Components (SAP Business One)

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Components Are in SAP Business One the Raw materials, semi-finished goods or sub-assemblies, which are processed in the manufacturing process into a finished product or a higher-level assembly. They are defined as items in a production bill of materials and are withdrawn from inventory during the manufacturing process. Their correct definition and efficient management are crucial for product quality., Delivery capability and cost control.

Context and meaning

Components are the building blocks of any production — every bill of materials consists of them. Procurement and consumption directly affect inventory (OITM, OITW) and liquidity. The costs of the components flow into the costing as material costs of the Work-in-Process (WIP) and ultimately into the manufacturing costs of the finished product. Precise demand planning via MRP is essential to avoid bottlenecks and simultaneously reduce excess stock—both of which are levers for minimising tied-up capital.

Master data prerequisites

Master data (OITM) Each component—and each by-product—must be created as its own article. For articles managed by batch or serial number, the setting in the „General" tab is „Manage articles by: Batches" or „Serial numbers" Mandatory.
Production bill of materials (OITT/ITT1): The components are stored as line items in the bill of materials for the parent item. Each line item contains the item number, quantity, and the issue method.
Quantity: A replacement is issued for used components Positive Amount deposited. For By-products, which arise in the manufacturing process and are fed into the warehouse, a Negative Amount entered.

Output methods

The issue method controls how and when a component is booked from inventory into a production order. SAP Business One offers three options:

Manual: Booking explicitly via the voucher „Output for production" — regarding by-products over „Entry from production".
Reversal on release Automatic booking as soon as the production order is released.
Reversal on completion notification: Automatic booking upon completion of the product (backflush).

Critical note for batch- and serial number-managed articles: Here — and particularly with by-products with negative quantities — the output method must perforce „Manual" to be set. The system does not allow a return method for such articles, as a specific batch or serial number is not known at the time of automatic booking. This must be assigned manually.

Transaction logic in the manufacturing process

Create production order (OWOR): Module → Production → Production Order. The components (WOR1) are transferred from the bill of materials to the order.
Output for production For components with the output method „Manual", removal from stock is carried out via the document „Output for production" — that leads to actual stock reduction.
Accrual adjustment When „Backflushing at Completion Confirmation" is active, components are automatically backflushed at the completion confirmation without a separate document.
Input from production (OIGN): The finished product is booked into inventory. By-products with a negative quantity appear in the document list; as they are batch-managed, the system requests a batch number for assignment – only then is the by-product with its specific batch in stock (IGN1).
Dismantling: In a dismantling order, components are returned to stock – a reversal of regular consumption, where the value of the parent item is proportionally distributed to the components.

MRP and Resource Planning

Of the MRP Assistant (Module → MRP → MRP Assistantgenerates procurement recommendations for components — as purchase orders or production orders. This is based on the gross requirements of the end product, current stock levels, open orders, safety stocks and lead times. The MRP run plans backwards from the desired completion date, thus providing the right timing for component procurement.

the Operational Resource Capacity (ORSC) indirectly influences component consumption: bottlenecks at machines or workstations shift the production plan – and thus the time at which the components are actually needed. Close coordination between material and capacity planning is therefore the basis for smooth production.

Practical tip

The choice of output method is not a detail – it shapes the entire manufacturing process. „Feedback on completion notification" for standard components whose consumption is clear and complete, and retain „Manual" For all items managed by batch/serial number, and for components where the worker is to actively document what was actually installed. By-products, on the other hand, should always be set to „Manual", otherwise the system will block the production confirmation.

Demarcation

Components are not Consumables or operating supplies, which are consumed in the manufacturing process but do not physically become part of the final product (e.g. lubricants, cleaning agents). They must also be distinguished from resources (ORSC), which account for working time or machine capacity, but do not form part of the final article as material. They also differ from By-productsThese also appear as a position in the bill of materials, but are recorded with a negative quantity and booked to the warehouse upon receipt from production - not withdrawn.

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