This problem is compounded by the number of enterprises engaged in the process, and is the result of the rapid growth of manufacturing outsourcing during the past 15 years. The need for both OEMs and contract manufacturers to protect information about parts or components fuels the problem. Although part numbers can be used with schematics to reverse-engineer a product, the part number itself may reveal information about the supplier and costs. The result is that manufacturers and their suppliers guard part numbers and resort to building translation tables to enable them to move BOMs from one enterprise system to another. Although XML format standards and business process automation help the transactional procurement process, they have made these errors potentially more dangerous and costly by reducing the time between steps in the product life cycle, and thereby reducing the time and opportunity to recognize and correct errors.

For example, in high-tech manufacturing, if a BOM has 100 unique parts and 40 of the parts have discrepancies to resolve, the processing time would increase by 26 hours or approximately 3.5 working days (assuming the contract manufacturer and OEM immediately resolve the discrepancies). If additional queue/wait time required to resolve issues is added to the calculation, the overall cycle time can increase by weeks.

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This problem is not insoluble. Translations between systems can be facilitated, and the likelihood of errors reduced, by applying a recently introduced series of standards, Product Data eXchange (PDX). Based on XML and usable with any system that recognizes XML, PDX is gaining support rapidly in high-technology manufacturing and is beginning to gain traction in the automobile and other manufacturing industries. PDX applies XML technology to the translation problem, virtually eliminating the potential for error by enabling BOMs to be seamlessly transferred between trading partners. Developed by the National Electronics Manufacturing Initiative, portions of PDX have been accepted by the ISO and ANSI. Several PDM vendors (e.g., MatrixOne, Agile, PTC, EDS, IBM) are implementing PDX in their products or considering doing so.

Much of the problem with BOM errors is caused by inconsistencies among the PDM products. The vendors recognize this and are working toward greater PDM/PDM integration as part of the industry's "one source of truth" effort. We expect that, in 12 to 18 months, vendors will have new versions of their products on the market, which incorporate the PDX standards to address the issue of mistranslations in exchanges between their products.

But this standard only solves part of the problem. The BOM contains a great deal of valuable information that, in most organizations, is not accessible to senior management. Manufacturers must add collaboration and leverage their PLM platforms like knowledge management systems to provide CxO-level visibility into the design and manufacturing process.

"Better intra- and inter-company collaboration, such as visualization through design collaboration and onward, would eliminate a large percentage of BOM errors--especially between trading partners," says Meta Group analyst Joanne Friedman. "If the PDM system, which is a secure, version-controlled repository of design, component, and specification data with attached drawings, schematics, etc.--a system with a great deal of functionality--were available to CxO-level executives and used as a single source of truth, supply chain efficiencies (e.g., transformation), manufacturing process efficiencies (e.g., reduced cycle time for earlier time to market), and financials (cash flow) would be positively impacted. 'Make it better, cheaper, faster' would prevail."

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