An essential step in manufacturing is completing a bill of materials, or BOM. Also referredto as an assembly component list, product structure or product recipe, a BOM is fundamentalto the effectiveness of multiple manufacturing and supply chain processes, includingproduction, materials requirement planning, inventory planning, scheduling and productcosting.
What Is a Bill of Materials (BOM)?
A BOM is a structured, comprehensive list of the materials, components and parts required tomanufacture or repair a product, as well as the quantities in which the materials are neededand their names, descriptions and costs.
A BOM also includes instructions for procuring and using these materials. Because of thebreadth and depth of the data it captures, a BOM can act as a central record of thematerials, components and processes used to build a product.
Key Takeaways
- A bill of materials (BOM) is a structured list identifying all materials and componentsrequired to construct a product, as well as the instructions for procuring and using thematerials.
- A BOM helps organizations plan purchases of materials, estimate costs, planfor and control inventory and minimize production delays and waste.
- An accurate, complete BOM helps identify the cause of a product failure and work quicklyto replace the faulty parts, materials and components.
- BOMs come in a range of forms and types. They can be single- or multi-level. Some of themost common types are engineering, manufacturing and sales BOMs.
Bill of Materials Explained
A BOM is essentially a blueprint for manufacturing a product. It encompasses the materials,components and steps required to create the item.
Most BOMs are structured in a hierarchy. At the top is the completed product, next are subassembliesand below those are the components and materials that go into making the product. Thisincludes details like part names, numbers, descriptions and the quantities needed.
While the concept of a BOM is straightforward, creating and managing bills of materials canbecome complicated, especially for products composed of hundreds or thousands of parts. Forinstance, if it becomes necessary to change one component because a supplier can’tmeet its delivery deadlines, this change needs to be replicated throughout the BOM whereverthat component is used. Some basic parts, like adhesives, may be used in multiple areas.
Why Use a BOM?
BOMs facilitate efficient and accurate manufacturing. By identifying and pricing all thematerials and components needed to make a product — before production begins— anorganization can determine whether it has everything it needs to move forward with minimalrisk of delays. This reduces the likelihood of both shortages and overages of materials orcomponents. By helping ensure the right parts and materials are available at the right timeand in the right quantities, BOMs help manufacturers remain within budget and on schedule.
Companies that work with contract manufacturers and provide the manufacturer with a BOM canbe more confident the final product will meet their specifications.
Conversely, proceeding without a BOM increases the likelihood of costly and time-consumingmistakes. These include shortages or overages in materials, production downtime while thematerials are assembled and additional expediting charges to make up for earlier delays.
Who Prepares a Bill of Materials? Who Uses a Bill of Materials?
Given the range of information within a bill of materials, creating one often requires inputfrom a company’s cross-section of functions. This can include design, engineering,purchasing, materials management and manufacturing.
Similarly, different areas within a company can be primary users of different types of BOMs.For instance, engineering and/or design typically uses an engineering BOM. Manufacturinggenerally uses manufacturing BOMs.
10 Key Elements of a Bill of Materials (BOM)
What is included in a bill of materials? Most BOMs include the following elements: BOM level;the part number, name, description and quantity; cost; and the unit of measure. While thebill of materials includes components and parts, it doesn’t include labor.
BOM level
This is a unique number showing where each part or assembly fits within the BOMhierarchy. Consider a BOM for a vehicle. Each major component, like the engine,doors and drivetrain, would be a level. They’d be further broken intocomponents and materials, like the pistons and crankshaft that are part of theengine. The pistons and crankshaft would themselves each be a level and then brokeninto their component parts. An example would be the piston rings that are part ofthe pistons.
Part number
This unique number identifies a material or component, enabling anyone involved inthe production process to identify it quickly. Part numbers can be intelligent—that is, they include some description of the part. For instance, an intelligentnumber for wire might be "WIRE-001."
Intelligent numbers can make it easier to identify each part. However, they requirethe person developing the numbering scheme to know each part in some detail beforeassigning numbers.
Non-intelligent part numbers include no descriptions. They’re generally easierto generate and likely to remain accurate for longer periods.
For most organizations, either numbering system can work. The key is to beconsistent.
Part name
The part name also is a unique identifier for each part or assembly. Like the partnumber, it helps users to identify the part quickly.
Phase
The phase indicates the lifecycle stage for each part. Examples include “inproduction” or “in design.”
Description
Also unique to each part or component, the description provides more detail than thepart name or number. Descriptions are helpful when it’s necessary todistinguish between parts that appear similar. For instance, “screws”could includeboth 1/2- and 5/8-inch machine screws.
Quantity
The quantity indicates how many of each part will be used in an assembly orsub-assembly. An example would be two piston rings per piston cylinder.
Unit measure
This designates in what unit of measure a part will be procured and/or used.Specifying the measure helps ensure the right quantities are ordered. For parts thatare complete, like gaskets, the unit measure likely will be “each.”
For some parts or components, it makes more sense to use a unit of measure. Forinstance, wiring and lumber generally are purchased by the foot. Small, inexpensiveparts that are difficult to count, like nails or screws, may be purchased by weightor by the box.
Procurement type
This indicates how the part or component is obtained. Choices typically includepurchasing the part, producing it internally or having it manufactured bysubcontractors.
Reference designator
The reference designator comes into play when products contain printed circuit-boardassemblies. The reference designator identifies the location of each part within thecircuit board assembly.
BOM notes
The notes section offers a chance to include other information useful to anyonereferring to the BOM. It might consist of a list of alternate suppliers or thespecifications that a material, like an adhesive, must meet.
Bill of Materials (BOM) Displays
Bills of materials generally are presented in one of two ways:
Explosion Display
In an explosion display, the BOM starts with the highest level of the product — say,computermotherboard — at the top. It then breaks the product down into components and partsthatbecome increasingly more granular.
Implosion Display
An implosion display is the inverse of an explosion display. It starts with individual partsand links them to form the major product or assembly.
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Advantages & Value of a BOM
Why is a bill of materials important? By providing a single record of the materials,components and assemblies that go into the product, a bill of materials ensures these itemsare in-house when needed and at the quantities required during production. This minimizes inventoryinaccuracies and production delays, both of which cost time and money.
Bills of materials also ensure uniformity. When each production run follows the same BOM, theproducts themselves remain consistent. This helps ensure they meet customer expectations andis critical when products need to meet safety or other standards.
The information contained within BOMs also is key when it becomes necessary to track productfailures. With this document, it’s possible to identify the parts, materials andcomponents used and zero in on potential sources of failures. Manually preparing andmanaging BOMs can quickly become unwieldy and error prone. Software, such as a supply chainand inventory management solution, can help automate the development process.
The Two BOM Structures
BOMs may be structured in one of the following two ways:
Single-level Bill of Materials
In a single-level BOM, each part that will make up the product or asset is shownonce, along with the quantity needed. It’s similar to a shopping list.
See AlsoSAP S/4HANA Currency SetupWhile single-level BOMs are easy to create, they don’t show the relationshipsbetween the assemblies, subassemblies and components used to construct a product. Ifa product fails, it may be difficult to determine precisely which component needs tobe repaired or replaced.
For instance, assume a BOM for a vehicle is constructed in a single-level format. Itlater becomes clear that the door handle on the vehicle is faulty. The single-levelBOM won’t distinguish between the parts that went into the handle and thoseused in other vehicle parts. For this reason, single-level BOMs typically are usedwith simpler assemblies.
Multi-level Bill of Materials
In contrast to the single-level bill of materials, a multi-level BOM shows therelationship (sometimes called parent-child) between components, sub-assemblies andassemblies. It often does this by indenting the materials and/or subassemblies thatmake up the higher-level part or assembly. For this reason, multi-level BOMssometimes are referred to as indented BOMs.
A sub-assembly may, in turn, comprise multiple components. When changes are made tothe assembly (or parent), they flow to the subassembly (or child). Because they showthese relationships, most complex products use multi-level BOMs.
Free Bill of Materials (BOM) Template
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Types of Bills of Materials
Both single- and multi-level BOMs may be created for use at various stages of the productdevelopment lifecycle. The primary types include engineering, sales and manufacturing BOMs.
Each focuses on different information.
Engineering Bill of Materials (EBOM)
An engineering BOM is developed while a product is being designed and defines a finishedproduct’s original design. It includes the items, parts, components and subassembliesas designated by engineering. It generally consists of a technical drawing of the product.
Engineering BOMs, as their name indicates, typically are developed by engineers. They oftenuse computer-aided design (CAD) software or similar systems to create the BOM.
Sales Bill of Materials (SBOM)
A sales BOM lists the products and components required to develop a product as ordered by thecustomer. It’s developed from the sales order and includes both the finished productand components, as they appear in the sales record.
Manufacturing Bill of Materials (MBOM)
A manufacturing BOM is used during production. It identifies the parts and assemblies neededto produce a shippable product, including packaging, and accounts for waste and itemsconsumed in the production process.
An MBOM identifies the groups of parts needed at each stage of the production process andprovides information on the processing required by various parts before assembly. This helpsdetermine when materials must be purchased and when various manufacturing processes need tobegin to meet scheduled delivery dates.
For a new product, an MBOM may last for a set period, such as several weeks. Then, if itbecomes clear the product requires changes, the MBOM can be updated or a new one may begenerated.
Information in the MBOM typically is shared with several systems, including the enterpriseresource planning (ERP) system and material requirement planning (MRP) systems.
Configurable Bill of Materials
This BOM is used for finished products that are configured and designed to meetspecifications requested by a customer. It identifies the materials and components,including any labeling or packaging requirements, needed to manufacture the product to thecustomer’s requirements.
Production Bill of Materials
A production BOM acts as the foundation for a production order and includes the componentsand assemblies that make up a product. As production proceeds, the components are convertedto finished products.
Assembly Bill of Materials
Like a sales BOM, an assembly BOM lists the parent item as a sales product rather than aninventory item. An assembly BOM also lists sub-assemblies (or children).
Template Bill of Materials
Template BOMs offer flexibility, as they can be used for either production or sales BOMs.These also include parent and child components.
How to Create BOMs in 7 Steps
Depending upon the industry, designers or engineers as well as purchasing, scheduling, andplanning workers will want to review them to ensure accuracy — an accurate BOM servesas aroadmap for finished goods and frees up resources to spend on the actual production process.Several steps are involved in creating an accurate, useful bill of materials, among them:
Determine what data to include.
For instance, will the BOM include consumables, like glue or wire? While this mayseem unnecessary, including these within the BOM from the beginning helps ensurethese materials are available when needed.
Centralize control of the BOM.
In many organizations, different departments or functions use different informationsystems. For the BOM to remain accurate and up-to-date, it will need to assembleinformation from all these systems into a single record.
Determine who will be able to change the BOM.
To minimize the risk of mistakes, the number of editors should be limited.
Decide how to track revisions to the BOM.
Many BOMs are revised on a continuous basis. For the BOM to continue to provide valueand remain accurate, all changes need to be tracked. Ensure all changes can beconnected back to the authors.
Choose the BOM presentation.
Such as single- or multi-level, that makes sense for the product.
Begin listing.
The materials, components and parts that will make up the product. This list willgrow and change over time.
Continue to add to and refine the list.
Tracking all changes.
History of the Bill of Materials
According to Form Labs, a digital fabrication company, World War I prompted advances in thediscipline of materials management to help companies best use scarce materials to fillorders of goods needed for the war. Following this and before World War II, engineers usedearly versions of BOMs to specify components within technical drawings.
In the 1960s, advances in production planning emerged, like Toyota’s Just-in-Timeapproach, as well as materials requirementsplanning, or MRP. Also, in the 1960s, enterprise resource planning (ERP) wasapplied to inventory management and control. Software engineers created programs to monitorinventory and reconcile balances.
By the mid-1970s, more than 700 companies were using MRP; this swelled to 8,000 by the early1980s. In addition, the concept of MRP expanded to include more processes, like accountingand human resources. Companies could use BOMs to plan for the materials outlined in themaster production and purchasing schedule. This helped in managing inventory and reducingdelays.
Today, ERP also encompasses business intelligence and front-office functions like ecommerce.Companies of all sizes and across all industries use ERP solutions.
Make the Most of BOMs With an ERP System
Manually preparing and managing BOMs can quickly become unwieldy and error-prone. Software,such as a supply chain and inventory managementsolution, can help automate the development process. ERP systems also can automate the tracking of changesto BOMs and identify discrepancies that can occur when multiple areas, such as engineeringand manufacturing, generate BOMs for the same product.
To help organizations manage inventory levels across their supply chains, look for an inventory managementsystem that includes inventory control, trackingand optimization.
An accurate, thorough and updated bill of materials improves decision-making and facilitatesefficient production processes. It can help organizations more quickly move designs intoproduction, which may help them capture customers. By cutting waste, BOMs help organizationssave money. Because of the depth and breadth of information they provide, BOMs can boostsupply chain resiliency.
Conversely, neglecting to create a BOM or failing to update one can result in inaccurateproduct costs, products being made incorrectly, inventory overages or shortages andproduction delays, among other challenges.
