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BOM Cost Reduction

With more and more businesses opting for global procurement, the number of companies involved in the process of manufacturing has increased. In such circumstances, the need to maintain a proper list of materials and components used in the manufacturing procedure has become essential. It is also necessary to reduce the cost involved in the manufacturing process. Dragon Sourcing helps you in maintaining the correct records and also offers BOM cost reduction services.

We are an experienced company offering ultimate sourcing solutions to businesses procuring raw materials or finished goods from developing or developed economies. We implement our experience and knowledge into each and every aspect of sourcing. Our professionals offer high end BOM cost reduction services to our esteemed clients.

Dragon Sourcing offers Efficient Bill of Material Cost Reduction Services

Our services help in offering significant savings to our clients allowing them to improve their overall sales as well as increase the profit margin.

Our professionals try their level best to cater to the needs of our large clientele offering the best of services at the most competitive rates. We are considered among the most trusted BOM cost reduction service providers. With deep knowledge and insight, we strive to offer true value for your money and ensure complete client loyalty.

Factors Determining BOM Costs

Handling the Bill of Materials is one of the most critical aspects of product manufacturing.The BOM is the single largest cost element for any product. We help you to realize the factors responsible to reduce the cost factor in the BOM.

  • The latest technological evolution has resulted in minimizing the cost incurred during the procurement procedure, resulting in higher profit margin.
  • Time is of utmost value as far as BOM cost reduction is concerned. Products launched within the shortest time frame fail to materialize on the cost optimization part.
  • The LLC (Low Cost Country) sourcing part should be properly evaluated to ensure low cost in materials used.
  • Component suppliers may decrease costs, but may not have passed on the benefits
  • Lack of suitable purchasing trends arising due to acquisitions and mergers often hamper the cost reduction aspect.

What makes us Different?

Our BOM cost reduction services involves the utilization of a specific type of multi-stage process based on the flexibility level of each client. Dragon Sourcing offers in-depth analysis of the Bill of Material in order to figure out all the necessary cost reduction options available. Our services include:

  • Figuring out all the necessary alternatives available to facilitate reduced costing
  • Trying to generate savings from every purchase consolidation
  • Availing the benefits and applying the necessary features of LLC sourcing
  • Analyzing the present purchase price and then comparing it with the abnormal procurement prices

BOM – An Idea

A list of the components needed to manufacture a product is referred to as Bill of Materials or BOM. It consists of the quantity of material required, besides the manufacturer’s part number (MPN).

Going deep we can say that the Bill of Material is a multi-level document including the following details of every item required to build a specific product:

  • MPN (manufacturer’s part number)
  • Item Part number
  • Approved Manufacturer List (AML)
  • Mechanical characteristics
  • Component descriptions
  • Part specifications

At one point of time, BOM was used for the internal operations of an organization. It helped to keep a record of the changes a product underwent during manufacturing or purchasing. It was also used to maintain a list of the components required to create the product.

These days, the process of manufacturing has changed. With increasing reliance on division of labour, it is has become largely distributed in nature. Today, BOM is the most important file offering detailed product data when product information is transferred from the original equipment manufacturer (OEM) to the electronics contract manufacturing service provider. The latter provides repair or return services for electronic assemblies and parts to OEMs. From the EMS, the product information is transferred to its vendors and suppliers.

The 3 Errors of a BOM

With the manufacturing process getting complicated with the passage of time, the accuracy of a BOM has become critical. It is important to avoid errors in order to ensure a smooth outsourcing process. There are mainly 3 errors in a BOM, namely, consistency, completeness and correctness.

# Consistency

The first error comprises of the following.

Information – You might identify a difference in the information in the BOM and the one present in design files and blueprints. For instance, a component may have 9 locations, while the BOM indicates 10 locations.

Format – BOM format may vary from one transmission to another. This can happen irrespective of the fact that you may be obtaining it from the same customer. Inconsistency in format often leads to confusion and data mismatch, resulting in slow decision-making.

Language – It is imperative to maintain the same language style and format in all BOMs to avoid consistency errors in regards to language.

# Completeness

The most common BOM defect is incomplete data. Part description, quantity, approved manufacturers list and reference designation are the most common data missing from the BOM. The absence of AML causes lots of issues in the long term. Omission of such important pieces of data make it difficult to analyze and verify the received components for the purpose of manufacturing.

# Correctness

A BOM with incorrect data causes lots of problems in the outsourcing process. Some of the most common mistakes include obsolete data, invalid supplier or manufacturer information, incorrect part numbers and more. Incorrect MPN causes a lot of trouble when you try to match the number with the actual part. Some problems arise due to incorrect, yet approved manufacturer’s list. Receiving information in hard copy format often leads to incorrect data as it involves manual re-entry, which is both time-consuming and error-prone.

Dragon Sourcing Incorporates Essential Strategies to Reduce the Bill of Material Cost

We ensure BOM cost reduction through proper amalgamation and analysis of the quantity of sub-components. Our professionals dedicate time and effort to correctly standardize the material lists and parts. If you plan to reinvent things constantly, adopting certain strategies to improve the BOM management part is crucial.

# We use the sub-structure analysis model for BOM

Focusing on the sub-structure as well as the sub-assembly analysis is essential to reduce BOM costing. The two analysis models allow you to understand the process of amalgamating the most common sub-components. We make sure that the products’ form, function and fitting are not impacted negatively because of the change. Our experts ensure decrease in manufacturing cycle time, thus reducing the costs involved in the purchasing process.

# Our experts develop new designs around standard components

The practice of design first followed by fitting often cause problems in the manufacturing process as components do not fit into the design appropriately. The correct approach is to make the design according to the most common components you want to use. This helps in reducing costs.

# We do not differentiate between the sub-components and consumables

We help our clients to understand that consumables, sub-component parts and raw materials within the Bill of Material should never be separated. We help businesses realize not to leave any consumable like, assembly screws and paints out of the BOM structure. Ignoring any component in the BOM causes confusion on the budget analyzing part. Dragon Sourcing assists businesses to avoid such negligence and include everything in the BOM list so as to facilitate BOM cost reduction.

Dragon Sourcing offers efficient BOM cost reduction services to its esteemed clientele. Call us or send us an e-mail with your queries regarding our high quality and reliable services.

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