Bill of Materials (BOM) Definition, Types & Examples [+ Video]

Written by
Start a trial of Unleashed software
Written by
10 Minute Read
Share Blog:

A Bill of Materials (BOM) is documentation that ensures all the right parts and materials are used for each assembly – and as such an absolute necessity for any manufacturer.

In this comprehensive bill of materials guide we’ll explain what bills of materials are, why they’re important, how manufacturers use them, and much more.

In this Bill of Materials guide:

What is a Bill of Materials (BOM)?

A bill of materials (BOM) is a record of all the parts, materials and processes required to manufacture a given product. A BOM details how a product is made, and the exact quantities of components required, from the fastenings needed in an assembly down to the packaging and labels used.

BOMs may be relatively simple documents, or complex, multi-levelled descriptions of a product made from multiple sub-assemblies.

A bill of materials can cover the smallest of assemblies to large machinery and equipment.

The latter can consist of many smaller BOMs, containing every part within an individual component. BOMs can be used as a picklist of all items issued for production and when documented correctly, they also serve as a helpful tool for costing finished products.

Bill of Materials Example

A Bill of Materials is hierarchical in nature. The finished product ranks at the primary level with subassemblies, components, and other parts at lower levels of importance. For example, a single-pane aluminium window sits at the highest level while subassemblies and other modules are listed in subsequent levels:

bill of materials example

An itemised bill of materials would include every aspect of the window assembly down to packaging and even the safety sticker for the glass pane.

Why is a Bill of Materials important?

BOMs are important because they provide businesses with a complete and accurate picture of the inventory stock required and all the processes associated with creating a single product.

In manufacturing, a BOM provides a description of the individual components used in production and the relationship between each of those individual parts.

In addition, it can include detail of the tools and equipment required for assembly, sub-assembly and any other consumables needed for the manufacture of a final shippable product.

BOMs are essential tools for eliminating problems in any company that runs lean and continuous improvement processes. They help to reduce errors such as ordering the wrong part or the wrong quantities or similar issues that can lead to costly downtime and production delays.

What does a Bill of Materials include?

A bill of materials should encompass everything required to produce a final product. Detailed instructions, routes and practices that need to be followed during the manufacturing process can be included within a bill of materials along with images, diagrams, and links to external files. A BOM should address:

  • Quantity – the number of parts to be procured or manufactured should be specified for each assembly. Quantity is a primary requirement of any BOM
  • Unit of measurement – to ensure that exact quantities are ordered a BOM should specify the unit of measure for each quantity. For example, per-unit, lengths, litres, inches, grams, kilograms, square-feet, or cubic-feet
  • BOM level – the BOM level specifies the number or ranking for each part to help identify all the elements of the BOM, whether single or multi-level
  • SKU – a stock keeping unit number (SKU) is assigned to each item for easy reference and for effortless tracking of each part
  • Part name – the unique name of each item combined with a specific part number helps to identify the item easily and effectively
  • Raw material – the BOM should specify the exact quality or type of essential raw material required in the manufacturing process to produce a finished product
  • Description – each part should have a suitable description of the part to help distinguish it from similar parts
  • Notes – the notes simply provide any additional information relevant to the BOM save for the description of parts
  • Images – having images or diagrams of the product being produced provides a visual representation to help easy understand each component and to cross-reference the BOM details with the image
  • Procurement method – this identifies whether the required part or inventory is purchased externally or manufactured internally

Bill of Materials in inventory software

The most efficient and accurate way of creating a bill of materials is to use inventory management software with BOM functionality. Using BOMs with inventory software has multiple benefits, for example:

  • Efficient production planning: The goods required for a production run can be worked out by multiplying the quantity of each SKU in a BOM required by the number of completed assemblies needed, minus any parts or components already held in stock. Inventory software automates this sometimes complex task.
  • Version management: Having a single source of truth for your BOMs is critical. A cloud-based inventory management system makes that document management easy.
  • Demand-driven purchasing: A good inventory system will let you start the production planning and purchasing process from within a sales order, for an efficient Just-in-Time approach to your manufacturing.

In the video below you can see how a new Bill of Materials is set up within Unleashed inventory software by first designating different elements as either ‘assembled’ or ‘component’ products.

3 main benefits of an effective Bill of Materials

BOMs are beneficial in numerous ways to manufacturers. But at their core, they solve problems in efficiency, waste, and cost.

Here’s how.

1. Boost efficiency

The primary benefit of a bill of material is that it identifies all the inventory stock, including raw materials, subassemblies, components, and parts necessary to create a single finished product.

This ensures more efficient inventory control as all the quantities required for an assembly can be correctly ordered.

2. Avoid waste

A BOM helps to identify avoidable waste.

When they have complete knowledge of every component and step in the manufacturing process, operations teams can make proper trade-offs between time, cash flow, and inventory control throughout the life of a product.

3. Manage production costs

The BOM helps to identify the basic cost of components which, once component costs are known, businesses identify if it is more cost-effective to outsource or purchase assemblies externally than to manufacture internally.

Information obtained through your Bill of Materials can feed directly into any management software system to further enhance operation efficiencies. They make the manufacturing process more cost-effective and aid decision-making.

Having an all-inclusive measure of total assembly promotes informed decision-making and highlights areas for improved efficiency, quality enhancement, and improved cost-effectiveness.

For companies that outsource manufacturing activities, having an accurate bill of materials is particularly important.

A BOM for contract suppliers should be complete, accurate and reviewed at regular intervals to avoid cost blowouts and production delays.

Bill of Materials in Excel

Online inventory control software is the most effective way of creating and working with bills of material.

However, for small businesses that are still working with spreadsheets, here’s a quick guide to creating a simple bill of materials in Excel.

  • Create a new landscape orientated workbook in Excel. On the first page list all your main products and or projects including any subassemblies. The product number will reference the corresponding product bill of material that lists the BOM in detail. Remember to always record the revision number and date of your product/project
  • Add column headings for your bill of materials. Headings should reflect all aspects of a part relevant to the completed project such as Part Number, Name, Description, Quantity, Units and Unit Cost
  • Format your columns. For example for unit costs, you can click the $ symbol on the menu bar to format the currency. Then select ‘Save As’ and save the workbook as an Excel template so that you can use and adapt it to create a BOM for a variety of products
  • For each new BOM, enter the details for each part in the rows under the headings. Include as much relevant information as possible, listing the manufacturer’s part numbers to ensure every part number is unique and to avoid confusion
  • Put a system in place to track all changes to the document. This can be a record of all previous versions and revisions, the changes made, by whom, and when. Ensure that each version is clearly marked and that the most recent one is always being used
bill of materials example

An example of what a bill of materials looks like in Excel

The main challenge when using Excel for your BOMs is that spreadsheets are plagued with issues and need to be constantly updated manually.

Once the file has been copied, saved to a desktop, or even emailed, the spreadsheet can be easily modified. It then becomes difficult to know with any certainty whether you’re using the latest, most accurate revision.

Bill of Materials types

BOMs can be implemented into practically any business in any industry, the following are common variations of a Bill of Materials.

Single-level Bill of Materials

A single-level BOM is the simplest form.

It shows each assembly or sub-assembly and the required quantities of each.

It does not show the relationship between assemblies or sub-assemblies and therefore will not identify the parts linked to a repair or failure.

Multi-level Bill of Materials

A multi-level BOM or an indented Bill of Materials, as it is sometimes known, is a BOM that details exactly how you build your product.

It includes all the sub assembly, the components, and the materials that go into making the finished goods. The hierarchical structure of a multi-level BOM maps out all components and sub-assemblies for a product.

A multi-level BOM shows the finished product at the top, then breaks down the components that go into that product, including SKUs, part descriptions, quantities, costs, and any relevant specifications.

Multi-level BOMs are vital in manufacturing, especially for manufacturers who use multiple sub-assemblies (several components constructed to make a single unit that is used as a part for a larger assembly), to produce their finished goods.

Assembly Bill of Materials

An assembly BOM identifies the items and resources needed to assemble a parent item.

Unlike a production bill of materials that contain machine or work centres, the assembly BOM simply contains a list of sub-components.

Any item with an assembly BOM is easily replenished with an assembly order that can be generated directly from a sales order. When customers request a slight variance of an item, the assembly order has the flexibility to be modified order on a per-sales order basis.

Engineering Bill of Materials (EBOM)

An EBOM is a special sort of Bill of Materials that deals specifically with how a product is designed.

It contains the list of all the equipment, parts, components, subassemblies, and assemblies that go into an engineering product.

Engineers typically create an EBOM using computer-aided design, that provides the product design for more than one component, where necessary.

Because the information contained in an EBOM is passed on to manufacturing, it is important that accurate parts and quantities are given.

This information will help manufacturing operations to make better purchasing decisions, avoid delays due to missing parts and will it ensure the availability of everything necessary to consistently produce a quality product.

bill of materials window example

Boost production efficiency and manage costs with a Bill of Materials.

Manufacturing Bill of Materials (MBOM)

An MBOM provides a description of the individual components used in the production of a finished good and it details the relationship between each of the separate parts used.

In manufacturing, all components required to manufacture a complete, shippable item are listed by part number, description, and quantity.

An MBOM should include details of the tools and equipment required for assembly, sub-assembly and any consumables needed in the manufacture of the final shippable product.

Sales Bill of Materials (SBOM)

The components for an SBOM must be sales items. SBOMs represent an assembled finished good at the sales stage. The finished product is managed as a sales item, rather than an inventory stock item.

The pieces can also be sales and inventory stock items. For example, the finished product may be a set of outdoor furniture. With this BOM, both the finished product and the components appear as separate items on the sales order document.

When the delivery to dispatch the customer’s order is created, the components on the bill of material are deducted from raw inventory stock.

Configurable Bill of Materials (CBOM)

A CBOM is used by industries that have very configured products. The creation of a CBOM is dependent on having a modular BOM structure in place because it is used to create customised versions of the products sold.

Therefore, needing to be easily moulded and shaped.

The benefit of a CBOM construct is that it reduces the effort required to maintain product forms. A CBOM is often driven by configurator software.

Service Bill of Materials

The service bill of materials should incorporate all information required to undertake a service job.

The service BOM will be regularly updated along with a single master BOM to integrate the new engineering or product change orders.

A service BOM is a list of all the serviceable parts needed to maintain an operational asset and is applicable to people servicing and maintaining machinery and equipment. A service BOM establishes a foundation for accurate, assessable information and provides relevant information to service-specific roles.

happy staff

With a BOM in place, your business can focus more on growing and less on fixing production problems.

Bill of Materials Tips

A simple BOM has several basic features such as part number, component description, quantity, unit of measure, others go into greater depth to utilise other product attributes.

Whatever the complexity of your BOM, these four point are the basis for building an effective BOM.

Tailor the BOM to project needs

Before creating a BOM, decide on the important details that are required from it and design the BOM to meet those requirements. Customise the BOM to the unique demands of your project or build.

Include sufficient detail

Include as much helpful information as possible to ensure the BOM is as clear, detailed, and accurate as possible. While some types of information aren’t always helpful, a general rule of thumb is the more detail, the better.

Check the details

Go over the information to check that everything is included that needs to be and that the data is accurate before uploading the BOM or forwarding it on. Even small mistakes can be costly so review the details to ensure the information is correct.

Restrict access

Limit the number of people with editing access to the BOM, allow editing access only where necessary. Other members of the organisation can still access and use the information but will not be able to make changes. This helps to protect against human error.

And finally, the best tip for building an effective bill of materials is to implement an online inventory management system that offers bill of material functionality.

SaaS companies can provide valuable advice to help get the most out of your Bill of Materials and automation will ensure that you are always working with the most current and up-to-date information.

More about the author:
Share Blog:
Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

More posts like this
Subscribe to receive the latest blog updates