Bill of Materials – What It Is, How It Works & Its Benefits

A Bill of Materials (BOM) is a tool that helps to simplify complex products and industrial processes. Think of a product, such as a car, that is composed of 10,000 individual components, each varying in shape, size, material, orientation, and function.

Most of these parts are sourced from various manufacturers before being assembled onto the body-in-white. In order to make a car, all of these parts must be sourced from within and outside a country in varying quantities. Thus, producing thousands of cars every month requires meticulous deliberation, planning and execution.

The complex process needs to be simplified to enhance accuracy and repeatability. A bill of materials is a tool that helps us achieve just that. This article will explore the concept of a bill of materials, its contents, types, and its role in simplifying complex processes within various departments in different industries.

What Is a Bill of Materials?

A Bill of Materials (BOM) is a product-specific document that provides a detailed breakdown of a product into assemblies and sub-assemblies. It serves as a comprehensive blueprint, outlining the various components involved in the manufacturing process. Think of it as a grocery list for making your assembly.

A bill of materials is an important and useful document, it serves as the foundation for production planning systems. As the number of parts in a product increases, it becomes increasingly difficult to manage the availability of all the components in sufficient quantities for the assembly process. The unavailability of just one part can halt the entire assembly line, costing the company thousands of dollars in lost productivity.

To prevent this, companies use a bill of materials to plan and track component purchases, optimise inventory levels and reduce waste. When used correctly, it enables a more systematic and deliberate process, minimising unplanned downtime and errors while ensuring operations run at the lowest possible cost.

What Is Included in a Bill of Materials?

A bill of materials can take on different forms. It has different components depending on the department to which it belongs.

For instance, a manufacturing bill of materials includes details, such as the product code, part name and number, quantity, description, colour, size, and the process in which it will be used to make the final product.

A sales bill of materials includes sales-relevant information, such as product prices, shipping details, part weight and dimensions, payment terms, tax rates, etc.

Thus, the BOM may include all the information that a department needs for smooth operations.

Bill of Materials BOM

Bill of Materials (BOM) Structure

A Bill of Materials (BOM) follows a standard structure. At the top is the finished product, which branches into sub-assemblies and their individual components as the hierarchy progresses downward. The BOM hierarchy resembles a pyramid, with the simplest components, such as fasteners, forming the base. These components combine with others at successive levels, ultimately culminating in the finished product at the apex.

Some BOM layouts may also include orthographic projections of a product, with all components tabulated at the bottom along with their details.

The structure of a bill of materials may also change depending on whether it is a single-level BOM or multi-level BOM:

• A single-level BOM places the finished product at the top, with individual components listed just beneath it. There are no sub-assemblies.
• A multi-level BOM is required for parts that have a high number of components and need more than one tier of hierarchy. The product’s assembly is broken down into sub-assemblies, tier after tier, until the individual components are reached.

A comprehensive bill of materials should include the following information:

Product or Assembly Name – Identifies the product or assembly, which is especially important for companies managing multiple product lines.

Part Name – Identifies the part and includes relevant details associated with it.

Part Number – A unique numeric or alphanumeric identifier is assigned to each part to ensure easy identification. A product may include several similar parts that vary in size or shape. For instance, bolts, which are commonly used as fasteners, can be differentiated by assigning a unique identifier to each type. This approach allows for more effective tracking and management of availability and usage.

Description – Prevents confusion between similar parts by providing any unique information about a part that may be overlooked at first glance. It may include details, such as colour or dimensions.

Quantity – Indicates the number of components in the final product. This helps to plan purchasing and manufacturing activities. Different components may have different units of measurement. The unit may be located in an adjacent column or in the quantity column itself.

BOM Level – A multi-level BOM consists of several levels. The Bill of Materials (BOM) also specifies the level for every component based on its position in the BOM hierarchy.

Manufacturer Details – Including manufacturer details is essential when a product consists of components or sub-assemblies sourced from multiple suppliers.

Part Phase – The term “part phase” refers to the stage a part is currently in. For a New Product Introduction (NPI) part, the phase might be labeled as “unreleased” or “in design.” For a finalised part that has reached the production stage and is on the machine shop floor, may be marked as “in production.” The part phase may sometimes also include the version of the parts, as they evolve through optimisations.

Alternate Part – A column may be added to the BOM to inform the reader of alternative parts to be used if the original part is unavailable.

Component Cost – The component’s unit cost may also be mentioned alongside their name in some bills of materials. This helps to understand the cost weightage of each component.

Procurement Type – The bill of materials may also specify the procurement method for a particular component. For items readily available in the market, the BOM may refer to them as “off-the-shelf”. custom-made parts, on the other hand, will be referred to as “made-to-specification”. This distinction helps us understand that certain parts may have longer lead times than others, enabling the team to plan manufacturing and purchasing activities accordingly.

Priority Analysis – The priority analysis column indicates which components or parts have a higher priority, typically requiring greater monetary investments or longer lead times. This helps to distinguish between critical parts and common parts.

BOM Notes & Comments – A Bill of Materials (BOM) also includes a notes/comments section for documenting any changes as the project progresses. For clarity, this section may also include diagrams and assemblies of relevant parts.

Types of Bills of Materials

Bills of materials are widely used in most product-based companies.

Although BOMs originated in manufacturing, they have gradually transitioned to other organisational functions. Today, in addition to a Manufacturing BOM, there are various types of bills of materials: Sales BOM, Engineering BOM, Production BOM, Purchasing BOM, Service BOM, and CAD BOM.

Each Bill of Materials (BOM) plays a crucial role in product development, and all of these BOMs are essential for the relevant department to support its functions and processes. Let’s take a look at two of the most important bills of materials to understand what they offer.

Engineering BOM

The engineering department prepares the Engineering Bill of Materials (EBOM) to define their product. It has a hierarchical structure with detailed specifications of each component, such as part number and tolerances. The EBOM is usually created using Computer-Aided Design (CAD) or Electronic Design Automation (EDA) software.

An EBOM covers only engineering concerns, such as form, fit and function. It does not concern itself with how parts are manufactured or procured. The EBOM is one of the first BOMs created in product development.

Manufacturing BOM

The Manufacturing Bill of Materials (MBOM) is created by the manufacturing team to build the product. Unlike the EBOM, it has a more visual format, with diagrams and/or flowcharts. Since manufacturing can only begin once the design is finalised, the Manufacturing BOMs are created after EBOMs.

The manufacturing BOM focuses on how a product is made. It contains detailed information about the manufacturing process, tooling, work instructions, and assembly stages.

Information Flow Between BOMs

All the different BOMs mentioned in the previous section are interconnected. Information flows from the top to the bottom through all the different bills of materials.

At the start of product development, only the requirements and specifications of the part are available. Using this information, an early bill of materials is generated, listing the assemblies and parts required for the final product.

The engineering department is the end user of the early BOM, as it helps them get a head start. They use the information from the early BOM to generate the Engineering BOM. The Engineering BOM is more comprehensive, benefiting departments like manufacturing, purchasing and servicing.

Each department uses the Engineering BOM to generate its own BOMs: Manufacturing BOM, Purchasing BOM and Service BOM. For example, if the Engineering BOM specifies that a part requires 6 M12 bolts, the purchasing department would order 600 M12 screws if the company plans to manufacture 100 finished products. So, in a way, the supporting departments are the actual consumers of the Engineering BOM.

In complex industries, such as the automotive and aerospace, all bills of materials play an important role. The components that form the product may be manufactured in-house or sourced from Tier 1, Tier 2 and Tier 3 suppliers. Parallel products may be manufactured simultaneously. Some components may be common to multiple products, while others may be unique to each product.

Effective optimisation of inventory and supply chain management requires a purchasing bill of materials that serves as a reference point for all stakeholders. This ensures alignment and prevents both shortages and wastage. However, not all types of BOMs are necessary for every company. Smaller companies, that do not have high purchasing requirements, can operate without a purchasing BOM.

How to Create a Bill of Materials

A bill of materials needs to be as comprehensive as possible without including any unnecessary information. Let’s break down the process of creating a general bill of materials when starting from scratch:

Step 1: Understand the Product

Start by defining the product and the goal of the bill of materials. By understanding the objective, irrelevant information can be filtered out. Pay attention to the design, specifications and all product documentation.

Step 2: List All Parts

Break the product down into its sub-assemblies, components and materials. Try to delve as deep as possible to identify each component separately.

Step 3: Identify Part Numbers and Other Part-Specific Information

In this step, gather specific information about each part of the Bill of Materials (BOM). This could be the manufacturer’s part number, description, part colour, dimensions, weight or any other relevant measurement. You may want to include part revision numbers to track changes over time.

Step 4: Create the Bill of Materials (BOM) Structure

The product determines the format. When dealing with a product with just a few components, a single-level BOM is efficient. For complex parts, a multi-level BOM would be more appropriate. Choose the relevant information gathered in Step 3 and organise the components in a hierarchical structure. The individual components are at the bottom. Moving up, these components are combined to form sub-assemblies that eventually lead to the final product. The final structure should look like a tree root or a pyramid.

Additional Tips

1. Include sufficient visual aids, such as drawings and diagrams.

2. Mention the manufacturers and suppliers of the different components in the BOM.

3. Manual bills of materials are prone to errors and difficult to modify. Invest in good BOM software for a better experience.

4. For clarity and consistency, use standard formats, terms and units.

Optimising a Bill of Materials

If you already have a BOM, you may be looking for tips to improve it. A bill of materials is an excellent tool, but it needs consistent maintenance. The following tips can help you optimise your current BOM to ensure you have the best version at all times.

Review at Regular Intervals

The most important feature of a BOM is that it accurately represents a process. However, product changes and updates occur regularly in most products. Therefore, BOMs have to be reviewed and updated regularly to reflect these changes correctly.

Cross-Functional Review

Discussing BOM among the various departments can reveal any missed information and how it could be included. This would make the BOM more accurate and complete than before.

Add Visual Aids

Add visual aids where necessary, such as images, diagrams and drawings, to enhance clarity and understanding of complex assemblies.

Integrate with Other Systems

Integrating the BOM with other systems, such as ERP and PLM, can make editing easier and allow better version control.

Benefits of Using a Bill of Materials

As pointed out in previous sections, a bill of materials serves various functions in different departments. Naturally, it also provides different benefits to each of them. In this section, you’ll find the benefits offered by the two most common bills of materials: the Engineering BOM and the Manufacturing BOM.

Benefits of an Engineering BOM (EBOM)

The Engineering BOM provides immense value not only to the engineering department but also to departments that support engineering, such as sales, purchasing and manufacturing. Investing in this tool helps engineering departments enhance efficiency and achieve their objectives. Let’s take a look at some specific advantages that an EBOM provides:

Improved Product Quality – The engineering bill of materials helps to enhance product quality over time by reinforcing design practices, minimising errors and reducing the need for rework.

Design Accuracy – Having a standardised EBOM enables the team to have a clear understanding of the various components, their design specifications and functionality. This enhances overall design accuracy.

Avoiding Downstream Problems – The team creates the EBOM during the design phase. This allows the engineers to identify and resolve potential issues well in advance, preventing costly corrections downstream.

Effective Communication – A picture speaks a thousand words. An EBOM is a comprehensive document that systematically lays out the form, fit and function of the proposed product and its components. This enables effective communication among the interdisciplinary teams involved in the product development process.

Version Control – A product may undergo many changes throughout the production process. These changes need to be tracked, documented and communicated to all stakeholders as soon as they are finalised. An EBOM with version control capabilities allows us to manage changes during the design phase and ensures that everyone has access to the most up-to-date and accurate information.

Synergy with PLM Software – The engineering bill of materials can be integrated with Product Lifecycle Management (PLM) software to oversee product data throughout its lifecycle. The integration is fast and seamless, offering the benefits of centralisation.

Failure Cause Identification – An accurate BOM helps identify the cause of product failure and facilitates the replacement of faulty components or materials.

Benefits of a Manufacturing BOM (MBOM)

The Manufacturing BOM serves as the central document for the manufacturing team. It is derived from the Engineering BOM and contains all the information relevant to manufacturing the product. Having an exhaustive and well-updated Manufacturing Bill of Materials (MBOM) provides the following advantages.

Improved Production Planning – The MBOM contains a comprehensive list of components along with all the required specifications and essential raw materials needed for manufacturing. This helps in accurate resource allocation and production planning. The BOM is also a prerequisite for designing Enterprise Resource Planning (ERP) and Materials Requirement Planning (MRP) systems.

Errors Minimised – Most errors in a manufacturing setup occur during the manufacturing and assembly of parts. Having a BOM standardises these manufacturing processes for all the concerned employees and reduces the chances of errors.

Improved Inventory Management – A clear and well-structured BOM helps maintain the appropriate inventory levels for production needs. It enables the anticipation of demand and ensures timely fulfillment while minimising logistics costs. This approach prevents common inventory issues such as stockouts, overstocking and backorders, as well as their cascading effects, including lost productivity, production delays and downtime.

Time Savings – Having a centralised document containing all the part details leads to time savings across the board. Details, such as part numbers, part colours and the fabrication process in which they will be used, can be easily revised by referring to the MBOM in case of any confusion. Items can be located within minutes in the store. Small time savings add up and improve the overall productivity and efficiency of the manufacturing operations.

Budget Control – An MBOM can reduce waste and improve time management, ultimately helping an organisation maintain control over budget.

Conclusion

All in all, a bill of materials is an essential tool for any company that wants to improve its production efficiency. A good BOM, through specifications, quantities and component details, improves collaboration among the various teams and streamlines workflows.

The benefits reach beyond the shop floor. A well-structured BOM allows to control inventory, production cost and product quality. A direct beneficial impact can seen in the accuracy and efficiency of the setup, and an indirect impact appears in customer satisfaction.