Importance of Knowing Your Bill of Materials - BOM

What is a 'Bill of Materials - BOM'

Article By: Investopedia

A bill of materials (BOM) is an extensive list of raw materials, components and assemblies required to construct, manufacture or repair a product or service. A bill of materials usually appears in a hierarchical format, with the highest level displaying the finished product and the bottom level showing individual components and materials. There are different types of bills of materials specific to engineering used in the design process, and specific to manufacturing used in the assembling process.

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By: Investopedia

BREAKING DOWN 'Bill of Materials - BOM'

The different types of bills of materials depend on the projected use and business needs. A manufacturing BOM is essential in designing enterprise resource planning (ERP) systems and materials requirement planning (MRP). A bill of materials explosion displays an assembly at the highest level broken down into its individual components and parts at the lowest level, while a BOM implosion displays the linkage of individual parts at the lower level to an assembly at the higher level.

For example, a computer is exploded into hard drives, computer chips, random access memory panels and processors. Each processor is exploded into an arithmetic unit, control unit and a register. The requirements for the arithmetic unit, control unit and register are imploded into the requirements for the processor, which are imploded into the requirements for the entire computer.

A bill of materials is a centralized source of information used to manufacture a product. It is an engineering term that refers to the design of a product. Manufacturers that build products start the assembling process by creating a BOM. Creating an accurate bill of materials is vital because the correct parts must be available when the item is manufactured. If it is not accurate, it can cause production to halt or cause delays, which increase operation costs because a company has to locate the missing parts, start another production order or deal with customer returns.

What is included in a BOM?

Every line of the bill of materials includes the product code, part name, part number, part revision, description, quantity, unit of measure, size, length, weight and specifications or features of the product. The engineering BOM is often organized by engineers based on a computer-aided design (CAD) drawing. For a finished product there may be more than one engineering BOM created.

A BOM list is necessary when ordering replacement parts and reduces possible issues if product repairs are required. It helps plan for acquisition orders and reduces the possibility of errors.

Engineering BOM

The engineering bill of materials defines the design of the finished product. It includes all alternative and substitute part numbers and parts contained in the drawing notes.

Manufacturing BOM

The manufacturing bill of materials comprises all the assemblies and parts required to construct a finished item ready to be shipped. It also incorporates the packaging materials required to send the product to the customer. It contains processes that require execution on the product prior to completion and stores all the information required for manufacturing activities.

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