Bills of materials (BOM)
Component lists, quantities and scrap rates are defined for finished and semi-finished items. In multi-level BOMs, a semi-finished item becomes a component of the level above it.
INDUSTRY: MANUFACTURING
One flow, from bill of materials to finished-goods cost.
In manufacturing, the real problem is rarely on the machines; it sits in the gap between the plan and what actually happened. SAP Business One connects bills of materials, production orders, material requirements planning, stock movements and costing to a single data model. NFKSOFT shapes that model around your production flow and feeds it with real data from the shop floor.
What ERP actually solves in a manufacturing business
In a manufacturing company, data is created in several places by nature: a supplier confirmation in purchasing, a raw-material issue in the warehouse, work-order progress on the floor, cost in accounting. The moment one of those links falls outside the system, the whole chain turns into guesswork. The familiar results are a line standing idle while the material sits in stock, a finished-goods cost that only appears at month end, and delivery dates quoted defensively.
SAP Business One treats production not as a separate island but as the continuation of purchasing, inventory, sales and finance. Bills of materials are tied to item masters, production orders to stock movements, stock movements to accounting entries. When a production order is closed, the cost of the finished item is not waiting to be calculated; it already exists in the system.
NFKSOFT's job is to shape that standard structure around your production type. Make-to-stock and make-to-order are not configured the same way; a single-level assembly does not use the same BOM logic as multi-level process manufacturing. Settling that distinction before implementation is the single most decisive step in the project.
Your production flow, expressed in ERP
Every stage from raw material to finished goods has a document and a record behind it in SAP Business One:
Production orders
Each order carries what will be produced, in what quantity, which components will be consumed and the planned dates. Component issue and finished-goods receipt both run through the order.
Material requirements planning (MRP)
Open sales orders, current stock, open purchase orders and forecasts are evaluated together, producing purchase and production recommendations.
Raw and semi-finished stock
Components are tracked per warehouse. A semi-finished item is both an output of production and an input to the next order, held in the same inventory structure.
Link to purchasing
An MRP recommendation turns directly into a purchase request and order; material received today becomes stock available for production the same day.
Finished goods and dispatch
Completed items enter stock, match the sales order and leave on a delivery document. No manual hand-off remains between production and sales.
BOMs and production orders decide how well the rest works
The bill of materials is the master data of the production module. A badly defined BOM does not only affect production; it distorts MRP results, stock consumption and cost. That is why we review the structure with you before mass-loading BOMs: which item is genuinely a stocked semi-finished good, which one is only a production stage, and at which level scrap should be defined.
On the production order side, the critical question is how components are issued. Are they backflushed when the order is released, reported partially as work progresses, or confirmed with barcodes in the warehouse? That single choice determines your stock accuracy and how much your reports can be trusted.
Subcontracted operations are handled separately. Sending material to a subcontractor, receiving the processed item back and reflecting the service invoice into cost is an area that, if not designed up front, ends up being corrected by hand later.
The data discipline MRP depends on
Material requirements planning is a powerful tool, but it is only as accurate as the data feeding it. Before go-live we settle the following:
- Correct procurement method (purchased / produced) on every item master
- Planning parameters such as lead time, minimum order quantity and order multiple
- Realistic safety stock levels defined per item
- Up-to-date BOMs with scrap rates that reflect reality
- Complete open purchase and sales orders in the system
- A clear warehouse structure if planning will run per warehouse
- Which periods and items a sales forecast will cover, if forecasts are used
- Who reviews MRP results, and how often
Serial and batch traceability
In food, chemicals, pharmaceutical supply, cable and packaging, batch tracking is not a preference but an obligation. SAP Business One supports serial number or batch management at item-master level; once enabled, batch information is required on the receipts and issues of that item.
Configured properly, this gives traceability in both directions: from a shipment delivered to a customer back to the raw-material batches it was made from, or forward from a suspect raw-material batch to every finished item and customer it reached. In a quality complaint or a recall, that is the difference between hours and days.
The hardest part in practice is deciding who enters batch information on the floor, and when. Entered in bulk at the end of the day, traceability weakens. Building a barcode-confirmed reporting flow in the warehouse and on the shop floor is what keeps batch tracking from staying a paper exercise.
Costing and production reporting
When your production cost is formed, and how accurately, is the foundation of every pricing decision you make.
Material cost
Components issued to a production order enter cost according to the valuation method on the item master; the finished-goods cost is built on that consumption.
Labour and overhead
Resource and labour lines added to the BOM, and the allocation approach behind them, are defined together during the project, and it is agreed in advance which expense is reflected on what basis.
Planned versus actual
Planned component quantities are compared with actual consumption per order, showing where variance concentrates by product and by line.
Scrap and loss analysis
When scrap is tracked through actual reporting instead of a fixed BOM percentage, real cost surfaces and chronic loss items become reportable.
Production progress reports
Open orders, completion rates and delayed jobs are monitored through standard reports, user queries and alerts.
Management dashboards
Dashboards that combine production, stock and sales data move the weekly meeting off spreadsheets and onto one screen.
Where the standard module ends and development begins
We make this boundary explicit from day one, because that is where expectation gaps in manufacturing projects most often form.
Included as standard
Bills of materials, production orders, component issue and finished-goods receipt, the MRP wizard, multiple warehouses, serial and batch tracking, inventory valuation and accounting integration are standard SAP Business One capabilities.
Shop-floor reporting screens
Letting operators report job start, finish, downtime and scrap from a screen on the floor is delivered by the NFKSOFT Production Tracking App, an application layer rather than a standard screen.
Barcode-driven warehouse and line feeding
Confirming material issue and finished-goods receipt by scanning barcodes on a handheld terminal falls under the Warehouse Management App.
Machine and equipment data
Collecting data automatically from PLCs, counters or an existing MES/SCADA system is an integration project. Scope depends entirely on what the source system can expose.
Industry-specific screens and fields
Quality control forms, specific label layouts, additional fields and approval steps are handled through adaptation and custom development.
Custom cost and production reports
Analyses that go beyond the standard reports are built as dedicated queries and report developments.
How a manufacturing project runs
Production is the ERP area that demands the closest observation of how work actually flows, so the analysis follows the line rather than an org chart.
01
Shop-floor and process analysis
We observe your production type, workflow, stations and current recording methods on site, and assess the state of your BOM and item data.
02
Design and data preparation
We define the warehouse structure, BOM levels, batch/serial policy and costing approach, and get master data ready for migration.
03
Pilot line and validation
We run end to end with real orders on a selected product family or line, then compare the results against actual production.
04
Roll-out and reporting
We extend to all product groups and switch on shop-floor reporting and management reports.
Questions we hear from manufacturers
Does SAP Business One support multi-level bills of materials?
Yes. A semi-finished item can have its own BOM while also being a component of a higher-level item. Production orders are opened per level, and MRP takes lower-level requirements into account when planning. How many levels you go down is less a technical limit than a design decision about which intermediate items you want to hold and track in stock.
We manufacture to order; how does that differ from make-to-stock?
The difference lies in what triggers planning. In make-to-stock, forecasts and safety stock drive it; in make-to-order, an open sales order creates the requirement directly. SAP Business One supports both, but item-master parameters, MRP scope and the way orders are released are configured differently. Companies running both models usually define a separate policy per product group.
What do we actually get when we run MRP?
MRP evaluates current stock, open purchase orders, open sales orders, production orders and any sales forecasts together, then derives the net requirement per period. The output is not a posted transaction but a recommendation list you review and approve: what to purchase, when and how much, and when to release a production order for which item. Recommendations can be converted into purchase orders or production orders in a single step.
How detailed can batch traceability get?
For items with batch management enabled, receipts and issues are recorded with the batch number. That lets you move backwards from a delivery to the raw-material batches used, or forwards from a raw-material batch to the finished items and customers affected. The strength of the trace depends on batch data being captured at the moment of the movement; bulk, delayed entry breaks the chain.
Can we collect production data automatically from machines or handheld terminals?
That sits outside the scope of the standard module and is handled as separate work. Operator reporting is covered by the NFKSOFT Production Tracking App, and warehouse or line-feeding movements by the Warehouse Management App. If data is to come from PLCs, counters or an existing MES/SCADA system, we first examine what the source can provide and in what format, then define the integration scope accordingly.
Related pages
YOUR MANUFACTURING PROJECT
Let's walk through your production flow together.
Tell us about your BOM structure, your planning needs and the conditions on your shop floor. We will show you clearly how far the standard SAP Business One capabilities take you, and where an application layer is genuinely needed.