What is a bill of materials (BOM)? Types, components and benefits

A bill of materials (BOM) is a comprehensive list of all the components, materials, and instructions needed to produce a specific product. It’s also one of the most important documents a business uses in its daily operations.

BOMs function as a centralized source of instructions for the design, production, or even repair of products. There are several formats and types of bill of materials, the most common being engineering and manufacturing BOMs.

What is a bill of materials?

A bill of materials (BOM) is often compared to a recipe or roadmap. Every item is listed with a corresponding unique part name, part number, description, and the total quantity used in the product.

In addition, a BOM includes how these materials are sourced, how much they cost, and all the instructions to assemble the finished product.

By organizing all relevant information in one document, BOMs help maintain production efficiency and quality. They allow businesses to plan their inventory management better and reduce any unnecessary delays or waste.

For this reason, BOMs are recommended for manufacturers and any business that uses raw materials to create finished products for sale.

Engineering BOM vs. manufacturing BOM

The two fundamental types of BOM are engineering bill of materials (EBOM) and manufacturing bill of materials (MBOM).

An EBOM is the starting point for all manufactured products. Developed by engineers, it’s usually centered on computer-aided designs (CAD) or other technical drawings. From there, all the components and materials necessary for engineering the product are listed, along with any specifications, tolerances, and available alternatives.

EBOMs go directly to the manufacturing process, which makes it important to include the most accurate details.

An MBOM focuses on manufacturing and assembling the physical product. While based on the EBOM, an MBOM covers every step needed for a product to ship. It includes all the components, equipment, tools, and packaging, as well as when each item is needed in the production process.

As product development needs change, both EBOMs and MBOMs are also updated or rewritten.

Why should your business use a bill of materials?

If your business performs any type of production, from initial design to final product assembly, it should use a bill of materials.

BOMs are essential in enterprise resource planning (ERP), used to outline all required resources and costs in manufacturing a single product.

Even relatively simple products require several components and steps to manufacture. Without standardized documentation, all this information can be easily skipped over or forgotten.

BOMs are beneficial for expanding departments or product lines. Aside from providing an accurate and centralized source anyone can reference, a BOM allows your business to discover potential areas of improvement as it grows.

Types of bills of materials

Aside from the engineering BOM and manufacturing BOM covered in the previous section, there are several other types of bills of materials used by businesses.

Configurable bill of materials (CBOM): This bill of materials is used for products that are configured to meet a customer’s specifications. While the basic product structure already exists, CBOMs allow for additional customizations and include all multiple variations, additions, or packaging options available for the product.

Sales bill of materials (SBOM): A sales bill of materials focuses on finished products that need to be assembled and packaged before they’re shipped to the customer. For example, the chairs in a dining table set, or the earbuds in a pair of wireless headphones. In a sales BOM, the finished product and its components are listed as separate items.

Service bill of materials: While BOMs are typically used in manufacturing, a service BOM is applied to services related to the product. It includes all components, as well as the installation steps and repair instructions needed to provide on-site services to customers.

Assembly bill of materials: Like the sales BOM, an assembly BOM lists the finished products to be assembled as a sales item. The components within the product, however, are not listed as separate or sub-items.

Structure of bills of materials: A BOM can be created using two different structures: a single-level bill of materials or a multi-level bill of materials.

Single-level bill of materials: A single-level BOM has the simplest structure, and it essentially lists all the components and the required quantities of each component used in production.

However, a single-level BOM doesn’t indicate the relationships between the components. It can be challenging to determine the cause or pinpoint the exact component to replace if an error occurs.

Multi-level bill of materials: Multi-level BOMs, or indented BOMs, show the relationship between components and their sub-components. The structure starts with the finished product and then lists down all the components used to make that product.

This makes multi-level BOMs especially useful for complex products with several components to be assembled or manufactured in-house.

What to include in your bill of materials

A bill of materials should include everything required to manufacture a final product. Referring to a BOM alone, someone should already know all the components, materials, resources, and steps needed throughout the entire development process. Specifically, the standard template for a BOM should include:

• BOM level or hierarchy: BOMs are often formatted according to levels or hierarchy, with the finished product at the top and individual components toward the bottom. Assigning components to their relevant hierarchy provides clear organization and understanding, especially for more complex products.
• Part number: Assign a unique number for every listed item to easily identify it throughout production.
• Part name: Include a straightforward and unique name for every item to easily identify it throughout production.
• Part description: Include a brief description for every item, noting anything that distinguishes it from other items.
• Phase: Record the current phase of each item (i.e., in design, in production, purchased, released). This helps track any bottlenecks, especially if producing a newly developed product.
• Quantity: Specify the number of each listed item in the final product to inform any necessary purchases.
• Unit of measure: Specify the measurement used for each item, maintaining consistency across similar types.
• Procurement type: Include how each item is purchased or produced (i.e., off-the-shelf, custom-made in-house).
• Price per unit: Include any known costs for each item.
• Reference designators: Include any special instructions that clarify how an item is assembled or used. For example, if a component is inserted into a circuit board, include a reference to where the component should go.
• Additional BOM notes: Note any additional information needed to explain the contents of the BOM better.

3 benefits of an effective bill of materials

Most businesses already have some form of documentation about their operations. Streamlining all this information into a standardized bill of materials offers a number of benefits:

• Serves as a centralized reference 

One of the most significant benefits of using a BOM structure is to have a single source of information for each product. It ensures all relevant departments see any manufacturing revisions, BOMs also streamline communication and prevent any product information from being stuck in organizational silos.

• Establishes a repeatable process 

As a business continues to manufacture products according to a bill of materials, it will naturally uncover new ways to improve operations. Whether through testing a new method or material, a BOM can lead to establishing an optimized and repeatable process.

• Reduces waste and inefficiencies

By identifying all the resources needed to produce a single product, BOMs can guide a business in better managing its purchases and cash flow when each resource is needed. A BOM outlines the exact materials and quantity used in every product, so a business can order only what it needs and prevent unnecessary purchases.

Final thoughts

Before any product can be manufactured, a business needs to know what materials and steps are required in the process. A bill of materials contains all this information, written in a clearly understood format and updated for optimal efficiency.

Whether a department is focused on initial design or final product shipment, a BOM can be used to outline all the resources needed during that specific phase.

A BOM brings everything together into a single document, from the measurement of the smallest component to a finished technical drawing, so your business can efficiently operate from a single source of information.