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Production Orders can only be planned for items that have a Production Bill of Materials. A Production BOM defines each step of a production operation, its duration, and the components and resources required to complete each step.


A Production BOM is an essential feature for resource Capacity planning and Scheduling production operations correctly. 


For simpler, single-step assembly/disassembly operations (e.g. assembling T-shirts into a multipack, assembling items into a gift box), users can use the simpler Assembly BOM. The difference between the Production BOM and Assembly BOM is that Assembly involves only one operation and Production involves many operations. The Assembly BOM lists products and service items but does not take into account resource capacity and operation scheduling.


Once you have mastered the basics of the Production BOM, use these articles to increase the complexity of your production processes within DEAR:

  • See Implement parallel operations in a Production BOM for help setting up complex operation sequences with parallel and non-parallel operations. 
  • See Finished products - Primary products, coproducts, byproducts, joint production products for manufacturing where several products results from a single production process. 
  • See Using Inputs and Outputs - Intermediate or semi-finished productsto define virtual intermediate products of production operations for use in later operations. Such intermediate products can be reflected in the Production BOM to increase accuracy in production reporting and transparency for the production process. 
    • It is recommended to understand how finished products are used before moving on to intermediate products.
  • See Co-manufacturing for full or partial co-manufacturing, the outsourcing of part or all of the manufacturing process of a product to a third-party.
  • See Customisable products - Make to Order for Production BOMs where components are defined by the options a customer selects. For example, a ring could be customised with different metals, ring size, different gemstones, or a custom engraving.
  • See Production BOM for product families to create a general production BOM for the family (e.g. shirt) but allow other product family variations to be used as components (e.g. fabric). Production BOMs for each variation are auto-generated from the general BOM and the mapping values, saving our users lots of time when preparing production BOMs for many variations at once.


Prerequisites

  • Set up Factory Calendar (required)
  • Set up Products (required)
    • Component products must be created so they can be added to the Production BOM. In the case of semi-finished goods, the semi-finished product needs an entry AND its component products need entries.
  • Set up Work Centres (required)
  • Set up Resources (required)


Table of Contents


Add a Production BOM to a product

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A Production BOM is added to a product and defined from the product details screen (Inventory → Products → [selected product]). 


NOTE: Before adding a Production BOM to a product, the component products must already be created in DEAR. Resources and Work Centres must be defined in the Production Settings. 


NOTE: Costs for components are estimated on the BOM screen from the Average Cost (an average of all purchase costs for this item). Sometimes this can lead to costs being estimated wrong on this screen, or displaying as 0 (e.g. if there was no last purchase price in the system). This will not make the production incorrect. See Resources for how costs are calculated for resources.

The actual cost of finished goods will be calculated using the costing method of each individual component allocated to an assembly. Actual costs associated with finished goods can be viewed using the Finished Goods Analysis Report. For production processes that produce more than one finished product, the user can choose to use Net realisable value method or sales value method to allocation joint costs. 

  1. Select Production BOM from the Bill of Materials drop-down list in the product document header.
  2. This will activate the Production Bill of Materials tab below where the Production BOM can be defined. If this is the first BOM you have created for this product, by default it will be BOM Version 1. Each product can have multiple BOM Versions. See BOM Versions for more information.  
  3. Enter the product output quantity and manufacturing buffer time. You can optionally include a URL for assembly instructions. See Manufacturing Bufferfor more information. 
    • Example: We are making a Production BOM for a Chair. The Production BOM defines the resources and components required to make 1 chair.
  4. Select to Ignore cumulative lead time or set a lead time for products. See Production BOM Settings for more information about this setting.
  5. If the When to transfer finished products to storage location setting is set to On Production Order Completion or On Production Run Completion (go to Settings → General Settings → Production Process Customisation to change), you can set a default Delivery Tolocation for this BOM's finished products from any of your organisation's locations. 
    • If this BOM produces multiple finished products, you can set the delivery location for each finished product in the finished products output section of the BOM. 
    • Delivery location can be changed during production if necessary.
    • If no delivery location has been specified in the production BOM or a production order, the demand/retail location from the logistics path will be used.
  6. You can either add a new Production BOM to a product or clone an existing Production BOM (see below). Adding a new BOM will add the operations and resources/components one by one.
  7. Press the +Operation button to start. An operation is a single step in the production process.
  8. Enter the operation Name, Cycle Time and Units per Cycle for the first operation. 
  9. You can edit the operation sequence if required; by default, the field will be filled with the next number in the sequence. Operations that take place simultaneously should be given the same sequence number. See Implement parallel operations in a Production BOM for help setting up complicated operation sequences. 
  10. Select the operation type. There are three options available:
    • Manufacturing – the operation type during which finished goods are produced. Cycle time for the operation depends on the quantity of finished goods to produce. 
      • E.g. Production BOM Qty is 1, Cycle time for a manufacturing operation is 15 minutes, Units per cycle is 1. In the case of a Production Order for 10 items, the operation time will be 150 minutes. 10 x Quantity of Items = 10 x Cost.
    • Setup  time taken to set up a manufacturing operation. Cycle time for this operation is fixed and is NOT changed depending on the quantity to produce. Units per cycle is set to N/A for this operation type.
      • E.g. Cycle time is set to 3 min in the Production BOM. A Production Order is raised for 30 finished goods, but Cycle time for the operation remains 3 minutes. Cost is constant no matter the number of items produced. 
      • For Components in Setup Operations availability will be calculated a little bit differently from Manufacturing operations:
        1. When Production Order is Released (without Runs) - no allocation will be created for components in Setup operations
        2. Once Production Run is created for this Production Order - allocation will be created for components in Setup Operations
        3. When 2nd Production Run is created - again new allocation will be created for Components

          Allocation will take place only if Production Run operation with type = Setup is not started/completed

    • Quality Control – the operation type during which components or products are inspected. Cycle time for the operation depends on the quantity of finished goods to produce.

    • Co-manufacturing – the operation type during which the production operation is carried out by a third-party, with finished products or outputs received by the manufacturer. See Co-manufacturing for more information. 

  11. Select a Work Centre for the operation. 
    • Example: The first operation in our Production BOM is Fabric Cutting. The operation Cycle time is 1 hour – it takes 1 hour to cut enough fabric. The Units per cycle value is 1 – enough fabric is cut for 1 chair. 
  12. Next, it is time to add components and resources for this operation. Click Add more items next to the operation number to open the components and resources table. The Operation should contain at least one Component or Resource.
  13. First, select the Type of entry. This can be a Component, Resource, Finished Product, Input, Output, Note or Attachment. See Production BOM entry Typesfor more information. 
    • Notes have a limit of 200 characters. 
    • Attachments have a limit of 32 MB. 
    • Component can be a simple product, an assembly product or a production product. 
    • Resource (e.g. tools, machines, people) must be defined in order to be selected.
    • Finished product is added to a Production BOM as an output of a production operation. A Production BOM can contain one or more finished products. If the production BOM is for a single product, it is not necessary to define finished products in the BOM. If the production BOM is for multiple products, each finished product must be defined explicitly in the operation that produces it. 
    • Input/Output is used to define intermediate or semi-finished products that are produced in one operation and then consumed in another operation of the same BOM. This allows for greater transparency and tracking of wastage during production. 
  14. Enter the other grid fields (SKU, Quantity, Wastage %/QTY if the Type is Component; SKU, Quantity if the Type is Resource). See Production BOM settings below for a detailed explanation of each field. 
    • NOTE: Position of Production BOM elements can be changed by dragging and dropping each line.
  15. Once the operation is complete, click Add operation to add the next step – repeat until the Production BOM is defined.
  16. If multiple finished products are defined in the BOM, see Finished Products yield to define which costing method and sale price to use when allocating production costs. 
  17. If finished products, inputs, or outputs are defined within the BOM, see Cost of Wastage to define wastage cost calculations.  
  18. Save your changes to finish.


Total Cost is a read-only field that will be automatically calculated from the approximate cost of resources and components required for the operation.

  • Average Cost (an average of all purchase costs for an item) is used on the BOM page to estimate component costs. The actual cost of finished goods will be calculated using the costing method of each individual component consumed for production. Actual costs associated with finished goods can be viewed using the Finished Goods Analysis Report.
  • Resource costs are taken from the sum of all service products assigned to each resource. 


Unit is a read-only field that will be automatically filled in with the Unit of Measure from the component's product details. If the line refers to a resource, this field will be automatically filled with 'N/A'


NOTE: Components, resources and quantities of a Production BOM can be edited in a Production Order if required. 


Production BOM entry Types

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Each entry for a production BOM operation can be one of several different types. The type determines whether the entry is for informational purposes only, whether the entry item is consumed during the operation or whether the entry is an output of the operation. 


DEAR supports the following entry types: Notes, Attachments, Components, Resources, Inputs, Outputs and Finished Products.


Informational

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Notes are used to give short text information about a production operation. Notes have a limit of 200 characters. Multiple note entries can be added to an operation. 


Attachments can be used to attach instructional files and documents to a production operation. Attachments have a limit of 32 MB and can be of any file type except .exe. Multiple attachment entries can be added to an operation. 


Production Inputs

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Components are items from your inventory stock. This could be a simple product, an assembled product or a produced product. Components are consumed by the production operation. Components are allocated to a production order from your inventory once the production order is released. See Product and Service Management for information about stock products.


Resources are the tools, machines, people, etc that are required in order to carry out production. Each resource has capacity determined by its operational hours. Resource capacity is consumed by the production operation. Resource capacity is allocated to a production order once the production order is planned. Resources are not applicable to co-manufacturing operations. See Managing Production Resources for more information. 


Inputs define a semi-finished or intermediate product consumed by a production operation. A product can only be added as an input if it has already been defined as an output of a previous operation. Inputs and outputs allow for better transparency and tracking of wastage of intermediate products during production. See Using inputs and outputs – Intermediate or semi-finished products for more information. 


Production Outputs

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Finished product is added to a Production BOM as an output of a production operation. A Production BOM can contain one or more finished products. If the production BOM is for a single product, it is not necessary to define finished products in the BOM. If the production BOM is for multiple coproducts, each finished product must be defined explicitly in the operation that produces it. See Finished products - coproducts, byproducts, joint production products for more information.


Outputs define a semi-finished or intermediate product generated by a production operation. Outputs are then used as inputs in other production operations in the same production BOM. Inputs and outputs allow for better transparency and tracking of wastage of intermediate products during production. See Using inputs and outputs – Intermediate or semi-finished products for more information.


NOTE: Only Stock items can be finished products and outputs of manufacturing and quality control operations. Co-manufacturing operations can have finished products and outputs of type Stock and Service.


Finished products output

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Finished products that have been defined in the Production BOM will appear in the Finished Products Output section at the bottom of the screen. If the production BOM is for a single product, it is not necessary to define finished products in the BOM, DEAR will assume that the primary product is the only finished product, and that it is completed when a Production Run is completed. 


When one or more finished products have been defined in the Production BOM, the Finished products output section estimates cost per unit based on the chosen production costs allocation method, sales value method or net realisable value method. As these costing methods are based on the sales price of the finished product, this section allows the user to select which sales price tier should be used for cost calculations.


If the When to transfer finished products to storage location setting is set to On Production Order Completion or On Production Run Completion (go to Settings → General Settings → Production Process Customisation to change), you can set a default Delivery To location for each finished product of a BOM in this section. This will generate transfer orders for the finished products from the production location to the delivery to location upon production run or production order completion. 


If the setting is set to Don't Transfer, this option will not be visible and no transfer orders will be generated by default. If no delivery location has been specified in the production BOM or a production order, the Demand/Retail location from the logistics path will be used. 


 See Finished products - coproducts, byproducts, joint production products for more information.


Cost of wastage

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In the course of production some wastage can appear. These can include intermediate or semi-finished products which are unsuitable for production or finished goods which are unsuitable for sale. Waste costs can be either posted to an expense account or included into production cost. This setting is managed and the expense account selected from Settings → General Settings → Production process customisation.


If Waste write off is set to (Auto) Posted to expense account, the Cost of wastage grid will be visible at the bottom of the  Production BOM. Finished products and Inputs/Outputs are automatically added to the cost of wastage grid.


Cost of waste is based on the sales price. Select the price tier to be used here.


Production BOM containing semi-finished products (Nested Production BOM)

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Finished goods (from Production or Assembly) can be included as components in a Production BOM. When a Production Order is authorised for a finished good that contains produced components, the nested Production Orders will be created and authorised. See Nested Production BOM for more information. 


NOTE: Assembly Orders are not created automatically upon Production Order authorisation. If a Production Order/Production BOM contains assembled components, these must be assembled manually by the user.


Production BOM Settings

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Version

The same product can be produced in different ways. For example, a widget can be fully produced in house, partially through a co-manufacturer, or from buying semi-finished components from a supplier and finishing them in-house. Each BOM version defines a production process for the same finished product, Production BOM version can then be selected when creating a Production Order. See Production BOM Versions for more information.


Product output quantity from the components in BOM 

This is the quantity of the finished good that can be produced from the quantity of the components listed on the BOM. This quantity depends only on the components and does not take into account any resource capacity.


Manufacturing buffer time 

Manufacturing buffer is a value set in the Production BOM to protect the production process from breaking the deadlines; it is used for scheduling. It is set in % as the ratio of work time to buffer time. 


Production Instruction URL

Enter a URL showing production instructions for the product, if applicable.


Ignore cumulative lead time

When this box is left unchecked, the lead time for component replenishment is calculated from the values set on the Suppliers tab of the Product page. See Product and Service Management for more information on configuring the lead time for replenishment. Production BOMs containing semi-finished products will calculate the cumulative lead time for the whole order.


When this box is checked, an additional field will appear when you can specify the lead time manually in days.


Operation sequence

This is the operation's sequence number. By default, it is filled with the sequence number in order starting from 1. Simultaneous operations should use the same number. 

Operation type

There are two options available:

  • Setup  time taken to set up a manufacturing operation. Cycle time for this operation is fixed and is NOT changed depending on the quantity to produce. Units per cycle is set to N/A for this operation type.
    • E.g. Cycle time is set to 3 min in the Production BOM. A Production Order is raised for 30 finished goods, but Cycle time for the operation remains 3 minutes. Cost is constant no matter the number of items produced. 
  • Manufacturing – the operation type during which finished goods are produced. Cycle time for the operation depends on the quantity of finished goods to produce. 
    • E.g. Production BOM Qty is 1, Cycle time for a manufacturing operation is 15 minutes, Units per cycle is 1. In the case of a Production Order for 10 items, the operation time will be 150 minutes. 10 x Quantity of Items = 10 x Cost.
  • Quality Control– the operation type during which components or produced products are verified. Cycle time for the operation depends on the quantity of finished goods to produce. 
    • E.g. Production BOM Qty is 1, Cycle time for a manufacturing operation is 15 minutes, Units per cycle is 1. In the case of a Production Order for 10 items, the operation time will be 150 minutes. 10 x Quantity of Items = 10 x Cost.


Name

Name of the operation. Character limit is 200. 


Cycle time

Specify how long the operation takes to produce some number of units. This is the minimum time required to produce some number of finished goods.


Units per cycle

Set the maximum number of finished goods that can be produced per cycle time of an operation. For an operation, this is the minimum time taken to produce enough operation output for one unit of the BOM product.


Work Centre

This is a mandatory drop-down selection to assign a Work Centre to the operation.


SKU: Component

A component or resource is added by selection from a drop-down list with search ability. 


Quantity

This is the quantity of components required to produce the finished good. This quantity should reflect the components required to manufacture the full amount specified in the Quantity to Produce field. 


In the case of resource, the quantity defines how many individual resources are required to produce the finished good. 


Unit

This auto-filled field displays the Unit of Measure specified for the component product. For resource lines, the field will be auto-filled with ‘N/A’.  Component Unit of Measure can be edited from Inventory → Products → [selected product]


Wastage % and Wastage Quantity

Wastage % and Wastage Quantity are mutually exclusive. If some of the components are wasted during assembly, use these fields to include that information.


Cost per unit

This auto-filled field displays the current average cost of the selected component. For resources, the cost is set up in Resource per Unit of Time. 


Total cost 

This read-only auto-calculated field is used to display the total cost. If the line is a resource or component line, this will show the total cost of that component/resource for the operation duration. If the line is an operation line, this will show the total cost of all components/resources for that operation.

It is calculated as: Quantity x Cost per Unit. As for the resource, the total cost is calculated based on cost per unit and cycle duration: Operation Cycle time in min / Resource Cycle duration in min x average Default Cycle cost x Qty of Resource.

  • Average Cost (an average of all purchase costs for an item) is used on the BOM page to estimate component costs. The actual cost of finished goods will be calculated using the costing method of each individual component allocated to an assembly. Actual costs associated with finished goods can be viewed using the Finished Goods Analysis Report.
  • Resource costs are taken from the sum of all service products assigned to each resource and are calculated as Cycle time / Unit of Time x Total cost for Unit of Time.


IMPORTANT NOTE: The average cost for components is a reference value only. The average cost in DEAR does NOT affect your P&L statement. All COGS calculations are done using accounting costing methods such as FIFO or FEFO. Costs are distributed to products upon purchase invoice authorisation. COGS journal entries are generated when the Ship tab of a Sale is authorised. 


Clone an Existing Production BOM

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Once a Production BOM has been created for a product, it can be cloned to other Production products to save time during setup.

  1. On the Production Bill of Materials tab, from the drop-down list, select the Product whose Production BOM you wish to clone. 
  2. Click Clone BOM.
  3. Make any changes to resources, components or operations. 
  4. Save your changes to finish. 


Production BOM Versions

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The same product can be produced in different ways. For example, a widget can be fully produced in house, partially through a co-manufacturer, or from buying semi-finished components from a supplier and finishing them in-house. You can define multiple production processes for the same finished product with Production BOM Versions. 


Add a new BOM version

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Click Add BOM version to start create a new version for the finished product. This will clone the Production BOM from the current version – you can make any required changes to the production process and click Save to keep the version. 


View BOM versions and set default

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Select a Version from the dropdown menu to see the detailed Production BOM for that version.


View BOM Version history from the Versions tab. This page shows the date that each version was created and allows you to name the versions. Select the default BOM version by checking the box next to the version. The default version of the Production BOM is used when a production order is auto-generated, e.g. from a sales order.


Select BOM version for Production Order

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Production BOM version can be selected during manual creation of a production order. Version can be selected while production order has Draft or Planned status. Simply select a version from the dropdown menu when creating a new production order, then Load BOM to load that version of the BOM.


NOTE: If a production order is auto-generated, for example as result of a sale, the default BOM version will be used. 


Step-by-Step Example Production BOM

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We want to create a Production BOM for a dining chair. This is a simple BOM containing only one finished product and no inputs or outputs. For more complex example BOMS, see Finished products - Example and Input/Outputs - Example


Preliminary Steps

Components

This chair requires the following components. These should be created as products before setting up for the Production BOM.

  • Birch lumber
  • Fabric
    • Suede seating fabric
    • Quilt batting
    • Urethane lining
    • Dust cover
  • High-density foam
  • Upholstery staples

The item Dining Chair should also be created as a product.


Resources

We will need the following Resources to produce one chair. These should be defined in Production Settings → Resources before setting up the Production BOM.

  • Labour: Woodwork
  • Labour: Fabric
  • Labour: General
  • Machine: Coping Machine
  • Machine: Sewing Machine
  • Machine: Overlock Machine
  • Machine: Pneumatic Stapler
  • Machine: Sander
  • Machine: Jigsaw

Costs are assigned to each resource using service products. See Resources → Set up Services for more information. 


Work Centre

Our Shop floor location has several Work Centres.

  • Lumber Store
  • Wood Workshop
  • Cutting Tables
  • Sewing Machines
  • Upholstery and Assembly Workshop
  • Testing Workshop

These should be defined in Production Settings → Work Centre before setting up the Production BOM. 


Setting up the Production BOM

Now that the preliminary steps are complete, we can set up the Production BOM for the dining chair. 


  1. Go to Inventory → Products → [dining chair name] to open the product details screen. 
  2. Select Production BOM from the Bill of Materials drop-down list in the product document header. This will activate the Production BOM tab below.
  3. We start by entering:
    • Product output quantity – this BOM is for a batch of 1 chair.
    • Manufacturing buffer time – we allow 20% manufacturing buffer time in case of problems during production. 
  4. Continue by adding operations, resources and components until the production process is fully defined. You can see that the Total Cost for the produced good is calculated automatically.



Editing a Production BOM

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Lines with added objects (components, resources, notes, attachments) can be dragged and repositioned within an operation. 

  • Objects can be dragged from one operation into another.
  • Operations can be dragged and dropped above or below another operation to change the sequence numbering. 


Operation values (Operation sequence, Name, Cycle Time, Units per cycle time and Work Centre) can all be edited. Edited values will be applied to Production Orders and Production Runs that have not been completed. Production Runs in progress are not affected. Changing these values will not cause changes in capacity planning or scheduling. You will receive a notification informing which orders are affected. 


Editing component/resource quantities, replacing components/resources

Editing component or resource quantities or replacing components and resources causes changes in Production Orders, Production Runs, Capacity Planner and Scheduler.


Replanning is possible only for Production Orders in Planned status. A user needs to Reload updated BOM into the order to cause re-planning.


Editing the Quantity field causes the re-planning of the component/resource. Replacing a resource or component means that this resource or component is deleted from the Production BOM, and a new resource or component is added. In both cases, the following changes are executed:

  • Capacity/resource availability is checked to see if the newly added component/resource is available for the Production Order. 
  • Reversed allocation of the new components/resources is executed and reflected in the corresponding reports (Availability report, Capacity Planner, etc.).
  • Production Order operations involving the new and removed resources are re-scheduled. 


It is possible to replace the component/resource in already started operations. Changes will affect all operations going forward. Production Runs already in progress will not be affected. We recommend that the user checks the Scheduler to ensure production deadlines have not been broken for affected orders. 


Editing wastage %, wastage quantity and cost

It is not possible to change the cost per unit for components/resources from the Production BOM. Cost per unit should be edited in the corresponding component or resource. 


Wastage %, Wastage quantity can be changed only for components. Changes in Wastage % or quantity increase/reduce the demand on component allocation: i.e. if wastage is increased – more components should be allocated and vice versa. It is the same process as for changing the quantity of a component. 


Deleting components/resources

Deleting of components is the same as for editing. The user should reload the BOM to the Production Order. However, reloading a BOM (and thus editing the BOM) is possible only for Planned orders. Thus, it is not possible to edit the BOM for orders in Released or Work in Progress status. Reversed allocation of the new components/resources is executed and reflected in the corresponding reports (Availability report, Capacity Planner, etc.). You will receive a warning message notifying you which orders are affected.


Import a Production BOM

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You can create or update a Production BOM for an already existing product by uploading a CSV file with the Production BOM information. 

  1. Go to Inventory → Products → Import → Production BOM.
  2. Download the Production BOM CSV template and fill it in with your information. You can expand the Field Specifications to get more information about each column heading. Do not change the column headings, or it will cause errors during the import. 
  3. Upload the updated CSV file to import it into DEAR.


Export and edit Production BOM details

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Production BOMs can be exported in one CSV file where they can be edited in bulk to save time. The updated CSV file is them imported into DEAR. 


  1. Go to Inventory → Products → Export → Production BOM to export a CSV file of all existing Production BOMs from DEAR Inventory. 
  2. Make the required changes to the CSV file and save it. 
  3. Click  Inventory → Products → Import → Production BOM to upload the updated information.

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