BOM Variance Report

Overview

BOM Variance Report – Business Overview

What Business Information This Report Provides

The BOM Variance Report helps businesses compare planned material consumption (as defined in the Bill of Materials – BOM) with the actual material consumption recorded during production.

It highlights differences in quantities and costs between what was expected and what actually happened on the shop floor. This report is critical for understanding material wastage, efficiency gaps, cost overruns, and process deviations during manufacturing.

In simple terms, it answers: - Are we using more or less material than planned? - Is production costing more than expected? - Where are material losses or inefficiencies happening?

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When and Why to Use This Report

You should use the BOM Variance Report when you want to: - Monitor production efficiency - Control manufacturing costs - Identify material wastage or excess consumption - Review actual vs standard production performance - Support costing, pricing, and profitability analysis

It is especially useful: - After production runs - During monthly cost reviews - When material costs increase unexpectedly - Before revising BOM standards or production processes

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Key Columns and Their Business Meaning

Although the report is system-generated, the columns translate directly into business insights:

• Production Item
  The finished product being manufactured. Helps identify which product has variances.

• BOM Item / Raw Material
  The raw material expected to be used as per BOM.

• Planned Quantity
  The standard quantity of raw material required according to the BOM.
  This represents ideal consumption.

• Actual Quantity
  The real quantity of material issued to production.
  This shows what was actually consumed.

• Quantity Variance
  The difference between planned and actual quantity.

  • Positive variance → Excess consumption
  • Negative variance → Lower than expected usage

• Planned Cost
  The expected material cost based on BOM standards.

• Actual Cost
  The real cost incurred during production.

• Cost Variance
  The financial impact of the variance.
  This directly affects product profitability.

• Stock Entry Reference
  Links the variance to the specific production or material issue transaction, enabling traceability.

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Available Filters and Their Business Purpose

The report includes filters that help managers focus on relevant data:

• Date Range
  Review variances for a specific period (daily, monthly, quarterly).

• Production Item
  Analyze variance for a specific finished good.

• BOM
  Compare performance across different BOM versions.

• Company / Location
  Identify which plant or unit has higher variances.

• Stock Entry
  Drill down into specific production batches.

These filters help isolate problem areas, high-cost products, or underperforming production runs.

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How to Interpret the Results for Business Decisions

• Consistent positive quantity variance
  Indicates material wastage, poor handling, inaccurate BOMs, or process inefficiencies.

• High cost variance with normal quantity variance
  May point to raw material price changes or procurement issues.

• Negative variance (less usage than planned)
  Could indicate improved efficiency—or an inaccurate BOM standard.

• Repeated variance for the same product
  Signals the need to review:

  • BOM accuracy
  • Production methods
  • Worker training
  • Machine calibration

Management can use these insights to: - Revise BOM standards - Improve shop-floor controls - Renegotiate supplier pricing - Adjust product pricing or margins

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Common Use Cases and Business Scenarios

• Manufacturing Cost Control
  Finance teams use this report to understand why actual costs differ from standard costs.

• Operational Efficiency Review
  Production managers track material wastage and efficiency trends.

• BOM Validation
  Engineering teams review whether BOMs reflect real production conditions.

• Profitability Analysis
  Helps leadership understand which products are eroding margins due to production variances.

• Audit and Compliance
  Provides traceability between planned production and actual material usage.

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Summary

The BOM Variance Report is a powerful management tool that connects planning, production, and financial performance. By regularly reviewing this report, businesses using Dafater can improve cost control, reduce wastage, and make data-driven decisions to enhance manufacturing profitability.

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Report Information

• Module: Manufacturing
• Related DocType: Stock Entry
• Report Type: Script Report
• Standard: Yes