Synopsis

Overview

The ‘Bill of Resource’ captures the entire part path, providing visibility to the components and operations required to manufacture parts. By intelligently capturing selected Part, Material & Supplier Operational data, companies can pro-actively coordinate the extended value chain to manage supply risk while reducing the total cost of acquisition of their finished parts, components and assemblies.

Importance

Many manufacturing companies have aggressively embarked on the journey towards outsourcing without first establishing an efficient methodology, framework, and tool set to manage the process. Take for example the scheduling and coordination of resources, each basic to ensuring business continuity and earnings certainty. Once an internally controlled supply chain planning activity must be modified and adapted to extend this process across multiple enterprises and geographies. Also, where critical path production resources are limited (materials and/or part transformation capacities), its essential to have the capabilities to monitor key points in the network to identify potential issues and pro-actively intervene on behalf of the entire Supply Network to coordinate these constraints. Relying solely on contractual agreements to drive desired behavior through the supply network or as a means to remedy the impact of a supply disruption is shortsighted and will not suffice. The consequences of being caught off guard and trying to fire-fight a production line shutdown or missing an important delivery commitment is more than enough incentive to begin actively coordinating critical variables throughout the value chain. This is especially relevant in a world where supply and demand variability, extreme market volatility, and widespread financial instability has become a new economic reality.

Insight

Operating effectively and efficiently across multiple enterprises and through n-tiers of external stakeholders necessitates an understanding of the critical inputs to your supply chain. The key to achieving this is held in the ‘Bill of Resource.’ By definition, the ‘Bill of Resource’ captures the operations, parts, and materials required through the manufacturing process to deliver a finished product. It provides the manufacturing company (or ‘Network Sponsor’) with the relevant data needed to (1) translate finished goods production schedules into part/resource schedules (demand plans) for any operation or point along the value chain (where Bill of Resource data has been captured) and (2) aggregate requirements across the entire network for operations or resources in short supply.

Example of the Bill of Resource: Gas Turbine Aircraft Engine

Value Summary

The Bill of Resource provides the information necessary to develop a sufficiently accurate understanding of the commodities-materials, parts and related interdependency’s that exist at critical points throughout the extended Supply Network. With this foundation in place, companies can pro-actively manage their supply network by establishing trigger levels for critical variables, monitoring volatility, and take action to mitigate potential exposure. It also provides the basis for capturing value/opportunities through collaboration.

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