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Bills of Materials: What They Are and How to Use Them

Learn about:

  • Bill of Material documents
  • Why bills of material are important
  • How to prepare a bill of material

A Bill of Materials (BOM) is a list of ingredients used to manufacture a product. It indicates the amount of each ingredient used. These ingredients can be raw materials, interim items, sub-units, parts, and consumer goods. 

This list does not specify where the materials are used or when they are required. However, it is in the form of a systematic hierarchy that may work as an outline for a few production measures.

Bill of Materials Document

The BOM document is a centralized information resource used in the manufacturing of a product. At the beginning of the assembly process, a BOM document is created. Preparing a perfect BOM document is very important since the right components must be available when the product is manufactured. 

Errors or defects in the BOM document lead to delays in the manufacturing process or even its total shutdown. This would cause the rise of optional expenditure because of the following:

  • The efforts spent in tracking missing components
  • Starting a new production order
  • Customers starting to return the merchandise

Why you must have a Bill of Materials Process?

The aim of a BOM is to ensure the manufacturer gets the product right the first time. This is only possible when all the components are available as and when required, and the sub-units are completed in the correct sequence. 

If anyone of the components is not available, it can result in the suspension of the production of a sub-assembly. This, in turn, can stop the entire operation.

In today’s highly volatile economic scenario, customers prefer to choose a rival manufacturer rather than wait for previously ordered products. Equally dangerous is the hoarding of inventory. Overstocked inventory can be very risky if the customer demand goes down, causing a surge in holding, insurance, labor, and outdated items, as well as rising costs.

This is where BOM is priceless. It eliminates any confusion about the parts that are needed for a certain order. It also provides an accurate analysis of what you must-have in the inventory and what you must order.

How to Prepare a Bill of Materials

Preparing a BOM is a major step in product development and a fundamental move to ensure uniformity of the production process. In essence, a BOM consists of:

  • Components or assembly 
  • Amount
  • Parent item 

Some extremely important fields to add to your BOM record are:

  • Material specifications
  • Description of each part 
  • Unique part name for each part or assembly
  • Unique part number
  • Part and component number
  • Finish/texture
  • Color code
  • Pictures
  • Quantity
  • Unit dimensions  
  • Unit price
  • Total cost
  • Processing time to manufacture a particular part
  • Tools required
  • Supplier
  • Status
  • Notes/comments

Preparing a BOM is a very significant development step; it’s a crucial step to guarantee overall stability across the entire production process. A well-prepared BOM is like a guide map that tells you when and what quantity of every single component you need to buy to manufacture a product.

Updated on July 8, 2020

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