Understanding the Essentials: Bill of Materials (BOM)

Posted on 
July 17, 2024
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When it comes to the manufacturing and design of a product a Bill of Materials (BOM) is essential. But for many companies developing a configurable BOM that is of the highest quality and value can be a daunting task. Whether you’re a product engineer or a procurement specialist understanding the use and value of a Bill of Materials is a must for adequate product lifecycle management (PLM).

What is a Bill of Materials (BOM)?

A bill of materials is an essential document that centralizes all the data related to the manufacturing and development of a new product, information that is specifically essential to manufacturers. 

Think of BOMs as a comprehensive document that guides production, detailing all the parts, components, and material requirements to make a product. It is important to note that a bill of materials is more than just a list of materials, it is a detailed record of how exactly a product must be made including part numbers, assembly process, product structure, part name, unit of measure, and any other necessary specifications.

With this detailed information, companies can better plan purchases of materials, predict consumer demands, and develop cost predictions, therefore reducing waste and procurement delays. 

With this document accessible to all team members, silos are broken down, ensuring that everyone has a clear understanding of what steps must be taken to produce complex products at the highest level. 

Types of Bills of Materials (BOMs)

Across industries, there are various types of BOMs, including both single-level BOMs and multi-level BOMs. Engineering bill of materials (EBOM) are created specifically during the design phase and give detailed specifications about how different elements of the product will be designed using the necessary raw materials. 

There are also manufacturing bill of materials (MBOM). Manufacturing BOMs are similar to engineering BOMs but focus more heavily on the assembly process and production order. This ensures that all subassemblies are clearly outlined by procurement type and can be connected back down a production line and the manufacturing process.  

Another type of common BOM is a sales bill of materials (SBOM) which outlines sales orders and products as they are sold. By doing so products that have been purchased together can more seamlessly be packaged and shipped together. This can also help teams improve product pricing that is tailored towards consumer demand. 

These types of BOMs, among other types of BOM structures, highlight different production processes and stages to ensure final products are created with consistency and efficiency. 

Role of a Bill of Materials in Manufacturing and the Supply Chain

As mentioned before BOMs are essential during the manufacturing of a product. By providing comprehensive lists of product parts, components, and materials, as well as specifications and quantifies the manufacturing process can be streamlined, decreasing lead time  

During the assembly process manufacturing BOMs ensure that individual parts are identified and available to complete the finished product. By having this detailed specification data errors and delays can be minimized while using resources efficiently and correctly.  

When it comes to supply chains having a configurable bill of materials is equally important. Typical multi-level bill of materials required detailed insight into all materials and components required for production, giving visibility into production across entire supply chains.  

These BOMs also help with inventory management and the forecasting of material demand and potential shortages. Using BOMs to oversee your supply chain allows companies to take a proactive approach when it comes to maintaining optimal inventory levels and their alignment with production planning. 

Challenges of a Bill of Materials

When it comes to developing and implementing a bill of materials catered towards your specific company and products different challenges may arise. During the implementation of BOMs, many companies are quick to discover the lack of accessible product data. 

With siloed data and specifications stored in Excel spreadsheets and other siloed legacy systems, even the development of a single-level bill of materials can seem near impossible. If BOMs are developed with inaccurate data it can lead to many complex challenges down the line such as product development errors, production delays, additional costs, and more.

Additionally, without accurate BOM management over or understocking of materials may also occur which can further disrupt procurement and cause financial burdens - resulting in potential losses against competitors. 

The Digital Transformation in Bill of Materials Management

In recent years there has been a drastic shift from traditional and manual bills of materials to digital ones. These advanced BOM management solutions allow teams to utilize automation and computer-aided design systems to more efficiently create the highest quality BOMs.

In the past manual processes frequently led to outdated and inaccessible BOMs, slowing down procurement and speed to market. The implementation of digital transformation in BOM management is coupled with many benefits. 

At the top of the list is enhanced accuracy as well as efficiency during the management of multi-level BOMs. Digital BOMs ensure that data and specifications are constantly up to date and visible to cross-functional teams. 

To drive the full value of a BOM all stakeholders must be utilizing the same one from engineers to supply chain managers, making this digital transformation that much more valuable. 

And beyond improved collaboration, digital BOMs also easily integrate into companies' currency Enterprise Resource Planning (ERP) and Material Requirement Planning (MRP) systems. This creates and more seamless and cohesive data management system that works with your current business models.

How Specright Enables Effective BOM Management

In order to align with this shift towards digital BOM management it is essential that companies first have adequate data management systems. With purpose-built Specification Data Management systems like Specright businesses never have to worry about the accuracy or accessibility of their data. 

With Specright, your bill of materials can be transformed from a static to a dynamic system where workflows can be layered and collaboration is seamless. By taking a data-first approach Specright ensures that companies always have the information they need to create unique BOMs.

Teams can also use Specright to integrate into their current ERP systems to gather high-level BOM details such as SKU numbers and unique names. And most importantly Specright ensures that this information is accessible to everyone in your organization. 

Learn more about Specright’s Bill of Materials Software, or see how Specright can help you develop the highest quality BOMs, with a demo today.


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