Bill of Materials

When manufacturers, suppliers, and retailers work together to produce products, they need a comprehensive inventory list that details all the components that go into making the product. Called a bill of materials (BOM), this provides an overview of all the parts and materials needed for assembly, their quantities, and how they fit together.

What is a Bill Of Materials?

A bill of materials (BOM) is a comprehensive and hierarchical list of components, materials, and assemblies required to construct a product.

Commonly used in retail and manufacturing, a BOM contains the inventory of all parts used in the making or assembly of a product, including the quantity, description, and any other relevant information. It may also include diagrams or drawings that illustrate how the parts fit together.

Depending on the product, this may include:

• Mechanical elements (e.g., hardware, motors)
• Electronic components (e.g., integrated circuits, resistors, PCBAs)
• Raw materials (e.g., lumber, steel)
• Software
• Tools and equipment
• Related documents, drawings, and instructions

The BOM lists any sub-assemblies needed to create higher-level assemblies and indicates their component parts. That way, when ordering parts, the manufacturer can easily identify and purchase the components that make up a given assembly.

When properly maintained and regularly updated, it serves as a valuable tool for controlling inventory, managing orders, and streamlining production.

And when integrated with a company’s ERP system, it can even provide real-time insight into the status of product construction and alert managers when an item is running low or needs to be restocked.

Synonym

• BOM: The abbreviation for “bill of materials,” often used interchangeably.

BOM Structures

There are two kinds of BOM structures: single-level and multi-level. Every component of the product catalog will use one or the other, and it all comes down to complexity.

Single-Level BOM

A single-level bill of materials (SLBOM) lists all components required to assemble a product, but none of its subassemblies. It includes each part, item needed, quantity, and specifications.

Single-level BOMs are mostly used for simple products that consist of a few components.

For example, a single-level BOM for an alarm clock may include the following parts:

• 1 x body housing
• 1 x LCD display
• 2 x AAA batteries
• 1 x speaker

In the example above, there is no information about the components that make up each part. If any component needs to be replaced, the entire assembly must be purchased again.

Multi-Level BOM

A multi-level bill of materials (MLBOM) is used for complex products that require multiple sub-assemblies to create a higher-level assembly.

It provides a hierarchical view of the parts needed to construct a product, outlining all component parts and sub-assemblies required for each level of assembly.

For example, an MLBOM for the same alarm clock may include:

• 1 x body housing
• 1 x LCD display
• 2 x AAA batteries
• 1 x speaker
• 1 x circuit board
• 4 x resistors
• 2 x capacitors

In this example, you can see the components of each subassembly (LCD display, circuit board, etc.), as well as the parts that make up those subassemblies (resistors and capacitors).

Depending on product complexity, a company may need two, three, four, or more levels in its BOM.

In any case, MLBOMs make it easier for manufacturers to locate and purchase individual parts if needed by providing a detailed view of the product’s components.

Types of BOMs

There are multiple kinds of bills of materials—most of which are either industry- or organization-specific.

Engineering (EBOM)

Engineering BOMs are primarily created and managed by engineers during the product design phase.

They guide the development of a product, ensuring all required components are accounted for and that the design is feasible from a manufacturing perspective.

Critical characteristics of EBOMs include::

1. Design-driven: EBOMs are created in tandem with the product design process, providing a detailed representation of the product’s structure, as envisioned by the engineering team.
2. CAD Integration: Engineering BOMs are often generated from and linked to computer-aided design (CAD) software, so any changes made to the design are automatically reflected in the BOM.
3. Version Control: EBOMs undergo multiple revisions during the design phase as engineers adjust based on feedback, testing, or other factors.
4. Multi-disciplinary: EBOMs may encompass a variety of engineering disciplines, such as mechanical, electrical, and software engineering.
5. Cross-Functional Collaboration: Engineering BOMs facilitate communication between various departments, enabling them to collaborate effectively throughout the product lifecycle.

Manufacturing (MBOM)

A manufacturing BOM (MBOM) is a detailed list of components, materials, and assemblies required to produce a product.

Unlike the engineering BOM (EBOM), which focuses on the product’s design, the MBOM is tailored to the manufacturing process and serves as the basis for work instructions, production routings, and resource requirements.

MBOMs are typically created by manufacturing engineers or production planners, who convert the design-focused EBOM into a format optimized for efficient production.

Key aspects of manufacturing BOMs include:

1. Production-Oriented: Besides components, quantities, and assembly sequences required to produce the finished product, MBOMs include additional elements, such as fixtures, jigs, or consumables.
2. Work Instructions: The MBOM is the foundation for creating work instructions, which may include visual aids, step-by-step directions, and quality control checkpoints.
3. Production Routings: MBOMs are used to develop production routings, which define the sequence of operations and work centers required to manufacture the product. Routings help optimize production flow, minimize lead times, and maximize resource utilization.
4. Resource Requirements: The MBOM helps identify the resources needed for production, such as labor, machinery, and tooling for better capacity planning, scheduling, and cost estimation.
5. ERP Integration: MBOMs are often integrated with enterprise resource planning (ERP) systems for seamless communication between manufacturing, procurement, and inventory management functions.

Sales (SBOM)

A sales BOM (SBOM) is an inventory-oriented list of all the components, raw materials, and assemblies required to assemble a product for order fulfillment.

SBOMs are used by sales teams to accurately determine costs and pricing for products that are offered for sale.

Important elements of SBOMs include:

1. Product Configuration: SBOMs capture the various configurations and options available for a product, allowing sales teams to provide accurate quotes and proposals to customers based on their specific requirements.
2. Pricing Information: The SBOM includes detailed cost information for each component, assembly, and option, enabling sales teams to calculate optimized pricing.
3. Lead Time Estimation: SBOMs provide availability information, which helps sales teams accurately estimate lead times and set realistic customer expectations.
4. Kits and Bundles: Sales BOMs may include information on product kits or bundles, which are groups of related products or accessories sold at a discounted price.
5. Integration with CRM and ERP Systems: SBOMs are often integrated with CRM software and ERP systems, so sales teams can access the most up-to-date product information.

Configurable BOM

A configurable BOM (CBOM) is flexible and adaptable based on specific customer requirements or preferences.

They are used primarily in industries where configurable products have numerous options, variations, or modular designs, such as automotive, consumer electronics, or furniture manufacturing.

Essential features of configurable BOMs include the following:

1. Modularity: CBOMs accommodate modular designs, where individual components or sub-assemblies can be easily added, removed, or replaced.
2. Rules and Constraints: Configurable BOMs include rules and constraints that govern the compatibility and interdependencies between various components and options.
3. Variant Management: CBOMs efficiently manage product variants by creating and tracking multiple product configurations under a single product family or platform.
4. Visualization Tools: Visualization tools work with CBOMs, enabling buyers and sales teams to see how different options impact the final product’s appearance and functionality.

Software BOM

Software BOMs are comprehensive lists of software components, libraries, and dependencies used in a software application or system.

They include information about each component’s origin, version, and licensing terms, as well as any known vulnerabilities or security risks.

SBOMs play an essential role in managing and maintaining complex software systems, ensuring compliance with licensing requirements, and mitigating security risks.

Vital components of software BOM functionality include:

1. Component Inventory: SBOMs provide a detailed inventory of all software components used in an application or system, including open-source and proprietary elements.
2. License Management: The SBOM includes information about each software component’s licensing terms and conditions.
3. Security and Vulnerability Management: SBOMs help IT professionals identify security vulnerabilities and risks associated with specific software components.
4. Version Control: SBOMs track the version history of each software component, so developers can identify and resolve compatibility issues, manage updates, and maintain a stable and functional software system.
5. Integration with Development Tools: Software BOMs integrate with various development tools and platforms, such as integrated development environments (IDEs), version control systems, and continuous integration/continuous deployment (CI/CD) pipelines.

Importance of Accurate BOMs

An accurate bill of materials is the difference between a well-orchestrated symphony and a cacophonous ensemble.

The importance of accurate BOMs can be highlighted through the following aspects:

1. Efficient production and supply chain management
2. Cost control
3. Quality assurance (QA)
4. Compliance and risk management
5. Streamlined communication
6. Scalability
7. Customer satisfaction

When every component is accounted for and properly documented, the entire product development, manufacturing, and sales process can flow harmoniously.

Components of a Bill Of Materials

An effective BOM contains these eleven components:

1. Levels: Shows where the part fits into the BOM hierarchy.
2. Part name: Helps identify and provide information about parts.
3. Part number: A shorthand identifier for parts, either intelligent or nonintelligent.
4. Manufacturer name: Identifies the part’s manufacturer.
5. Part phase: Indicates the part’s stage in the product lifecycle, sometimes including a revision level.
6. Alternate parts: Lists substitutes if the original part is unavailable.
7. Priority analysis: Defines critical parts to help prioritize purchasing.
8. Description: Provides details to distinguish similar parts by characteristics like color and dimensions.
9. Quantity: Indicates the required amount and units of measurement for each part.
10. Procurement specification: Describes how parts are purchased and made, often using designations like P (purchased), M (modified), and C (custom).
11. Comments and notes: Documents changes, notes, and visual aids like images or diagrams.

Benefits for Businesses Using Bills of Materials

When a business uses a BOM instead of relying on manual methods, they gain several key advantages—primarily revolving around efficiency and time management.

Improved Accuracy in Production Processes

Inventory inaccuracies can cost anywhere from $10 to $250 per mistake—a figure that results in millions in losses, according to LinkedIn research.

And failure to plan adequately for equipment downtime and production inefficiencies could mean a loss of time, labor, and money.

Using an accurate BOM eliminates the risk of these problems by ensuring that the right components are available when needed.

Increased Efficiency in the Design Phase

Depending on the complexity of the product, it may take hours for engineers and designers to create a BOM manually.

Manually-created BOMs have high margins of error with limited customizability.

The process can be completed in minutes by automating the process and connecting a BOM to design tool kits. This saves time, streamlines team collaboration, and helps keep projects on track.

Enhanced Effectiveness in Product Structures

A BOM ensures that all components fit together, providing an effective way to check product structure and make sure everything works as intended.

This reduces the risk of costly errors or changes in the production process and ensures that the correct parts are used in each product.

Challenges With Using Bills of Materials

BOMs are often integration-ready, but some companies may still encounter challenges in connecting the BOM to their production line, inventory system, or payment processor.

Complexity with Multi-Level BOMs

Multi-level BOMs are inherently complex, and require a lot of manual work to keep them up-to-date.

For example, a car may have many subparts that need to be accounted for in the BOM—each of which requires its own information, such as part name, cost, quantity, and vendor.

Difficulty Tracking Component Changes

If a component is updated or changed, it needs to be reflected in the BOM.

Manually tracking these changes can lead to a lot of errors and confusion—but automated tools help alleviate this difficulty by quickly detecting and accounting for component changes.

Outdated or Inadequate Technology

Even if a BOM is successfully implemented, spreadsheets and manual accounting processes can hinder bill of materials management significantly.

Systems that are disconnected can’t provide real-time updates that a BOM depends on to stay accurate, and manual processes are slow and vulnerable to errors.

Using CPQ to Create a BOM

CPQ software supercharges manufacturing and sales processes by enabling the creation of complex BOMs in minutes.

CPQ has product configuration data built-in, making it easy to pick the correct part for any product or component.

Here’s how CPQs create a BOM based on product configurations:

1. Configuration: CPQ software guides the user (salesperson or customer) through product selection and customization based on pre-defined rules and constraints.
2. Validation: As the user progresses through the configuration process, the CPQ system validates each selection against the product’s rules and constraints.
3. Pricing: Once product configuration is complete, CPQ’s digital pricing feature calculates the total cost based on the selected options and components.
4. BOM Generation: After the configuration and pricing are completed, the CPQ system creates a BOM that reflects the selected configuration.
5. ERP/MRP/CRM Integration: The generated BOM seamlessly integrates with the company’s ERP, MRP, and CRM systems for efficient companywide communication and data flow.
6. Documentation: CPQ software can also generate documentation for the configured product, such as assembly process and instructions, technical drawings, or user manuals.  

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