A bill of materials (BOM) is a completer list of raw materials, parts, assemblies, sub-assemblies, components, and the quantities of each required to build a product.
For example, if you want to build a smart watch, then the bill of materials for the watch will include items such as battery, touch panel, watch case, watch band, sensor, antenna, CPU and more. And their quantities and costs will also be included in the BOM.
With the bill of materials (BOM), you’ll have access to the purchase plan. estimated material costs, inventory control and thus able to make better decision to reduce the project and product cost.
What does the bill of materials (BOM) look like
The bill of materials is hierarchical by nature. That said, it’s in a hierarchical format, with the highest level showing the complete product and the bottom level individual parts and components.
So in the case of the smart watch, the bill of materials could look like this:
The image above includes some of the most commonly seen columns used in a bill of materials: BOM level, part number, part name, quantity, unit price or price of each, procurement type, reference designators and BOM notes.
But due to different purposes the bill of materials serve, there could be other necessary columns as well. For example:
- manufacturer part number;
- distributor part number;
- package (the size and shape of the part);
- extended price or line total;
- setup cost or tooling cost;
- lead time for parts that need to be purchased months ahead
Use your best judgement to decide what should be included in the bill of materials so it’s effective enough to help you make the decision and reduce risk and costs.
How does the bill of materials (BOM) help
As one of the most important steps and the beginning of creating a product, the tremendous amount of information included in the bill of materials is of great help to the success of a product or project.
With the accurate bill of materials, you’ll have an accurate purchase plan of raw materials and their costs, appropriate inventory control, accurate records, supply robustness and material requirements plan. That being said, you can monitor the production from the very beginning and adjust the plan when something is off the track. This is how you can anticipate and mitigate possible risks and reduce the operation cost.
Types of bill of materials (BOM)
There are 2 main types of bill of materials that we share here:
1) Manufacturing bill of materials (MBOM)
Basically, everything you can find in the final boxed product to some extent belongs to the manufacturing BOM.
The manufacturing bill of materials provide details on all the parts or components needed to build a market product. Apart from the information of the assemblies, the MBOM also includes information on how the items are related to one another, how the product is assembled, and if any parts require processing beforehand.
Without an accurate manufacturing bill of materials, you are at risk of purchasing the wrong parts or wrong quantities of parts, low quality product, or no product at all. All these add up to your cost, and it takes time for you to clean up the mess as well.
2) Engineering bill of materials (EBOM)
An engineering bill of materials define products as they are designed by the engineers, who usually develop it with Computer-Aided Design (CAD) tools. The EBOM usually consists the list of items, parts, components, sub-assemblies and assemblies in the product. Since there could be many revisions of the design, there could be more then one EBOM.
Why is the bill of materials (BOM) important
To turn your product concept into a reality, an accurate and effective bill of materials is a must. It’s how you get a full picture of your product, from what are included in it, to how much each of the part cost. Such information is crucial for you to decide how to move on in the product development process, and finally, your business success.
In addition, a manufacturer can’t start the assembling process without creating a bill of materials (BOM) first. If the bill of materials is not accurate, production delays could happen. Then comes the increase of operation costs, which is definitely not what you want to see.
Manage your BOMs well
As of now, you may already come to the conclusion that an effective and correct bill of materials is of great importance. Insight Solutions Global is well experienced in providing professional support to whatever questions you may have in the supply chain. So if you have any question regarding the bill of materials, feel free to let us know. We’d be happy to help.