Which of the following best describes the purpose of a Bill of Materials class?

An essential step in manufacturing is completing a bill of materials, or BOM. Also referred to as an assembly component list, product structure or product recipe, a BOM is fundamental to the effectiveness of multiple manufacturing and supply chain processes, including production, materials requirement planning, inventory planning, scheduling and product costing.

What Is a Bill of Materials (BOM)?

A BOM is a structured, comprehensive list of the materials, components and parts required to manufacture or repair a product, as well as the quantities in which the materials are needed and their names, descriptions and costs.

A BOM also includes instructions for procuring and using these materials. Because of the breadth and depth of the data it captures, a BOM can act as a central record of the materials, components and processes used to build a product.

Key Takeaways

• A bill of materials (BOM) is a structured list identifying all materials and components required to construct a product, as well as the instructions for procuring and using the materials.
• A BOM helps organizations plan purchases of materials, estimate costs, plan for and control inventory and minimize production delays and waste.
• An accurate, complete BOM helps identify the cause of a product failure and work quickly to 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 the most 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 subassemblies and below those are the components and materials that go into making the product. This includes details like part names, numbers, descriptions and the quantities needed.

While the concept of a BOM is straightforward, creating and managing bills of materials can become complicated, especially for products composed of hundreds or thousands of parts. For instance, if it becomes necessary to change one component because a supplier can’t meet its delivery deadlines, this change needs to be replicated throughout the BOM wherever that 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 the materials and components needed to make a product — before production begins — an organization can determine whether it has everything it needs to move forward with minimal risk of delays. This reduces the likelihood of both shortages and overages of materials or components. By helping ensure the right parts and materials are available at the right time and 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 can be more confident the final product will meet their specifications.

Conversely, proceeding without a BOM increases the likelihood of costly and time-consuming mistakes. These include shortages or overages in materials, production downtime while the materials 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 input from 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. Manufacturing generally 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 the bill of materials includes components and parts, it doesn’t include labor.

1. BOM level

   This is a unique number showing where each part or assembly fits within the BOM hierarchy. Consider a BOM for a vehicle. Each major component, like the engine, doors and drivetrain, would be a level. They’d be further broken into components and materials, like the pistons and crankshaft that are part of the engine. The pistons and crankshaft would themselves each be a level and then broken into their component parts. An example would be the piston rings that are part of the pistons.

2. Part number

   This unique number identifies a material or component, enabling anyone involved in the production process to identify it quickly. Part numbers can be intelligent — that is, they include some description of the part. For instance, an intelligent number for wire might be "WIRE-001."

   Intelligent numbers can make it easier to identify each part. However, they require the person developing the numbering scheme to know each part in some detail before assigning numbers.

   Non-intelligent part numbers include no descriptions. They’re generally easier to generate and likely to remain accurate for longer periods.

   For most organizations, either numbering system can work. The key is to be consistent.

3. Part name

   The part name also is a unique identifier for each part or assembly. Like the part number, it helps users to identify the part quickly.

4. Phase

   The phase indicates the lifecycle stage for each part. Examples include “in production” or “in design.”

5. Description

   Also unique to each part or component, the description provides more detail than the part name or number. Descriptions are helpful when it’s necessary to distinguish between parts that appear similar. For instance, “screws” could include both 1/2- and 5/8-inch machine screws.

6. Quantity

   The quantity indicates how many of each part will be used in an assembly or sub-assembly. An example would be two piston rings per piston cylinder.

7. 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 that are 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. For instance, wiring and lumber generally are purchased by the foot. Small, inexpensive parts that are difficult to count, like nails or screws, may be purchased by weight or by the box.

8. Procurement type

   This indicates how the part or component is obtained. Choices typically include purchasing the part, producing it internally or having it manufactured by subcontractors.

9. Reference designator

   The reference designator comes into play when products contain printed circuit-board assemblies. The reference designator identifies the location of each part within the circuit board assembly.

10. BOM notes

    The notes section offers a chance to include other information useful to anyone referring to the BOM. It might consist of a list of alternate suppliers or the specifications 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, computer motherboard — at the top. It then breaks the product down into components and parts that become increasingly more granular.

Implosion Display

An implosion display is the inverse of an explosion display. It starts with individual parts and links them to form the major product or assembly.

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 items are in-house when needed and at the quantities required during production. This minimizes inventory inaccuracies and production delays, both of which cost time and money.

Bills of materials also ensure uniformity. When each production run follows the same BOM, the products themselves remain consistent. This helps ensure they meet customer expectations and is critical when products need to meet safety or other standards.

The information contained within BOMs also is key when it becomes necessary to track product failures. With this document, it’s possible to identify the parts, materials and components used and zero in on potential sources of failures. Manually preparing and managing BOMs can quickly become unwieldy and error prone. Software, such as a supply chain and inventory management solution, can help automate the development process.

The Two BOM Structures

BOMs may be structured in one of the following two ways:

1. Single-level Bill of Materials

   In a single-level BOM, each part that will make up the product or asset is shown once, along with the quantity needed. It’s similar to a shopping list.

   While single-level BOMs are easy to create, they don’t show the relationships between the assemblies, subassemblies and components used to construct a product. If a product fails, it may be difficult to determine precisely which component needs to be repaired or replaced.

   For instance, assume a BOM for a vehicle is constructed in a single-level format. It later becomes clear that the door handle on the vehicle is faulty. The single-level BOM won’t distinguish between the parts that went into the handle and those used in other vehicle parts. For this reason, single-level BOMs typically are used with simpler assemblies.

2. Multi-level Bill of Materials

   In contrast to the single-level bill of materials, a multi-level BOM shows the relationship (sometimes called parent-child) between components, sub-assemblies and assemblies. It often does this by indenting the materials and/or subassemblies that make up the higher-level part or assembly. For this reason, multi-level BOMs sometimes are referred to as indented BOMs.

   A sub-assembly may, in turn, comprise multiple components. When changes are made to the assembly (or parent), they flow to the subassembly (or child). Because they show these relationships, most complex products use multi-level BOMs.

Free Bill of Materials (BOM) Template

Download our free bill of materials template to plan purchases of materials, estimate costs, plan for and control inventory and minimize production delays and waste.

Get the free BOM template

Types of Bills of Materials

Both single- and multi-level BOMs may be created for use at various stages of the product development 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 finished product’s original design. It includes the items, parts, components and subassemblies as 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 often use 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 the customer. It’s developed from the sales order and includes both the finished product and 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 needed to produce a shippable product, including packaging, and accounts for waste and items consumed in the production process.

An MBOM identifies the groups of parts needed at each stage of the production process and provides information on the processing required by various parts before assembly. This helps determine when materials must be purchased and when various manufacturing processes need to begin to meet scheduled delivery dates.

For a new product, an MBOM may last for a set period, such as several weeks. Then, if it becomes clear the product requires changes, the MBOM can be updated or a new one may be generated.

Information in the MBOM typically is shared with several systems, including the enterprise resource 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 meet specifications requested by a customer. It identifies the materials and components, including any labeling or packaging requirements, needed to manufacture the product to the customer’s requirements.

Production Bill of Materials

A production BOM acts as the foundation for a production order and includes the components and assemblies that make up a product. As production proceeds, the components are converted to finished products.

Assembly Bill of Materials

Like a sales BOM, an assembly BOM lists the parent item as a sales product rather than an inventory 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, and planning workers will want to review them to ensure accuracy — an accurate BOM serves as a roadmap 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:

1. Determine what data to include.

   For instance, will the BOM include consumables, like glue or wire? While this may seem unnecessary, including these within the BOM from the beginning helps ensure these materials are available when needed.

2. Centralize control of the BOM.

   In many organizations, different departments or functions use different information systems. For the BOM to remain accurate and up-to-date, it will need to assemble information from all these systems into a single record.

3. Determine who will be able to change the BOM.

   To minimize the risk of mistakes, the number of editors should be limited.

4. Decide how to track revisions to the BOM.

   Many BOMs are revised on a continuous basis. For the BOM to continue to provide value and remain accurate, all changes need to be tracked. Ensure all changes can be connected back to the authors.

5. Choose the BOM presentation.

   Such as single- or multi-level, that makes sense for the product.

6. Begin listing.

   The materials, components and parts that will make up the product. This list will grow and change over time.

7. 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 the discipline of materials management to help companies best use scarce materials to fill orders of goods needed for the war. Following this and before World War II, engineers used early versions of BOMs to specify components within technical drawings.

In the 1960s, advances in production planning emerged, like Toyota’s Just-in-Time approach, as well as materials requirements planning, or MRP. Also, in the 1960s, enterprise resource planning (ERP) was applied to inventory management and control. Software engineers created programs to monitor inventory and reconcile balances.

By the mid-1970s, more than 700 companies were using MRP; this swelled to 8,000 by the early 1980s. In addition, the concept of MRP expanded to include more processes, like accounting and human resources. Companies could use BOMs to plan for the materials outlined in the master production and purchasing schedule. This helped in managing inventory and reducing delays.

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 management solution, can help automate the development process. ERP systems also can automate the tracking of changes to BOMs and identify discrepancies that can occur when multiple areas, such as engineering and manufacturing, generate BOMs for the same product.

To help organizations manage inventory levels across their supply chains, look for an inventory management system that includes inventory control, tracking and optimization.

An accurate, thorough and updated bill of materials improves decision-making and facilitates efficient production processes. It can help organizations more quickly move designs into production, which may help them capture customers. By cutting waste, BOMs help organizations save money. Because of the depth and breadth of information they provide, BOMs can boost supply chain resiliency.

Conversely, neglecting to create a BOM or failing to update one can result in inaccurate product costs, products being made incorrectly, inventory overages or shortages and production delays, among other challenges.