Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

1.2.2 Product-Related Objects

Intended learning outcomes: Produce an overview on business objects such as item, specializations thereof (particularly part and component), and item family. Explain the product structure and the bill of material. Differentiate between a convergent and a divergent product structure. Describe the concepts of product family, variant, option and commonality.


According to [APIC16], some terms get a specialized definition (cf. Section 1.1.1):

  • An item as a business object is any unique manufactured or purchased part, material, intermediate, subassembly, or product.
  • A part as a business object is generally an item that is used as a component and is not an assembly, subassembly, blend, intermediate, etc.
  • A component as a business object is the raw material, part, or subassembly that goes into a higher assembly, compound, or other item.

From the company’s perspective, the collective term item includes the following specializations, also called item types:

  • An end product or end item or finished good is a completed item that generally does not serve as a component of another product.
  • An intermediate product or a semifinished good is stored or awaits final operations in the production process. It can be used in the assembly of a higher-level product and is thus also a component.
  • An assembly is an intermediate product and is composed of at least two components.
  • A single part (often simply called part) is either produced in-house (in-house part) or purchased (purchased part) and is used in an end item. An in-house part is produced from only one component.
  • raw material is, for the company, a purchased item or an original material that is converted via the manufacturing process.
  • service part or a spare part is a component that can be used without modification to replace a part or an assembly.
  • MRO item is an item for maintenance, repair, and operating supplies. It supports activities in the company and is, in general, not used as a component for products.

As the majority of the basic descriptions (or attributes) of all these types of items are the same, such as identification, description, inventory, costs, and price, they are often grouped together in the generalized object item. Figure 1.2.2.1 shows the item types as specializations of item.

Fig. 1.2.2.1        The business object item as a generalization of various goods objects.

An item family is a group of items having similar features (such as form, material) or a similar function.

For example, different kinds of screws may be grouped together as an item family and viewed as a (composed) business object, “family of screws.”

Product structure is the structured list of components to be used in order to manufacture a product, understood as a whole-part hierarchy.

A structure level, or simply level, is assigned to every part or assembly in a product structure. It signifies the relative level in which that part or assembly is used within the product structure ([APIC16]).

The (structure) level stands in inverse relation to the relative depth of the components in the product structure. End products generally have the level 0. The direct components of an end product have the level 1. A component in an assembly has a level code one unit higher than the assembly.

A design structure level is a structure level from the point of view of product design. 

Bill of material and nomenclature are other terms for a convergent product structure (in contrast to divergent product structure, where we usually speak of recipes; see also the definition of these concepts in Section 4.4.2).

The quantity required or quantity per or usage quantity is the number of components per unit of measure of the next higher level product into which the component is built. The cumulative quantity per of each component in the end product is thus the product of quantities required along the product structure.

The example in Figure 1.2.2.2 shows a bill of material, that is, a convergent product structure with two (structure) levels.

Fig. 1.2.2.2        A product structure (bill of material) with two (structure) levels.

Item 107421 is the end product composed of the two assemblies 208921 and 218743. Each assembly, in turn, has two components. The quantity required is given in parentheses. As an example of cumulative quantity per, in 107421 there are 2 · 3 = 6 components 390716.


The exercise shows a bill of material, that is, a convergent product structure with two (structure) levels.
Item 107421 is the end product composed of the two assemblies 208921 and 218743. Each assembly, in turn, has two components. The quantity required is given in parentheses. As an example of cumulative quantity per, in 107421 there are 2 * 3 = 6 components 390716.
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The low-level code is a number that identifies the lowest level in any bill of material at which a particular component appears ([APIC16]).

The low-level code is generally calculated by a computer program.

A product family, or product line, is a group of products having similar features (such as form or material) or similar functions, similar product structure with a high percentage of the same components or components from the same family, and a high percentage of the same processes in the process plan. Cf. [APIC16]. 

A variant, or a product variant, is a specific product in a product family. 

An option is a choice — often mandatory and from a limited selection — that must be made by the customer or company when customizing the end product. Cf. [APIC16]. 

Commonality is a condition where a given component is used in multiple products. Cf. [APIC16].

A product family is designed as such as early as the product design phase. Throughout its life cycle, it will be expanded where desired. The product structure of each variant is different, but according to its definition, it is based on a high degree of commonality.


Quiz on Chapter 1.2.2.: not yet available

Product Structure and Product Family[kml_flashembed movie="https://opess.ethz.ch/wp-content/uploads/elements/Q_122.swf" height="75%" width="100%" /]



Course section 1.2: Subsections and their intended learning outcomes

  • 1.2 Business Objects

    Intended learning outcomes: Present business-partner, and order-related business objects in detail. Explain product-related, process-related, and resource-related business objects. Produce an overview on rough-cut business objects.

  • 1.2.1 Business-Partner, and Order-Related Business Objects

    Intended learning outcomes: Present in detail the order as a business object. Produce an overview on terms such as business partner, due date, order promising, order confirmation, order status. Differentiate between order positions for items (to be) delivered and labor (to be) performed.

  • 1.2.2 Product-Related Objects

    Intended learning outcomes: Produce an overview on business objects such as item, specializations thereof (particularly part and component), and item family. Explain the product structure and the bill of material. Differentiate between a convergent and a divergent product structure. Describe the concepts of product family, variant, option and commonality.

  • 1.2.3 Process-Related Business Objects

    Intended learning outcomes: Present in detail business objects such as operation, setup and run time. Explain the routing sheet, the critical path, interoperation time and the production lead time. Describe the product module, the production structure, and the cumulative lead time. Disclose the process plan. and the lead time offset.

  • 1.2.4 Resource-Related Business Objects

    Intended learning outcomes: Produce an overview on terms such as facilities, workstations, production equipment, work center, capacity, load, work-center load. Explain the load profile of a work center. Differentiate between standard load and actual load. Disclose capacity utilization and work center efficiency. Differentiate between rated capacity and theoretical capacity.

  • 1.2.5 Rough-Cut Business Objects

    Intended learning outcomes: Identify reasons and principles for defining rough-cut business objects. Disclose the rough-cut product structure and the rough-cut process plan. Explain a way to derive a rough-cut resource requirement plan from a detailed resource requirement plan. Describe a way to establish the rough-cut process plan and the product load profile.

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