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What a Bill of Materials Is and Why You Need One

Sean Peek
Sean Peek
business.com Contributing Writer
Updated Jun 28, 2022

Here are some tips to create a bill of materials.

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 quality 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. 

FYIFYI: A BOM provides you with accurate information, which will help you to make better decisions to manufacture your product efficiently and cost-effectively.

​​Who uses and prepares a bill of materials?

Traditionally, the engineers overseeing a given project organize the bill of materials. They usually complete this process with the help of a computer-aided design (CAD) drawing. To create a polished finished product, multiple BOMs need to be created to keep a client informed during the production process and account for the specific material needs of a product.     

Bill of materials displays

  • Explosion display: BOM explosions display a product assembly starting at the highest level and break down the individual parts and components of a product at the lowest level. For example, a computer would be “exploded” into various parts, like hard drives, computer chips, access memory panels, and processors. Further, each processor is exploded into an arithmetic unit, control unit and register.
  • Implosion display: BOM implosions display a product assembly starting at the lowest level and link the individual parts and components of a product to the highest level of assembly. For example, using the same computer example as above, all requirements for an arithmetic unit, control unit and register are “imploded” into requirements for the processor, then further into the requirements for the computer as a whole.

Types of bills of materials

Engineering bill of materials (EBOM)

An EBOM defines the product as designed, meaning it lists numerous items, components, subassemblies and overall parts needed for a product. For instance, a printed circuit board designed by engineers will list the resistors, capacitors and chips needed to assemble the board. Engineers use electronic design automation (EDA) to streamline the creation of their EBOMs. 

Sales bill of materials (SBOM)

Unlike other kinds of bills of materials, an SBOM outlines finished product details before the production and engineering teams assemble the product. Not only do the components appear as separate items, but the finished product is also listed as a separate item on the SBOM document for the client. 

Manufacturing bill of materials (MBOM)

An MBOM constitutes the assemblies and parts required to create a business’s final product. This document usually contains detailed information about ordering parts and building the product that is passed on to the subsequent departments involved in a product’s building phase. The key to these kinds of BOMs is accuracy. 

Configurable bill of materials (CBOM)

A CBOM is used in industrial and heavy manufacturing industries across the world. It hones in on a customer’s specific requirements for components that will be needed to design an item, manufacture it, and then pass it along to the next department in the product-building pipeline.  

Production bill of materials (PBOM)

A PBOM lays out what will be the bedrock for a customer’s product order. Prices, quantities, descriptions and associated units of measurement are all laid out in a PBOM. This helps the production teams keep track of raw materials they will then transform into finished products for the next building stage.  

Assembly bill of materials (ABOM)

An ABOM shows which items are listed to sell versus store for building. While it lists sales items like an SBOM, it does not list the finished product. An ABOM can be a single-level or multi-level, depending on the product demands. 

Template bill of materials (TBOM)

Although a TBOM shares similarities with other BOMs, it breaks down what will be needed in each bill of materials, without specifically listing each product component, part, or stage that is displayed for the product teams in the other bills of materials that will be needed to create a customer’s final product. 

How to create a BOM

Here is the step-by-step process for creating a BOM:

  1. Determine which data to include. To create a BOM, product teams must understand which items they need for each phase of production.
  2. Assemble information into a single location. Next, plug those items into software like Genius ERP or Microsoft Excel. Both have a premade BOM template within their platforms. Software programs like these also help keep BOMs organized between each team. 
  3. Determine who your editors are. To help avoid mistakes, only a select few people should be allowed to make changes to your BOM.
  4. Track all revisions. To ensure accuracy among new revisions, each editor must track their changes so those involved can review them.
  5. Choose the BOM presentation and list necessary items. Decide on either a single- or multi-level presentation for the product, and start listing all the required materials. 

TipTip: Continually revisit and revise your BOM. The list will grow over time, and you might need to add to or refine it throughout the process.

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 are 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 to identify 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 about the use of the part.  
  • Picture: Pictures are worth a thousand words and 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, the texture and finish of a product are critical aspects of 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 five.
  • 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 cost 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. It might be a little confusing if you are sourcing multiple suppliers, so keeping track of which supplier you are using for production becomes critical.
  • Notes/remarks: Keep everyone involved with your BOM on the same page by providing 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 how much of each individual part you need to purchase and when you should make these purchases.

Jared Haw contributed to the writing and research in this article.

Image Credit:

Frima V / Shutterstock

Sean Peek
Sean Peek
business.com Contributing Writer
Sean Peek has written more than 100 B2B-focused articles on various subjects including business technology, marketing and business finance. In addition to researching trends, reviewing products and writing articles that help small business owners, Sean runs a content marketing agency that creates high-quality editorial content for both B2B and B2C businesses.