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Updated Jan 11, 2024

What a Bill of Materials Is and Why You Need One

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Sean Peek, Senior Analyst & Expert on Business Ownership

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Creating a remarkable product after weeks, months or years in the workshop can be a thrilling experience for an entrepreneur. Although it’s exciting to get a new product up and running, you’ll need to prioritize organization during manufacturing, and that includes implementing a bill of materials (BOM).

Once you understand the purpose of a BOM, it becomes much more than a list of items. Indeed, a BOM can shape the effectiveness of your manufacturing and supply-chain processes.

What is a bill of materials, and why is it so important?

A bill of materials is a comprehensive list of all of the components, subassembled parts and raw materials needed to build your product. A BOM is a fundamental requirement in the manufacturing world and plays a critical role in the development of any product. Simply put, you cannot manufacture a quality product without a bill of materials.

Whether you are making a toy or a rocket, a BOM helps you accurately manage and oversee resources and identify materials to reduce wasteful spending. 

Did You Know?Did you know

A BOM helps you 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 BOM. They usually complete this process with the help of a computer-aided design (CAD) drawing. Multiple BOMs must be created to keep a client informed during the production process and to account for the specific materials needed for a product.   

Types of bill-of-materials displays

A bill of materials is designed to show the components, materials and quantities required for each step in the manufacturing process. A BOM displays that information in one of these ways: 

  • Explosion display: A BOM explosion displays a product assembly starting at the highest level and breaks down the individual components of a product at the lowest level. For example, a computer would be “exploded” into various parts, like hard drives, processors and access memory panels. Then, each processor would be exploded into an arithmetic unit, control unit and register.
  • Implosion display: A BOM implosion displays a product assembly starting at the lowest level and links the individual parts and components of a product to the highest level of assembly. For example, using the same computer example, all requirements for an arithmetic unit, control unit and register would be “imploded” into requirements for the processor and then further imploded into the requirements for the computer as a whole.

>> Learn more: How Machine Learning Is Leading to Smarter Manufacturing

Types of bills of materials

There are many types of BOMs, some of which fulfill unique or specific needs in particular industries. Here are the most common types of BOMs:

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 lists the resistors, capacitors and chips needed to assemble the board. Engineers use electronic design automation to streamline the creation of their EBOMs. 

Sales bill of materials (SBOM)

Unlike other kinds of bills of materials, an SBOM outlines the details of the finished product before the production and engineering teams assemble it. Not only do the components appear as separate items, but the finished product is 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, and that information 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 zeroes in on a customer’s specific requirements for components that will be needed to design an item, manufacture it and 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 the raw materials that 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 to store for building. Like an SBOM, an ABOM lists sales items. However, an ABOM does not list the finished product. An ABOM can be single- or multilevel, depending on the product demands.

Template bill of materials (TBOM)

Although a TBOM has similarities with other BOMs, it breaks down what will be needed in each BOM, 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.

TipBottom line

Accounting and invoicing software can help you keep track of material costs. Browse our best accounting and invoice-generating software picks for your business.

How to create a bill of materials

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. Compile information in a single location. Next, plug those items into software such as Genius ERP or Microsoft Excel. Both platforms have a premade BOM template. Software programs like these also help keep BOMs organized across teams. 
  3. Select your editors. To help prevent mistakes, select only a few people who are 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 of the required materials. 
TipBottom line

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 bill of materials 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 important 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: Assign a number to each part to make for easy reference and to identify parts quickly. Each part should have its own unique part number. Avoid creating multiple part numbers for the same part, which can 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: It’s crucial to know what material your product is composed of 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 and its use.  
  • Picture: Pictures are helpful for identifying 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,” to ensure production is as consistent as possible.
  • Finish/texture: Like color, the texture and finish of a product are essential aspects of the customer buying process and can be the difference between a customer purchasing your product or going with a competitor. 
  • 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.
  • Unit: This allows you to classify the measurement unit for a part that will be used or purchased. Standard measures include pieces, centimeters, inches, feet and yards. As a rule of thumb, 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 the quantity is one.
  • Total cost: The total cost is calculated by multiplying the unit price by the quantity, giving you a quote for the entire quantity for each part number.
  • Lead time: Lead time is the number of days, weeks or months 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, you must 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 keep track of which supplier you are using for production.
  • Notes/remarks: Keep everyone involved with your BOM on the same page by providing relevant notes. [Read more about supply chain distribution.]

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 those purchases.

Jared Haw contributed to this article.

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Sean Peek, Senior Analyst & Expert on Business Ownership
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.
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