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What Is a Bill of Material and Why Does It Matter?

A bill of materials or BOM is a comprehensive list of all materials required in production. This contains the exact quantity and description of raw materials, intermediates, consumables, or parts organized in a hierarchy to present the process. A BOM comes in two structures: the single-level BOM and the multi-level BOM.

A single-level BOM, in the most basic sense, is a list of materials with its corresponding quantity and description required to finish a product. It’s easier to develop, but it doesn’t suit complex products that involve the components of a single part. The latter needs a multi-level BOM. A multi-level BOM offers more details and showcases the relationship between one material to the other.

A BOM is an important tool in managing your supply chain and in bringing together all personnel in operation. This binds together every merchandiser, buyer, supplier, and designers as it gives them the complete picture of the different components and the right amount of each to produce the right goods. It also serves as a key communication tool between you and your partners in the manufacture.

According to TechTarget, an efficient BOM helps you with the following:

1. Make purchases – because it comes with all the material list, you won’t need to prance around the dark, not knowing what your production needs.

2. Determine estimate costs – a BOM requires the quantity of the materials needed to conjure a finished product. Putting this on the list helps your budgeting team make wise allocations

3. Secure supply and lessen material wastes – a BOM will help give you better control over your supplies to reduce wastes and ensure that you have enough to keep the operation stable.

4. Plan and keep track of all the resources – this ensures that you never have to run out of supplies again as it allows you to keep a close eye on every material needs. You’ll know exactly what to buy and when to use it.

These benefits help you manage a smooth-sailing production by looking after the product’s components. Aside from this, Medium also sees a BOM as an integral part of the production because it sets the standard of how a product should be made. It presents how each component comes together to generate the right product model that will, later on, get to the hands of the consumers.

Types of Bill of Materials

Depending on your goals and needs, your BOM comes in different types that you should be aware of. They vary in format, function, and details, so it’s important that you identify which model suits your requirements.

Engineering Bill of Materials (EBOM)

An EBOM focuses on the functional aspects of a component or structure and is usually designed by a group of engineers. To show how a part functions as an element of the product, it usually involves a technical or mechanical sketch or illustration. And because it’s design-based, it’s made with the help of computer-aided design (CAD) and can have multiple logic models as it undergoes several revisions.

Manufacturing Bill of Materials (MBOM)

An MBOM is a list of all items needed to manufacture an end product. It also includes information on which components need processing prior to its assembly. It also explains how each part will come together in order to complete the process, which will be shared with those responsible for purchasing and building the product.

Sales Bill of Materials (SBOM)

An SBOM presents a product on its sales stage, where the different parts of the product come as different sales items on the receipt even though they appear as merely a component and should be labeled as an inventory.

Essential Components of a Bill of Material

Like any other important document, a BOM contains essential parts and information that one should never miss. These components contribute to a BOM’s efficiency and should be included when filling out the sheet. Read through and take the time to know each of them:

How to Create an Efficient Bill of Materials

A BOM is an integral part of any production, but it can serve otherwise when it’s structured weakly. Create an effective BOM by following the guidelines below:

Step 1: Start with a Comprehensive List

Before you venture into completing the entire business document, create a complete list of everything you’ll need to commence the production or to manage your operations. It’s best to identify every material you’ll need, so you can easily set them down in your bill of material sheet later on without missing anything. This is an easy task to take if you’ll only need a couple of resources, but if you need a lot of them, there’s the risk of missing out on a single item. To help you organize your resources, use categories. This way, you can work your first by looking at the bigger picture as you gradually narrow it down to its details. As an example, if you manufacture goods, you can label the lists as pre-production, in production, and post-production. You can focus one phase at a time and easily determine which things should go on your list.

Step 2: Specify Quantity

Know how much you’ll be needing of each material and include this on your list. It’s not enough to know what you’ll need, but you need to have an idea of the quantity. Do the research and determine the scale of your production or enterprise. Calculate the quantity you’ll be needing in each production. If you’ve been operating for a while, you’ll be able to fill this part immediately by referring to your previous records. However, if you’re new in business and are still surveying the field, this might need a little more research. Doing this contributes to a better pricing process and budgeting.

Step 3: Don’t Leave Out the Description

Don’t think you won’t need the description anymore because you already have the material name. The description plays an important part in making sure that the buyer, manufacturer, or anyone who’s assigned to check on the bill understands what the materials look alike and how they differ from other similar materials. Without this, the possibility of duplicating several materials is not far off, which is a waste of time and resources. Provide a space where the description should be.

Step 4: Know Your BOM’s Type and Level

When you’re done with your needed list and are now ready to structure your layout, begin by knowing what type of BOM you’re making and what level it should include. This provides you with an overview on how you would need the format to look like. Deciding this largely depends on the kind of activity you’re leaning on what your focus is all about. As an example, if your operation centers on a product’s design, you need to go for an engineering BOM. If you only need to see an overview of the product’s components without digging the history all the way to the different raw materials that were used, a single-level BOM could work. Otherwise, if you want to have every specifics, a multi-level BOM would require more effort.

Step 5: Consider Using a Template

If you’re having a hard time coming up with the format of your bill of materials, you might want to consider getting a template for your convenience. This is highly recommended, especially if you’re managing a huge operation entailing a large number of materials. Starting a form on your own can be tricky, adding a significant burden on single-handedly tracing all the necessary materials. Using a template allows you to directly fill in the sheets with all the data you’ve gathered. This way, instead of drafting out the document structure on your own, you can now search for a template that matches your BOM type and level. This saves you a lot of time and effort with a commendable end result.

FAQs

Resource mismanagement is an issue with grave consequences. Not only can it hamper the progress of production, it can cripple an entire business’ operations as well. This is why every management must place high regard on how they supervise their goods to ensure that every piece is utilized in the way it should be. The BOM as a resource management tool is an essential part of this responsibility.