What is Bill of Material (BOM) in Manufacturing Industry ?

The Bill of Materials, known as BOM is a product structure of required raw materials, parts and assemblies in exact quantities needed to manufacture the final product. The BOM is a very essential part of the manufacturing industry. Without BOM, you cannot have an idea on what you are going to produce. The BOM pulls all the information about the FG. The manufacturers put great effort in creating a bill of material before any start of a new project. This is the initial and crucial phase of production, as the results directly rely on efficient BOM.

Let us put it as simply as possible, Imagine you are going to make a Fan, then the bill of material will include the following items,

  • Fan Blades
  • Fan Stamping
  • Fan Shaft
  • Fan Capacitor
  • Fan Downrod
  • Fan Canopies
  • Fan Bearings

Now if you need to produce more fans then the quantity and raw materials vary accordingly.

Structure of BOM :

The BOM can have two types of structure depending upon the complexity of the product, namely Single Level and Multi Level BOM

Single Level BOM – This BOM can be as simple as the product involving only a few process items to be made and assembled together. 

Multi Level BOM – Multi level BOM is used for more complex products involving N number of process items to be produced. This captures each and every single detail of the product structure. Hence any issues can be sorted out easily during production.

BOM in Manufacturing industry

Source : Types of BOM

Creating an effective Bill of Material :

Once you have received a new sales order, then the next step will be to create an effective BOM. In simple terms, BOM tells you how you are going to manufacture the product. It explains what are the sub assemblies needed, how much raw materials are required, the parts and items needed to be purchased and so on. Hence the complete success of a project relies on creating an efficient BOM. It can avoid unnecessary mistakes during production, which may cause delay in delivery. Using an effective BOM ensures that you have a fail proof system. It enables everyone on the shop floor working on the same page.  

Now let us see what information a BOM entry must have. A screenshot of Freedom ERP’s ientERPrise BOM entry,

BOM in Freedom ERP

Elements of BOM :

Since it is the most important phase of production, to make it more effective and conveyable you will have to consider the persons who will utilize this information. Hence create a more detailed entry which can be well understood by all levels of workers. Following are the labels included in creating a BOM entry.

  • Process Item – The sub assemblies, parts and items that combinely make finished goods.
  • Required Material – The materials required to make that particular item you mentioned above.
  • Unit of Measurement (UOM) – The specified materials need to be purchased or allocated with an accurate unit of measurement. For example, metals in kilograms or numbers.
  • Required Quantity – How many such items are required to meet the final output product.
  • Scrap Quantity – Scrap is nothing but the remains of the used raw materials after processing it.
  • Rework Process – The scrap remains can also be reworked and used for other items.
  • Additional remarks – There is an additional column to add more information about the process items, so that everyone can follow the same instruction.

Benefits of Bill of Material in Manufacturing :

As we all know the complexities involved in manufacturing industries, it is wiser to create an efficient BOM to be on a safer side. Below are the benefits you could expect.

  • Inventory Control :

Since bill of material states all the required materials for production, it has been already allocated from the stores to the shop floor. Even if there is no stock or minimum stock then the system automates a reminder about it. Hence making sure you purchase the materials and you wont run out of stock during a hectic production schedule. 

  • On-time delivery : 

Once the inventory control is achieved all other processes seem to function uninterrupted. This results in smooth production and hence the deliveries made on time. The bill of material gives you an idea to predict the time required to complete the process. This as a continuous practice yields better results in accurate predictions for future projects.

  • Reduced wastage :

Inventory is another form of money that you invest in a manufacturing industry. Hence when your inventory is under control, it results in efficient and optimized usage of materials. You can avoid items being stored for a long period and just throwing it away.

  • Good alternative for Excel :

BOM has different structures depending upon the product that you are going to manufacture. Excel can only be used for simple products with less requirement and minimum number of processes involved. When it comes to multi level structured BOM, then it is difficult to maintain the accuracy. Hence ERP Software can be used for such complex processes.

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