What is Bill of Materials (BOM)?

bom management

Summary: A bill of materials (BOM) is an absolutely critical document at all stages in the product development lifecycle — from procurement and manufacturing, to logistics and inventory management, to sales and after sales services.

A bill of materials (BOM) is a centralized source of information that lists all assemblies, sub-assemblies, parts, and raw materials needed to produce one unit of a finished product. Simply put, each finished product has its own bill of materials. A BOM usually contains a hierarchy, with the finished product displayed at the top level, and the components and materials at the bottom level. The quantity of each item needed to complete one unit of the next-highest level of assembly is also listed.

There are different types of BOMs for different projected uses and business needs. An engineering bill of materials (eBOM), for example, is used throughout the design process. eBOMs include all the alternative and substitute part numbers and parts contained in the drawing notes, such as: part name, part number, part revision, description, quantity, size, length, etc. A manufacturing bill of materials (mBOM), on the other hand, is used throughout the manufacturing process. mBOMs include all the assemblies and parts required to construct a ready-to-ship product, as well as information on how the parts relate to one another, and any required packaging materials. The sales bill of materials and service bill of materials are two other commonly used BOMs.

A BOM is a product’s blueprint and is critical to every aspect of its lifecycle — from procurement and production control, to logistics and inventory management, to sales and after sales services. Incomplete or inaccurate BOMs can cause production delays, increases in production and operational costs, decreases in product quality, and product returns or rework.

Why are BOMs so important?

BOMs contain all the information you need to manufacture a product, and act as the core building blocks of a product’s records. They are often managed across multiple engineering disciplines (eBOMs) and manufacturing teams (mBOMs), and also have a big impact on finance and purchasing, since they’re used to calculate the cost of assembly, as well as plan the purchasing schedule and cost of materials. Furthermore, sales can use BOMs to calculate the cost of a product and margins; and logistics may need specific BOM information, such as packaging and delivery requirements. Lastly, after sales services could consult a BOM for replacement and repair details, or product specifications. 

The key to successful BOM management is having a centralized location for the BOM and other product records. Companies often have departments working in silos, using different tools and working with different product data. This can result in loss of productivity, excess inventory, rework and errors, quality issues, missed deadlines and product launches, longer time to market, and, eventually, missed opportunities. Whereas, the ability to control change management ensures everyone in the company has a single version of the truth. 

With many organizations moving to global operations, where product design is done on one side of the world and manufacturing processes are outsourced on the other side of the world, collaborating and sharing product information securely and effectively is a must. With proper BOM management systems in place, organizations can ensure the integrity of the design and manufacturing processes, as well as mitigate the risks associated with sharing product information. 

How do you create a BOM

Creating a BOM is a critical step in product development and key to ensuring consistency throughout the manufacturing process. Fundamentally, a BOM includes:

  • Parent item 
  • Components or assembly 
  • Quantity

Some of the most critical fields to include in your BOM record are:

  • Part and component number
  • Unique part number
  • Unique part name for each part or assembly
  • Material specifications
  • Description of each part 
  • Pictures
  • Color code
  • Finish/texture
  • Quantity
  • Unit measurements  
  • Unit price
  • Total cost
  • Lead time to make the particular part
  • Tooling
  • Supplier
  • Status
  • Notes/remarks

A Bill of Material can look like this:

bom management

(Upchain PLM software plugin integration with Excel)

BOM management: Excel VS alternatives

The bill of materials as we know it dates back to the 1960’s, when organizations started to implement computer programs to manage their BOMs. The way companies handle BOMs has not changed much since then — most organisations still create their BOMs on spreadsheets.

First, with the rise of MRP systems, Lean, Kanban, and TQM; then, with the proliferation of Product Lifecycle Management (PLM), Product Data Management (PDM), and Manufacturing Execution Systems (MES), product development systems have become much more sophisticated. Cloud technology and IoT-enabled organizations focus on collaboration, bringing together physical and digital information across the supply chain. 

Historically, Excel has been the go-to business tool for BOM management. It’s quick to implement, licenses cost little to nothing, and most people have familiarity with spreadsheets. It’s best suited for a small, single-location, manufacturing organization. 

However, as the company grows and expands, so do its product development and manufacturing processes, resulting in a different set of needs for integration, data sharing, security, collaboration, faster time to market, and more. This is when companies start to consider software.

Software tools like Upchain PLM can help keep your BOMs organized and your data up to date. Within the platform, you can attach drawing files, view the drawings right in the system, and store them in one central location. You can view 3D models and their components, create markups and add comments, view previous versions, create issue workflows, and more. 

Before evaluating BOM management tools, there are a few key features you need to consider. First of all, the BOM management tool needs to provide a single data source throughout the entire organization and supply chain, in real time. Secondly, it should be set up so that teams across different functions and locations, can have different levels of access to product data sets, while working collaboratively and efficiently. Finally, the tool should enable partner integration and data sharing in a secure environment.

Wrap up

Creating a bill of materials is a critical and time-consuming task. Managing it, keeping the information up to date, and sharing product data can become overwhelming. Inefficiencies and complications can arise as a company expands and adds partners throughout the supply chain. 

Cloud BOM management solutions, like Upchain, can help your company remove inefficiencies, scale operations, minimize risks, and take care of all your other BOM management needs.