How to Roll Up or Roll Down BOM Costs in NetSuite

ARTICLE - A Bill of Materials (or BOM) is a critical tool for determining the cost of finished goods.

It’s a list of materials, assemblies, sub-assemblies, formulations, mixes, and other components that go into each finished product. Manufacturers big and small use a BOM to keep track of all the parts and materials that go into every product, no matter how seemingly simple the product is.

For instance, a pressure washer may include a water inlet, a power supply, a hose, and a water pump.

A BOM helps ensure that a finished product is made correctly the same way time and again. A BOM typically includes the number, name, description, quantity, and size of the parts.

Notably, a BOM also can include the cost of all relevant parts.

A fully and accurately measured BOM can help a business calculate its Cost of Goods Sold (COGS), which significantly impacts the company’s margins, profits, and even its taxation levels.

Why roll up and roll down BOM costs within NetSuite?

There are times when a NetSuite user may want to establish or reestablish an item’s standard or other cost types:

When an item is new
When the BOM components have changed
When there is a mistake in the purchased item cost
When there is an error in the production BOM
When there has been a change in the cost of raw materials
When there is a change in the production process
When it’s time for fiscal year roll-up or reevaluation

Regardless, users will need to roll up or roll down BOM costs.

In the past, finance teams may have used spreadsheets or homegrown solutions to track BOM costs.

But new technology from iCloudAuthority makes it easy to see the BOM cost rolled up or rolled down directly within NetSuite. The technology rolls up parts, assemblies, and materials to the exact configuration a user wants. Similarly, users can instantly see the cost of each component of a BOM.

The benefits of managing BOM costs in NetSuite

iCloudAuthority enables users to break out all the subcomponents, assemblies, and inventory items that go into each finished product, determine the quantity or amount of each item, and assign a cost.

By doing this, NetSuite users can quickly load data into the system to calculate the total cost for each finished product. The solution uses a hierarchy of logic to calculate the BOM cost for each item:

1. The preferred vendor price.
2. The item cost is based on the last purchase order they issued to the supplier.
3. The average cost of the item over time.
4. The latest price that the company paid for the item.
5. The purchase price entered manually into NetSuite by staff.

A business that manufacturers many types of bicycles, as an example, can instantly roll up the BOM cost for each model and effortlessly drill down into the data to see the cost of the individual parts.

Information then can be effortlessly downloaded to a spreadsheet and shared with stakeholders.

Because the solution is native to NetSuite, all this can be done from the familiar screens and user interface of a company’s NetSuite ERP. What’s more, the lightweight solution can be installed fast.

See iCloudAuthority for yourself

Every business wants to manage its costs in times like this.

Deploying the iCloudAuthority BOM solution native to NetSuite will help businesses of all sizes do just that.

Rolling up and rolling down BOM costs directly within NetSuite with iCloudAuthority’s native solution streamlines financial processes, inventory flows, and strategic and material planning.

Contact one of our representatives today to discuss your business needs and schedule a demo.