Bill of Materials

Men working on parts in a factory
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Introduction

A bill of materials is used in the manufacturer of a product and should contain raw materials, sub-assemblies, sub-components, parts and the quantities of each. Each line of the bill of materials (BOM) will include the part number of the item, description, quantity, unit of measure, and a procurement type which describes if the part is purchased or manufactured. There are a number of different types of bill of materials such as the engineering bill of materials, the manufacturing bill of materials, and the equipment bill of materials.

The different types of bill of materials depend on the business need and use for which they are intended.

Engineering Bill of Materials

The engineering bill of materials or engineering BOM, defines the finished product as it was designed. The engineering BOM lists the items, parts, components, sub-assemblies and assemblies in the product designed by engineering. 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.

It is important to create an accurate bill of material, especially for a new product, as it is vital for the correct parts to be available when the item is being manufactured. To ensure that the parts are available when required, the purchasing department needs information on what vendors need to be used to purchase items from and the lead times of each part that is ordered.

The purchasing department will negotiate to obtain the best price for each part to reduce the overall cost of the finished product.

If the bill of materials is not correct this can cause problems. If the quantity of a line item is incorrect this can cause production to be stopped, and the delay can cost a company as they would either need to find the missing parts, or start another production order.

Manufacturing Bill of Materials

The manufacturing bill of materials, also referred to as the manufacturing BOM, contains all the parts and assemblies required to build a complete and shippable product. This includes all the packaging materials required to ship the finished product to the customer. The bill of materials will also include any processes that need to be performed on the item before it is completed. The manufacturing bill of materials stores all the information required for manufacturing activities. When MRP is run the bill of materials are exploded for the finished products that have been ordered by customers. The MRP process takes the details from the manufacturing bill of materials and calculates, based on the suggested delivery date to the customer, whether materials are need to be purchased and when the manufacturing order needs to be started.

There are a number of elements to a bill of materials that needs to be decided when creating a BOM. For some companies the bill of material should have a validity date range. For new products that are being introduced to the market, the manufacturer may only be testing the product on a test market so they may want to restrict the use of the BOM to a month or two months.

If, after the test period, the product requires some modification, either to key elements or to packaging, the bill of materials can be changed and a new validity date is established or a new BOM would be created.

Configurable Bill of Materials

It is possible to have a bill of material for a finished product that can be configured to a specific requirement for a customer. The configurable bill of material contains all the components that are required to manufacture the material to a customer's specific requirements.