreds that I have done. Typically the errors range from 3-10% of true cost, to the worst ever – a total A$97 error in a BOM of $495 sale price. This firm believed they were profitable – because the accounts said so – they just could not work out why they kept running out of Cash.
But the instant we turned the BOM into a gentani of cost – BING!! problem solved.
Another trick is to convert the “current” “production” BOM into a good Lean Design type framework – and suddenly you find the design will not work – that is – it will point out “missing” elements or info in the BOM ,i.e., it is not easily manufacturable – at least not without cost, quality or time problems.
I suspect I am not the only one to hear the word gentani for the first time, and some explanation might be useful. Etymology, here, is not helpful. “Gen” (原) means “original” and “Tan’i” (単位) “unit.” My guess, based on this, was that, if you had converted a measurement from inches to cm, the “gentani” was the original unit, inches. Obviously, this guess is wrong.
Googling “Gentani + Toyota,” I found a 2013 presentation by Toyota Europe CIO Pierre Masai, defining it as a “Basic KPI” and describing it in a way that resembles what the Business Process Reengineering people called a cost driver.
Steve Hope, manager of environmental affairs for Toyota Europe in 2014 described the minimum amount of energy needed to achieve a results as a “gentani.” Gary elaborated on this concept as follows:
Gary D. Stewart: Gentan-i means “basic unit” – so a gentan-i of cost means costing right down to the most basic unit. (e.g., we used to measure the number of cuts from a saw blade + the number of times a blade could be resharpened – and then calculated this to a single cost per unit)
In BOM terms it means taking the BOM right down to the most basic unit (time, materials, labour, etc).
Typically most firms use an abbreviated BOM – that is they only go down to a level where the basic unit can be manually “rolled-up” to say level 4 of the BOM – (most ERP systems facilitate this) – but Toyota BOM’s are supposed to go right down to the lowest possible level – even if that means there are 20 to 30 levels to the BOM.
The purpose of such precision is that the team leader can use this fine detail gentan-i of cost as a problem solving tool – i.e. why did I get less cuts from this blade? why did I use more sanding disks than normal? Why did I use too many sets of gloves today?
I know to many people that this will seem like Toyota madness – but its purpose is to put decision-making capability into the hands of the operators and team leaders on a “live” basis so they can react instantly when something varies form the very visible gentan-i standard.
This is why Jeff and Carey above said that the BOM is controlled by production (i.e. as close to the actual touch operations as possible).
But when firms use an abreviated BOM – this form of decision support is not available to the operators – that data is not fine enough.
That is why I convert a BOM into a gentan-i of cost – when you have to put the very fine detail into the Cost gentan-i – it reveals all of the “holes”in the BOM.
As many do, Gary expands the BOM to include all sorts of data items that, important though they may be, are not part of the product structure. After all, it’s a bill of materials, not time or labor. The need for 24 screws to fasten a lid to a housing is intrinsic to the design of the product. This number is the same whether you manufacture in Sydney, Seattle, or Nairobi. The purchasing lead time of the screws and the amount of labor needed to fasten them, on the other hand, differ by site.
Toyota’s Global Body Line (GBL), for example, is designed to weld the same car bodies with welding robots in some plants and manual welding in others, using the same fixtures and achieving the same results. The BOM is the same in both cases but amount and type of labor used is obviously different.
I don’t recall ever hearing of ERP systems actually facilitating any analysis of BOMs. Instead, my experience has been that you need to rely on an expert in the system to extract the data in some hopefully usable form, and then analyze it by other means.
Where do you find a 30-level bill of materials? So much for flattening the BOMs! The deepest I have heard of is 13 levels, and it is perceived as too many.