Phantom BOMs in Microsoft Dynamics AX: Their Role in MRP and Costing

Phantoms are a very common phenomenon in manufacturing. We should use the term ‘Phantom BOMs' as a more precise description of the topic. The more complex a manufactured piece of equipment is, the higher the chance there will be phantoms in the BOM. How do we explain the need for phantom BOMs in a business?

In the engineering design process, there is a need to define certain sections of the equipment in a BOM, although it is nothing you could ever build or assemble in the typical sense; it represents a function in the equipment. Such elements are too deeply integrated with other pieces of the finished product to represent traditional parts or subassemblies, for example a hydraulic system. The hydraulic system certainly represents a distinct functional segment in the design of equipment but will never be assembled in isolation. This is a perfect example of a phantom-BOM. The real BOM that contains all the pieces required for the hydraulic system becomes a phantom-BOM in the end item that uses it. Now we have the ability to copy this phantom BOM to other finished products, which is one of the essential reasons to have phantom-BOMs in the first place.

APICS says the following: "Phantom bills are a coding and structuring technique used primarily for transient subassemblies. The phantom bill represents an item that may not exist physically but is treated as an accounting unit". From an accounting perspective, one can also say that the phantom-BOM represents "work in process".

Sometimes phantom BOMs are also used to represent options for configurable products. A phantom BOM can certainly be a multi-level BOM by itself that contains more phantoms on lower levels. I have seen phantoms in almost every implementation, the record holder (for now) being ...