What is BOM (Bill of Materials)

September 8, 2019

The first step to understanding bills of materials and how BOM operates is defining the term and what it means. Bill of Materials represents the full set of information about the product, what it includes and contains, grouping all assemblies, parts, materials with the corresponding quantities and connected documents.

The bill of materials is also known as a product structure that contains important components (parts, materials, assemblies) required to manufacture a final product. 

This structure is usually made of assembly and sub-assemblies (sub and intermediate) and components (parts and materials). It also has details about all necessary parts and their quantity as well.

The bill of material is designed to provide an information link between manufacturing partners. But it is also used by company departments to communicate and manage information for product development processes. So what is the bill of materials? Let’s see the main takeaways.

Main Takeaways

1. Definition of bill of materials: a data structure developed by a manufacturing company that contains information on the items (components, materials, etc.) required to produce an end product. The BOM also includes the links to the documents explaining how to manufacture parts and other components.
2. Part Numbers are used to show all components and identify them in a unique manner.
3. Bill of Materials (Product Structure) can be formatted in different ways — single level, multi-level or flattened to present the information about product structure in the way needed for engineers, manufacturing planners, contractors and other users.
4. When we define Items, we can distinguish between different component types (e.g. Buy, Make, Material, Labor, etc.) that are the most commonly used in manufacturing.
5. Additional information can be used to filter BOM using effectivities, configuration, vendor information, etc.

Why Are BOMs Important

Manufacturing is a complex process and it requires a well defined process including a recipe of what needs to be manufactured. The Bill of Materials is a lifeblood of every product development process and it contains all information needed to manufacture a product. To yield profit after the initial investment, you need to make sure that the final product is of the best possible, considering cost and quality.

Bills of material definitions show us that a product is designed according to the requirements and with the desired results. A well defined Bill of Materials will ensure the product will be delivered on time and according to the standards.

So why is the bill of materials important:

1. It keeps your business organized. With a properly outlined assembly, everyone on the team knows what to expect and when to expect it.
2. The manufacturing process activities are rarely slowed down. The bill of materials contains accurate details which enable smooth operations.
3. Ensure all components are counted and provide a tool to plan product cost. 
4. Project management has a better vantage point and more information when it comes to decision-making. This includes figuring ways to speed up the manufacturing process or making it more cost-effective for the business.
5. Intelligent BOM cooperation can help manufacturers dramatically reduce risks, create or increase productivity and innovations.
6. Individually assigned roles are easily executed and any mistakes encountered at each stage of the process can be quickly identified and corrected ahead of time.
7. Another meaning of bill of material says it is easier for the manufacturer to know where to find and purchase the raw material required to create the final product.

What to Include in an Effective Bill of Materials

We have looked at the definition of BOM and why it is important. Now let’s analyze a typical BOM by highlighting what it is made up of:

1. BOM Level — to help everyone understand what is required during the manufacturing process, every part must be assigned a number to know exactly where it falls in the hierarchy.
2. Part number — use a numbering scheme to further identify all the individual parts. It is important to make sure that there is no repetitive number, especially if many parts are involved.
3. Name of part — provide a special name to each part to help prevent confusion down the line.
4. Phase — take note of every stage and what parts belong to it, also indicate how far in the process of production they are. For instance, you can indicate the stage of production by using the phrase “in production”. The importance of this part is that it allows you to stay track of what is being done.
5. Description — every single part should be described in detail. This also serves to distinguish it from other parts and makes it easy to identify.
6. Quantity — take note of the number of all the parts involved at every phase of production.
7. Measuring unit — find a system of measurement that will help you define each part. To make sure that you get the right quantities, remember to be uniform across the board.
8. Procurement type — take note of how every part is bought or created.
9. Reference designators — document this information to help you prevent any problems down the line.
10. BOM Notes — other additional information.

Product Structure (BOM)

Product Structure (BOM) is defining the hierarchy of assemblies, components and all related information for a product. The different components of a BOM of materials can be arranged in hierarchical ways. 

There are three main ways to format Bill of Materials:

1. Single-level BOM;
2. Multi-level BOM;
3. Flattened BOM.

Note: Flattened BOM is sometimes called Part List, although it can contain not only parts.

Single-level BOM

The single-level bill of materials has a simple structure. It names all the important components required for manufacture and arranges them in one level.

It basically works like a recipe, where all important ingredients are listed. Due to its simplicity, the single-level BOM is not suitable for large-scale production, especially complicated end products.

Multi-level BOM

To represent a complex product, companies are using multi-level BOMs. The structure can represent the way product is built and designed, allowing to group specific items in the subsystems and modules (for example, a group dedicated to created or purchased parts, a subgroup of assemblies). 

It usually has the following structure:

1. Details about the marketing of the end product involve finding better ways to appeal to the consumers of the product and keep them engaged.
2. The various processes involved in the manufacturing of the product and any tactics that may be applied to reduce costs.
3. Testing the product to ensure the best quality is released to the public for use.

Flattened BOM

Another way to present all components needed to manufacture the product is to present a flattened list of all items used in multiple assemblies. Such a BOM is critically important for planning and procurement because it gives an easy way to access all information and it works as a summary of all component quantities used in multiple assemblies.

6 Steps to Prepare a Bill of Materials

Every upstream project needs to include manufacturing bills of materials as another (major) type of case management. Usually, the distributors are trying to use standard BOM to record all costs properly. For encouraging you, let’s check main steps to prepare BOM:

1. Identify All Sources of BOM Information

The first step in preparing the Bill of Materials is to identify all sources of information needed to create a BOM.

The information includes:

• Requirements data;
• Design information;
• Manufacturing data;
• Supplier’s data.

It is absolutely critical to include ALL information needed to manufacture the product to the bill of materials. Don’t leave information outside of the BOM because it will lead to mistakes, delays and unexpected costs.

2. Create the Initial BOM

After identifying all sources of information for the BOM, you need to make steps to bring the information from other systems (e.g. CAD systems) or to create data manually. The process of BOM creation is iterative. It is possible that you won’t be able to create all the information at the first step, so you will have to come back to add information.

3. Manage Revisions & Update BOM

Change is the most permanent thing. Therefore, as you work on the Bill of Materials creation, you need to be prepared to capture changes and maintain revisions of Bill of Materials. It will allow you to track work and to support traceability of changes.

4. To Validate Quantity & Data Correctness

Keep in mind that the initial Bill of Materials created from a design system might not include all needed information or a correct quantity for parts and components. At this stage, you need to validate the quantities and any additional items (e.g. documentation, labor, etc.) that need to be included in the BOM.

5. Team & Collaboration

A successful Bill of Materials process requires the collaboration between multiple members of the team. That’s why it is important to have collaborative tools to support the BOM management process.

You will need to stay connected with multiple engineers, production planners, procurement, contractors and suppliers. Without successful collaboration, you won’t be able to define a correct Bill of Materials, which will lead to mistakes, additional cost and delays.

6. Analysis & Calculation

Bill of Materials is a data foundation for your product. You need to have the ability to perform various analytics and calculations based on the BOM data. The most typical one is cost rollup.

To predict the cost is one of the most critical elements in the product development process. A correct and complete BOM is a foundation for cost rollup. Beyond that, BOM can be used for many other tasks: suppliers’ selection, lead time validation, contract manufacturing and others.

If you have questions or would like to know more about the bill of materials, OpenBOM support can help you, just get in touch! We also offer complete services to support your product development from prototype to production and maintenance.