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What is a bill of materials in manufacturing?

Male engineer calculating parts of production machine in factory.

As a small to medium-sized manufacturer, you're constantly juggling priorities, whether prototyping a new product or preparing to launch the next iteration of your product line.

No matter how busy things get, it’s essential not to overlook one critical element of your manufacturing process: your bill of materials (BOM). This key operational document impacts a range of business functions, from product development to field service management.

Bill of materials: defined

A BOM is a list of all the components needed to make a product or assembled part. Think of it as a recipe for your product, comprising both the raw materials and subassemblies needed to manufacture an end product. A BOM will also include part revisions and even instructions on how to repair a product.

Your BOM will appear in several versions dependent on business use, beyond what is simply needed to design and manufacture your product. Here are some common formats you might encounter:

Engineering bill of materials (EBOM): This is your product as designed by engineers. The EBOM, which may be represented as a drawing or diagram, includes all parts of the assembly except shipping and packing material.

Manufacturing bill of materials (MBOM): This comprises all the items required to build a complete and shippable product, including consumables such as glue and screws.

Service bill of materials (SBOM): A subset of the engineering bill of materials, the SBOM covers everything you need to maintain the product during its service lifetime. Unlike the EBOM, it may consolidate individual parts into sub-assemblies for maintenance purposes.

For example, a technician fixing a broken dishwasher may be required to change the full motor rather than replacing sub-components inside the motor. The service bill of materials will reflect this approach.

Configurable bill of materials (CBOM): Bills of materials can be configurable for instances where a manufacturer wishes to make a slightly different version of a product for a customer.

Take computer manufacturing. Whether shipping laptops to consumers or servers to enterprises for use in the data center, IT hardware is highly customizable. A CBOM reflects this level of customization.

Benefits of good BOM management

The upsides of good BOM management extend beyond efficient production. Use the information in your BOM as a launching pad for analysis of your business process. Consider the following areas:

Warehousing: The way you design your warehouse has a material impact on your operating costs. BOM analysis can help identify your most frequently used components. Store them close together in the warehouse to reduce picking time and increase efficiency. If you’re in any doubt about good warehousing practices, a logistics partner can help you optimize your warehouse layout and design.

Product lifecycle management: When approaching a product refresh, analyze your BOM to identify sub-componentry that can be easily updated without changing the core specification of your product.

Inventory management: Leveraging your BOMs to understand your inventory requirements helps optimize operations and keep your supply chain lean. Partner with a logistics expert to help support all aspects of inventory management, from purchasing to transportation through storage and shipping.

Sustainable manufacturing: Remember effective BOM management is not only good for the bottom line, it is also good for the environment. By optimizing your supply chain for only what is needed and ordering parts correctly on the first attempt, you are practicing sustainable manufacturing and preserving much-needed resources to channel into other areas of your business.

Creating a source bill of materials

With multiple BOMs used for various commercial purposes, it is important to maintain a source BOM, which automatically updates in line with any changes.

To build your source BOM, you first need an inventory, or database of parts, from which to pull. This inventory is critical and creates a standardized the identification of parts throughout your operation.  It is also the foundation of a strong inventory management system.

There are many operational reasons for building a BOM and many different bills of materials templates available, but most BOMs contain at least the following:

  • Part names: Use the name listed in your inventory.
  • Part numbers: This may contain a serialized list of numbers or deploy an approach called intelligent part numbering, which results in more descriptive part numbers.
  • BOM level: How many levels does your bill of materials need? More complex products may drill down to numerous sub levels, whereas simpler products often require just a few levels to adequately represent their composition.
  • Quantities: How many of each part does a sub-component require?
  • Units of measurement: Are we talking inches or feet? Is it ounces or pounds?
  • Procurement information: Where do you normally purchase the part from, or is it manufactured in-house?

Depending on the version of the BOM you are generating, you may want to include consumables such as product fixings as well as product datasheets and assembly drawings. And remember to provide a section in your bill of materials for contributors to leave notes.

Effective BOM management

If your business only produces a small number of products, or if your products are simple to manufacture, you may choose to maintain your BOM in spreadsheet format.

However, for more complex products, it is common for small and medium-sized businesses to invest in BOM software. By adopting BOM software that draws on a single database, it is easier to ensure that changes to your source BOM cascade through to other versions of the product.

Failure to update downstream versions of a BOM can cost your business – not to mention your customers, internal employees, and suppliers – time and money in rectifying incorrect or missing orders. And for a small or medium-sized business, time and money are two of the most valuable resources to have. 

Optimizing your BOM management

With the right level of attention, managing your BOMs should become an established part of your operating protocol. Ask yourself the following questions to stay on top of BOM management:

  • Who has high level responsibility for BOM management in your company? Spreading senior responsibility across a range of stakeholders is generally not advised.
  • Do you have a documented process in place for maintaining your source BOM?
  • Are your staff adequately trained around BOM maintenance?
  • Is your BOM software comprehensively integrated with other business-critical tools, such as your inventory management software?
  • Are you demonstrating financial return to your company through good management of your bills of materials?

No doubt there’s a lot to consider when it comes to bill of materials, but the benefits enjoyed by a company that properly utilizes effective BOM management at its heart are numerous.

Reach out to our supply chain experts today for a 15-minute consultation to help support with the development and effective execution of BOMs within your organization.

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