Learn how to create a Bill of Materials (BOM) and why it's crucial for product assembly.
Published 16 Dec 2022
Bills of Materials, or BOMs, list all the parts and components that go into building a product. In other words, it's a shopping list for manufacturers. A BOM typically includes a description of each part and information about its price, supplier, and product code.
The goal of a BOM is to provide a complete overview of the materials needed to create a product, making it easy for manufacturers to order the correct parts and assemble them correctly. While BOMs are essential for large-scale manufacturing operations, they can also be helpful for smaller businesses and hobbyists who need to keep track of the parts used in their products.
The bill of materials includes a broad scope of data, so input from various company departments is essential for its construction. These may consist of functions such as design, engineering, purchasing, materials management, and manufacturing.
A well-crafted bill of materials aids companies in materials requirement planning and manufacturing by providing an accurate and quickly followed roadmap. A good BOM can improve different parts of production, including:
Single-level BOMs help provides a shopping list, but they have limitations. For example, they do not indicate how assemblies, subassemblies, and components relate to each other.
A multi-level bill of materials (also called a parent-child BOM) differs from a single-level BOM in that it shows the relationship between components, subassemblies, and assemblies. Material or subassemblies used to make up the higher-level assembly or part are usually indented. As a result, multi-level BOMs are sometimes called indented BOMs.
BOM records should always include specific product information, such as:
Eliminate manual tasks and streamline your operations.
You can have either a single- or multi-level BOM for use during various stages of product development. The most common types are engineering, sales, and manufacturing BOMs—each with its key focuses.
The EBOM is a product’s design blueprint. It includes everything engineering has designated as needed to assemble the final product, such as items, parts, components, and subassemblies. The BOM generally contains a technical drawing of the desired outcome.
SBOMs are simply a list of the products and components in the order that they are needed to create the customer’s product. This bill comes from the sales order and includes final products and any necessary pieces or parts, which will be specified in detail within the sales record.
The Manufacturing BOM is a tool used during the production process. It facilitates the identification of shippable products, packaging, and waste items.
Depending on your industry, different people need to look at the bill of materials to ensure it is correct. Here are several steps involved in making a helpful bill of materials, including:
For example, the BOM might include consumables necessary for the product, like glue or wire. The inclusion of these in the BOM from the beginning ensures smooth production in the future.
Because various departments or functions in an organization usually use different information systems, the BOM (Bill of Materials) will need to be accurate and up-to-date by gathering data from all these separate systems into one primary record.
It is best to have only a few editors so that there are fewer chances for mistakes.
Although BOMs are revised frequently, every modification must be documented so that the BOM provides value and remains accurate. Ensure that each change can be attributed to its author.
Choose between single- or multi-level depending on what’s perfect for the product.
Enlist each material, component, and parts that will make up the product since this is subject to change over time.
As the product changes, so will the BOM. Keep it updated as much as possible to ensure everyone is on the same page.
A bill of material calculation uses data from several sources to determine a manufactured item’s standard cost. These sources can include information about items, routings for bills, formulas for calculating indirect costs, and the costing version.
A multi-level BOM consists of nested lists of components and assemblies (i.e., hardware, software, PCBAs) within the finished assembly. In contrast, a single-level BOM represents a lower-level assembly (i.e., PCBA).
COGS refers to the total cost of a single unit, including the BOM, labor costs, and shipping. Your gross margin is determined by subtracting your COGS from the sale price. Depending on your distribution channel, your margin will differ. COGS only includes the costs to produce the goods, while the BOM includes all the materials used in production.
The type of suppliers you work with significantly impacts the likelihood of acquiring a BOM. If obtaining a BOM is essential to your business, consider partnering with a contract manufacturer. Even though this requires relinquishing control over product design, it may be manageable depending on your company’s size and capacity.
Creating and maintaining accurate BOMs is vital to the success of any manufacturing or production process. SafetyCulture can help streamline this process by allowing you to:
Rob Paredes is a content contributor for SafetyCulture. He is a content writer who also does copy for websites, sales pages, and landing pages. Rob worked as a financial advisor, a freelance copywriter, and a Network Engineer for more than a decade before joining SafetyCulture. He got interested in writing because of the influence of his friends; aside from writing, he has an interest in personal finance, dogs, and collecting Allen Iverson cards.
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