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What a Bill of Materials Is and Why You Need One

ByJared Haw,
business.com writer
| Last Modified
May 07, 2019
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> Business Basics
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Regardless of what you are selling, when it comes time to make your product, there is one thing all manufacturers will ask you for: a bill of materials, or BOM.

It doesn't matter if you are just starting out and searching for someone to manufacture your product, trying to shave off some of your cost of goods sold (COGS), looking for a more efficient means to manufacture your product, or just asking a factory for a quotation – all manufacturers will ask you to provide a BOM. 

What is a BOM, and why is it so important?

A BOM is a fact of life in the manufacturing world and plays a critical role in the development of any product. Simply put, you cannot manufacture a product without one. In essence, a BOM is a comprehensive list detailing all the components and sub-assembled parts and raw materials needed to build your product.

Whether you are making a toy or a rocket, a BOM helps you to accurately manage and oversee resources and identify materials to reduce wasteful spending. It provides you with accurate information, which will help you to make better decisions to manufacture your product efficiently and cost-effectively.

What should a BOM include?

Like a recipe, a BOM ensures your product has the right ingredients (materials and components) to be made correctly. Whether you are planning your BOM or studying ways to improve your BOM, here the most critical fields to include on your BOM record.

Number: This field allows you to document and track the number of parts and components that make up your product.

Part number: You want to assign a number to each part for reference and identifying parts quickly. Each part should have its own unique part number. Do yourself a favor and avoid creating multiple part numbers for the same part. This will create confusion down the road.

Part name: This assigns a unique name for each part or assembly and will help you identify parts and components more efficiently. Similar to the part number, each part is assigned a unique name.

Material: Knowing what material your product is composed of is crucial, depending on your product's function, and necessary to determine where to shave off costs. Simply stating "plastic" will not be good enough; the exact type of plastic should be defined.

Description: This section provides a full description of each part. This is where you can go into detail of the use of the part.  

Picture: Pictures are worth a thousand words. Photographs are helpful to identify parts more efficiently.

Color: Each part needs  a color associated with it. To be as objective as possible, provide a Pantone color rather than just saying "blue" or "green." This will ensure that production will be as consistent as possible.

Finish/texture: Like color, texture and finish of a product is one of the most critical aspects in the customer buying process and can be the difference between an end customer purchasing your product or going with your competitor. Don't be lazy – include the type of texture or finish you are looking for.

Quantity: This allows you to record the number of parts used in each assembly and will help you make purchasing and manufacturing decisions. For example, you might need five of the same screws for assembly, so, under Quantity, you should include 5.

Unit: This allows you to classify the measurement in which a part will be used or purchased. Standard measures include pieces, centimeters, inches, feet and yards. As a rule of thumb, you want to remain consistent throughout to help ensure the right quantities are procured and distributed to the production line.  

Unit price: This allows you to record the price per part number. Typically, this assumes that the quantity is one.

Total cost: This is calculated by multiplying the unit price by the quantity. This will get you a quote for the entire quantity for each part number.

Lead time: Lead time is the number of days, weeks or months that it takes to make that particular part. Before you place a purchase order, you will need to know the lead time for the final product.

Tooling: For the majority of customized parts, there is a need to open your own tools. This column will provide you with a cost associated with opening a tool needed for that specific part.

Supplier: Record the name of the supplier that provides you with that part. If you are sourcing multiple suppliers, it might be a little confusing, so keeping track of which supplier you are using for production becomes critical.

Notes/remarks: Keep everyone who is involved with your BOM on the same page by providing other relevant notes.

Creating a BOM is not just an ordinary development step – it's a critical stage to ensure total consistency throughout the manufacturing process. A well-defined BOM will tell you when and how much of each individual part you need to purchase.


 

Jared Haw
Jared Haw
See Jared Haw's Profile
Have spent nearly 10 years in China to help develop and manufacturer some of the most innovative and top products throughout the year Spends the majority of my time in Hong Kong, Shenzhen/Dongguan and Cleveland
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