Assembly vs. Production - An Overview

A Bill of Material (BOM) defines the manufacturing or production of an item comprised of sub-components.  It can be difficult to decide whether to use Production or Assembly BOMs when managing your inventory.  I will discuss several high-level differences between these two approaches and give examples on how to set them up. 

An assembly BOM defines which items and resources are required to assemble the parent item.  A resource cannot be a machine or work center.  You do not need to have a resource defined, meaning the assembly BOM will simply contain a list of sub-components.  If a customer requests a slightly different version of an item, you have the flexibility to modify the assembly order on a per-sales order basis.  This is a good option if you only need to plan for the combination of simple components, without the need for manufacturing. 

An item with an assembly BOM is replenished with an assembly order, which can be created directly from a sales order.  If you’d like, you can also sell the parent item as an unassembled kit.

Production Bill of Material:

A production BOM can be a more complicated manufacturing process than an assembly order.  A resource in a production BOM could be a work center or a machine center, unlike in an assembly BOM.  Operations and actions required during production are defined by routings.  If you need to plan for manufacturing, using production processes will give you the capability to do so.  Production BOMs also support versioning, allowing you to define several types of the item.  When creating a production order for the item, NAV select a default BOM.  You can define the Production BOM Version Code on the line of the production order you’d like to adjust. 

Production processes also allow more advanced planning, calculating MPS and MRP.  MPS is the master production schedule and shows a forecast for that item’s manufacturing depending on orders in your database.  MRP calculates the material requirements for the item’s forecast, helping you ensure you have the right ingredients when and where you need them. 

An item with a production BOM is replenished with a production order.  Like an assembly order, you can create production orders directly from a sales order.

Assembly vs. Production – new item setup:

To create a new item replenished via assembly BOM:

1. Create a new item.
2. Select the Assembly BOM option under Assembly:

                             This example found in the CRONUS USA, Inc. database contains the components for a front bicycle wheel.

To create a new item replenished via Production BOM:

Note that you can complete the following steps in any order but will need to revisit the item card if you create the item first.

1. Create a Production BOM
   1. Found via Departments/Manufacturing/Product Design/Production BOM OR Search for “Production BOM”
   2. Enter in your components as lines on the Production BOM page. These components can be either Items, or other production BOM creating a multi-level BOM.  A production BOM used as a component will need to have a status of “Certified”.
   3. When your production BOM is completed, change the status to “Certified”
2. Create a Routing (not required)
   1. Found via Manufacturing/Product Design/Routings OR Search for “Routings”
   2. The routing defines Machine and Work Centers required for manufacturing. I have an example copied below that shows the required operations to create a front bicycle wheel.
   3. When your production routing is complete, change the status to “Certified”

An example found in the CRONUS USA, Inc. database:

      3. Finish by creating a new item using the production BOM and routing. In addition to required fields, visit the replenishment tab and set the               Replenishment System to “Prod. Order”.  Then enter in your new Routing No. and Production BOM No.

It’s important to know which of these two approaches is better suited to your inventory management.  I’m hopeful that showing the two side-by-side can help highlight the advantages of each and make this decision a little bit easier.

If you are interested in learning more information on Assembly vs. Production, attend our webinar on February 12, 2019 at 1 pm CT / 2 pm ET. I will detail how we can create different versions of the BOM to represent variations of that item. 

Thanks for reading,
Daniel Palmer