Supply Chain integration is!

But let’s backup.

A recent article over on Nasscom Community stated to purport why BOM integration is the missing link in direct material sourcing software.

The article made a number of great points:

0. Every component in a BOM represents a commitment to a supplier: as well as a lead time, a cost assumption based on historical pricing, revision-level tracking, and, ultimately, a production schedule that cannot afford to slip.

1. Direct integration allows direct sourcing event initiation from line items. No more cut and paste (or, even worse) manual entry of existing information into the e-Sourcing system.

2. Direct integration enables multi-level BoM visibility. Complex manufactured goods rarely have a flat bill of materials. Sub-assemblies nest within assemblies, and procurement must coordinate across those levels.

3. Direct integration creates a feedback loop that improves future procurement decisions. When actuals are mapped back to BoM line items, planners have a data trail that generic procurement systems do not provide.

But here’s what it’s missing.

Lead times depend on the supplier factory location, carriers, and currently available routes.

Quality, Risk, and Compliance data, used when multiple suppliers are being considered, lie in the Quality Management, Supply Chain Risk, and Compliance modules in the Supply Chain Suite.

Current stock and forecasts lie in the inventory management and forecasting modules in the supply chain suite.

The BoM only holds what needs to be sourced. It doesn’t hold all of the data required for Procurement to make a good sourcing decision — that comes from the supply chain systems, which generally include the BoM!

There’s a reason Bob Ferrari and I wrote a 7-part series on why direct sourcing solutions [which, by definition, include BoM Management] don’t work for direct, and that’s because direct sourcing needs to be tightly integrated with, if not part of, the supply chain suite in order to be effective.