A Bill of Materials (BOM) is a structured list of the materials, components and subassemblies needed to make a product. It tells a manufacturer what is required and how much of each item is needed. A BOM is also called a product structure or parts list.
For example, a furniture BOM might list the wood panels, screws, hinges, handles and packaging needed to make one cabinet. Each item has a quantity and may also have a unit of measure, such as pieces, metres or kilograms. A more complex product can have several levels. A finished cabinet may contain a door assembly, and that assembly may contain panels, hinges and other parts. This is called a multi-level BOM.
Manufacturers can use different types of BOM for different purposes. An engineering BOM describes how a product is designed. A manufacturing BOM shows the materials and assemblies needed to build it. A sales BOM can describe the items included in a product sold to a customer. The names and exact uses vary between ERP systems, so a company should define how it will manage each BOM.
A BOM is important for production planning and material planning. An ERP system can use it to calculate how much material is needed for a planned quantity of finished products. For example, if one unit requires four screws, an order for 100 units requires 400 screws, before allowing for any extra material needed for waste or production losses. The system can compare this demand with available stock and help identify what must be purchased or produced.
A BOM also supports product costing. When the system knows the materials and quantities required, the company can estimate the material cost of a product. Actual costs may change because of supplier prices, waste, substitutions or production differences.
BOMs need to be controlled and kept up to date. A new product design or material change may require a new version. The company should know which version applies to each order and when it became valid. This helps prevent the wrong components from being purchased or used in production.
A BOM usually describes what goes into a product. It does not, by itself, explain every production step or where each step takes place. Those details are often recorded in a routing or production process. In an ERP system, the BOM and routing work together: the BOM defines the materials, while the routing defines the operations used to make the product.
