A bill of materials (BOM) is like a recipe for your product. And for technical manufacturing, it’s the difference between frying a cheap burger and searing a tender filet mignon.
Just as a recipe lists baking ingredients and techniques, a BOM details the names and quantities of the raw materials, parts, components, and subassemblies required to manufacture a product.
Here’s an example. To build a bicycle, your BOM would list items like the frame, wheels, and brakes, their quantities, and instructions for assembly.
BOM management is a vital part of the manufacturing process because it ensures you have the ingredients to create the right product every time.
The different types of bills of materials
No BOM is one-size-fits-all. It depends on your industry and the manufacturing stage. These are the most common types:
- A manufacturing bill of materials (MBOM) is a detailed list of all the materials used on the factory floor.
- An engineering bill of materials (EBOM) is the initial design concept created in the product development stage, listing all parts necessary for a prototype.
- A configurable bill of materials (CBOM) lists all materials that include variations dependent on customer choices.
- A software bill of materials (SBOM) is a list of all the components and libraries used to develop software.
You can have multiple BOMs for a single product — for example, a top-level (or parent) BOM that lists all the major components and subassemblies for the finished product, which might contain subassembly BOMs detailing the materials and components needed for different parts of the product.
If you were building a car, the top-level BOM would list major components like the engine, transmission, and body. Each of these major components would be a subassembly requiring its own BOM. The engine subassembly lists the cylinder block, pistons, and crankshaft, and the transmission subassembly lists gears, shafts, and bearings.
Subassembly BOMs make top-level BOMs more manageable and easier to understand. They also make it easier to track inventory levels for each component accurately, avoiding under- or overstocking.
Key elements of a bill of materials
The exact details depend on the products you’re making, but a comprehensive BOM generally includes the following information:
- BOM level: This indicates the component’s hierarchical level or stage in the product structure. The top-level BOM is Level 0, while subassemblies are Level 1, 2, and so on.
- Part number: This unique identifier numbers each component.
- Part name: This descriptive name also identifies components.
- Phase: The phase defines the relevant stage of the product lifecycle.
- Description: Some BOMs include a more detailed description of the component.
- Quantity: This is the number of units of the component required for the finished product.
- Procurement type: The BOM should explain whether the component is made in-house or purchased from a supplier.
- Unit of measure: Each component is measured in feet, kilograms, or another unit.
- Reference designators: These explain the location of the component in the product assembly.
- BOM notes: These include any additional information relevant to the component.
8 benefits of using bills of materials in manufacturing
BOMs are indispensable tools for any manufacturer looking to optimize their operations and improve product quality. Here are some of the top reasons why.
1. Provides a comprehensive production blueprint
A BOM provides a detailed roadmap for every stage of production, from raw materials to the finished goods. This comprehensive overview prevents overlooking important steps, reducing the risk of errors, delays, and costly rework.
2. Improves accuracy and reduces errors
By meticulously listing every component along with its quantity and specifications, BOMs minimize the potential for error. When you get things right the first time, that accuracy extends to procurement, inventory management, and quality control, resulting in consistent finished products and increased customer satisfaction.
3. Enhances communication and collaboration
BOMs serve as a central source of truth, facilitating clear communication and collaboration across every team involved in the manufacturing process. Engineers, production managers, and quality control personnel can all refer to the BOM and work toward a common goal.
4. Optimizes inventory management
BOMs enable precise inventory planning. By knowing exactly what materials are needed and when, manufacturers can avoid overstocking (which ties up capital) and understocking (which leads to production delays). This translates to cost savings and improved operational efficiency.
5. Streamlines cost tracking and analysis
BOMs include cost information for each component, allowing manufacturers to track production spending accurately. Understanding a product’s cost breakdown helps identify opportunities for cost reduction, negotiate better prices with suppliers, and ultimately improve profitability.
6. Supports efficient change management
Product designs evolve and market demands shift. But you can easily update BOMs to reflect these changes, keeping production processes agile and responsive.
7. Supports regulatory compliance
In industries with strict regulations, like aerospace and medical device manufacturing, BOMs help ensure compliance with traceability. You have a clear record of the components used in each product at the ready, making recalls or audits much easier than they’d be without solid BOM management.
8. Enhances product lifecycle management
BOMs are present through the entire product lifecycle, from initial design and prototyping to production, sales, and even after-sales service. Managing BOMs effectively bleeds into the whole lifecycle for stronger strategies at every stage. Plus, they provide valuable information for product development and repairs, improving your reputation and keeping customers happy long-term.
10 tips to streamline your bill of materials management
Your BOMs should work just as hard as you do. Here are some tips for a more efficient, accurate, and profitable manufacturing process:
1. Choose the right type
As mentioned, different products and processes require different BOM types, so decide which works best for you. A simple product might only need a manufacturing bill of materials (MBOM), while something more complex or customizable would require a configurable bill of materials (CBOM).
2. Invest in BOM management software
One of the best ways to streamline your BOM management process is with a dedicated software solution that integrates with your enterprise resource planning (ERP), material requirements planning (MRP), and inventory management tools. This way, you don’t have to move back and forth between programs.
If you use Fishbowl for inventory management, BOMs are easy to create within the Bill of Materials module, simplifying your procurement and resource planning processes.
3. Establish clear naming conventions
Standardized naming conventions are crucial for efficient BOM inventory management and seamless communication. To avoid confusion and gain consistent results across the BOM supply chain, use an established naming convention for part numbers, subassemblies, and descriptions.
4. Implement version control
Over time, you might decide to tweak BOMs for better results. Record those changes and clearly label the different versions to ensure you’re using the up-to-date BOM for each production run. This minimizes errors and maintains product consistency.
5. Collaborate with suppliers
Effective communication with suppliers maintains a reliable BOM supply chain and avoids production delays. Work with your vendors to stay up to speed on the availability and lead times of the components that go into your finished products. There should be no surprises.
6. Accurately forecast demand
Use inventory management software to forecast demand and align your BOMs with production schedules. Accurately predicting what you’ll need in the future helps you optimize BOM inventory management, ensuring you have the right materials on hand to meet production demands.
7. Optimize inventory levels
To avoid spoilage and obsolescence, a grocery store stocks many shelf-stable pantry staples and buys produce or quick-to-expire items as needed. Follow the same principles for your BOM inventory, keeping the essentials available without wasting money on excess inventory holding costs. Set reorder points and safety stock based on demand patterns and lead times.
8. Track costs effectively
Monitor raw material, labor, and overhead costs. Tracking spending at each stage of the BOM supply chain and production process helps you identify opportunities for cost reduction and improve your bottom line.
9. Conduct regular audits
Regular audits maintain data integrity and improve production efficiency. Create a schedule for conducting a systematic review of your BOMs every month or quarter, checking all information for accuracy, completeness, and consistency.
10. Integrate with quality control
The quality of a finished product is only as good as the BOMs used to create it. Work quality control measures into the BOM management process, giving you the time and tools to proactively address any quality issues that arise during production.
Get unmatched bill of materials management with Fishbowl
Fishbowl is an all-in-one inventory management solution designed to help you control warehouse operations, manufacturing workflows, and more. It has everything you need to track raw materials, manage subassemblies, and control stock — all from one central platform. Fishbowl’s QuickBooks integration even syncs your inventory and financial data, making it easier to generate accurate prices for finished goods that reflect the true cost of your products.
Are you ready to implement effective BOM management? Schedule a demo of Fishbowl today.