Bill of Materials: Recipe for Success in Product Manufacturing
A bill of materials is an inventory of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts and the quantities of each needed to manufacture a product.
A complete list of everything you’ll need throughout production. It’s basically the DNA of a product.
A Bill of Materials (BOM) has varied applications and is sometimes also referred to as Production Recipe or Assembly Component List.
Bill of materials are meant to be followed to the letter and are considered a core element of any efficient manufacturing operation.
There are three / four main types of bill of materials, more on that later. In this article, we are looking at manufacturing bill of materials, how to create one and what solutions there are to help you along the way.
How to Create a Bill of Materials?
Creating a bill of materials is vital for production management to ensure consistency and quality throughout the manufacturing process.
Despite the awesome benefits of using BOMs, it cannot be denied that you have to spend a bit of time putting them together at first.
But at the very least you can think of it as an exercise to really get to know your product, and even the chance to know your margins too.
Single-Level Bill of Materials
A single-level bill of materials structure (BOM) is a simple list to produce a product, consisting of only one level of children in components, assemblies and material.
Although simplicity can sometimes be best, a single-level BOM is not suitable for more complex products.
Another key factor to consider is that if an issue arises with a product, such as a quality concern, you would not be able to identify which material in the production process needs to be replaced or amended.
If you are producing more complex items such as a laptop, you will need to opt for a multi-level BOM, that can provide you with the specific relationship between various materials, assemblies and sub-assemblies.
Multi-Level Bill of Materials
A multi-level BOM, also referred to as an indented BOM, is an intricate bill of materials that lists the components, assemblies, and parts required to make a product.
It provides a display of all items that are in parent-children relationships. When an item is a sub-component for example, all its components including finished parts and raw materials are also exhibited.
It’s similar to a single-level BOM, but provides a greater layer of detail and specificity on all parts involved in the production of the product. It displays further details such as quantity of required materials and is indented to illustrate the relationship between various materials, assemblies and sub-assemblies.
A multi-level structure can be illustrated by a tree with several levels and branches.
You can see then that there are layers of complexity you can apply to your bill of materials depending on your product.
You can’t say each type of product always fits a specific BOM.
It’s a lot more fluid than that.
The important things to consider are whether it captures the recipe as you intend. And if it gives you the space to improve it as you go along.
You want to make sure your BOM is both flexible and accurate.
That’s what it really boils down to.
On a basic level, a bill of materials should include the hierarchal structure:
- Parent item (product);
- Materials or sub-assemblies (child);
- Quantity of materials needed.
When considering a software solution to help you create a bill of materials and manage production, you need to find a solution that can integrate the appropriate product hierarchy through this parent-child delineation.
What to Include in a Bill of Materials?
The parameters that you include in a bill of materials will depend on the product you are producing, but generally a good bill of materials will include:
- Material Name: Every material, ingredient or sub-assembly should have a detailed, unique name in your bill of materials. This will allow the material to be easily identified.
- Variant code / SKU: This is a unique code for a material variant (also called SKU). This means that anyone involved in the production process is able to identify parts instantly.
- Description and notes: Bill of materials should include a clear, informative description of the material for those involved in the production process. You should also include any additional information that is needed for someone to clearly understand the BOM.
- Units of Measure: This is the unit that you use to measure the quantity of a product or material in your stock. For example, it may be pieces (pcs) or kilogram (kg).
- Quantity: The quantity if each material needed to produce a product must be specified. This allows the bill of materials to be an accurate purchasing asset, and to help with establishing safety stock and reorder points.
- Product Color: Specifying the product color will help to ensure there are no errors made by those using the bill of materials to create the finished product. Especially if you have a lot of color variants.
In order to make your manufacturing process even more effective, you may want to "enrich" the BOM structure with more parameters.
Slot these into your BOM as you see fit.
- Lead Time: The time between the initiation and completion of an assembly process;
- Scrap factor: The percentage of components and/or materials ruined during manufacturing operations;
- Quality criteria: Upfront defined measurable tests and test results in order to confirm that the quality objectives of an assembly process have been met;
- Done criteria: An upfront agreement of assembly steps and tasks that need to be completed in order to complete the assembly process; and
- Roll-up Cost: Calculates the standard cost based on the BOM and routings of assembling the product.
It all depends on the manufacturing process and what data you want to make use of. Each of these metrics can have great value for business making decisions.
Example to Get You Started
Understanding the varying complexities and types of bill of materials available to you can sometimes seem overwhelming and leave you wondering where to begin.
So, here’s a basic bill of materials example to show how you can get started.
Let’s go with making wooden doors, simple enough.
First job is to list the items that go into making a door. You need:
Okay I guess we’re done then. Time to go home?
Well not quite yet, there’s a few more steps to go through. And the next is to determine how much of each item we need.
- Door Panel (x1 unit)
- Handle (x1 unit)
- Hinges (x2 unit)
- Latch (x1 unit)
Brilliant, we know what we need and how much of it.
Next up: how much does it cost?
- Door Panel (x1 unit) $20
- Handle (x1 unit) $6
- Hinges (x2 unit) $2
- Latch (x1 unit) $2
Total Cost: $30
So, that’s about as simple as a Bill of Materials, or product recipe, as you will ever find.
It’s not too hard to imagine how it could become more complex. If for example, we offered different door handles then it would make sense to build a configurable BOM.
But that should give an idea of how it works, so you can start building your own BOMs.
Types of Bill of Materials
There isn’t a one-size-fits-all when it comes to a bill of materials. There are many types of BOMs to choose from, so it helps to understand your options. We have put together a quick overview of some of the different types to help you decide what your business needs.
Manufacturing Bill of Materials (MBOM)
A manufacturing bill of materials displays the materials, assemblies and sub-assemblies that are required to produce a finished product. It applies to the production process before completion of the finished goods
Engineering Bill of Materials (EBOM)
An engineering bill of materials is different from a manufacturing BOM, as it defines the design of a finished product. It is often created based on a computer aided design or CAD drawing, as is part of product lifecycle management.
Configurable Bill of Materials
A configurable bill of materials (CBOM) is a form of BOM used by industries that have multiple options and highly configurable products.
The CBOM is used to dynamically create products that a company sells, so it can easily be molded and shaped. The benefit of using CBOM structure is that it reduces the work-effort needed to maintain product structures.
The configurable BOM is most frequently driven by "configurator" software. The development of the CBOM is dependent on having a modular BOM structure in place.
BOMs that describe the sub-assemblies are referred to as modular BOMs.
Modular BOM structure provides the assemblies/sub-systems that can be selected to "configure" an end-item. So, this structure requires modular BOM as well.
The main reason why modular BOMs are used is that the job of maintaining the BOM is much simpler (given that the assembly list of the product is long and complex, and maintenance does not require a complete overhaul of the BOM each time).
Benefits of BOM Manufacturing
The benefits of having BOMs (aka product recipes) in manufacturing can be a lot more widespread than just on the end-product itself.
With a clear list of materials, quantities and inventories you will ensure you won't run out of materials.
By using BOMs your Smart Manufacturing Software can remind you when stocks are low so that you can replenish as necessary.
This can massively reduce delayed deliveries to customers. Awesome.
Knowing the required inventory levels, process involved and the time it takes to manufacture, results in timely and predictable delivery processes.
By knowing how everything functions at every step along the way you can ensure that each step happens on time when it needs to.
With better planning comes more accurate knowledge on how much time a job will take which feeds back into the BOM.
This allows your team to cost up jobs and orders more effectively, making you more profit.
It’s a beautiful self-refining cycle.
Another reason why a BOM is essential in manufacturing is its ability to help decrease waste: the word that makes every manufacturer cringe.
And a lot of waste comes from excess inventory itself. You are tying up resources that could be put to use and keeping unusable products. It’s throwing away money.
With BOMs you know what is needed and by bringing in the right parts efficiently, you aren’t left with excess inventory. You know exactly how much would be needed, and you aren’t left with incorrectly assembled products that cannot be used.
In the end you are left with product recipes that constantly self-improve. And at the same time this kind of BOM inventory helps manage your inventory at optimal levels.
Bill of Material Software is the Best Excel Alternative
We got through what BOMs are, why they’re important and how to make them.
But where do you keep and update them?
There is always the option to write it all down on paper, but that is easily misplaced.
If you manufacture a simple product with few processes, then a spreadsheet should do the job. However, spreadsheets can be inefficient and prone to error.Anything beyond that though and it gets a little tricky. Especially if you have sub-assemblies and multiple components involved.
It would make a lot more sense if you could have a bill of materials software that made everything seamless, wouldn’t it?
Well you can thank your lucky stars then.
Because you can now use a Smart Manufacturing Software, like Katana MRP which embeds your BOMs into your inventory and entire workflow.
That means you can see how your BOMs are affecting your inventory, production and sales from a single dashboard.
Katana Smart Manufacturing Software allows you to create BOMs that interact with your entire workflow in real time.
Katana makes it simple to create a product recipe (BOM). You simply have to log in to your Katana account, access the “Items” screen, click the “Products” tab and then choose a product you need to create a recipe for. Then choose the “Product Recipe” tab and add your materials and their respective quantities. The stock cost will automatically update, accordingly.
Here’s a handy video tutorial to simply things:
A bill of materials (BOM) is a vital, centralized source of information of materials, assemblies and sub-assemblies to manufacture a finished product.
There are many variations of BOMs to choose from, which will depend on your product’s complexity and your manufacturing processes.
Creating and managing a BOM is much easier and efficient, when created within an integrated inventory and production management software – such as Katana MRP.