Bill of Materials

Sample Bill of Material
Example of a Bill of material form

A Bill of Materials (BOM) defines the complete set of physical elements required to manufacture a product. It may be in a tree form, or more typically in a printed document indented to the lowest level required, to accurately list all parts and raw materials needed to make the unit. It is then used by the project manager or purchasing department to order any supplies that are necessary.

With the increasing sophistication in the business processes, a bill of materials has come out to be a full warehouse of information, listing entries such as quantities, details of supplying vendors and prices. It thus helps a manager define, manage and analyze the products his company produces.

A Bill of Materials software typically allows to create and maintain the components parts list from engineering (eBOM) and manufacturing (mBOM). Other functions include management of labor, overhead, history and revision control.

Consequently, a bill of materials works as a building block, a central source of information supporting product costing, inventory control and engineering management. An inaccuracy in the information provided in a BOM may thus result in incorrect costing, erroneous inventory levels, accounting variances and customer returns.

Manufacturing projects typically involve complex or challenging sales, engineering, purchasing and production requirements. An accurate estimation, purchasing and cost controls are thus the key factors for the projectís profitability. In such a critical scenario, a bill of materials helps ensure that all necessary departments and individuals have ready access to the latest information available. This results in more orders through greater options, better use of labor and machines and more efficient stock holding.

Thus, efficiencies derived through the use of a bill of materials aid the project manager in realizing faster time to the market, meeting customer demand, withstanding adverse market conditions, and achieving enhanced profitability.

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