An engineering bill of materials
(BOM) is often compared to a cake recipe. Both identify and list the components of a
finished product. While the cake recipe identifies ingredients such as flour, sugar, and
eggs, the BOM identifies and lists all raw materials, subassemblies, and even intangibles
that contribute to the costs of manufacturing a product. While a recipe and a BOM are
similar, the consequences of inaccuracy are not. The wrong ingredient in a cake recipe may
create a "flop" that ends up in the garbage, a loss, but one that could be
resolved in a matter of hours by baking a second cake. Producing product with a wrong
component in an engineering BOM is not so easily resolved. It can negatively impact your
company's performance through
- incorrect costing of product,
- inaccurate inventory levels,
- accounting variances,
- customer returns,
- production of out-of-spec units,
- potential product liability claims.
An accurate engineering BOM is a prerequisite to developing other operating systems.
It's a "building block," a central source of information that supports product
costing, inventory control, and engineering documentation.
A bill of materials may be in a tree form, or more typically in a printed document
indented to the lowest level required to accurately describe all material and
subassemblies of the parent (or level one) product (Table 1).
Whether you utilize the tree or indented method, the key to understanding BOMs is their
leveled structure with a "bottoms up" or "goes into" organization. For
example, level three components always "go into" level two components, level two
components always "go into" the parent (or level one) finished product. However,
not all components at a given level require a supporting or lower level. If a sub-assembly
at level two is a purchased part, there is no need for a lower, or supporting level (For
example, PN15476-62009 [I] Control). Conversely, if a level two component is fabricated
in-house, all materials that "go into" the level two component must be
identified and listed at a lower or supporting level (For example, PN14644-38389 [AA]
Precipitator Assembly). The BOM should be considered an engineering document that
accurately identifies and lists the components required to produce a given product at a
given revision level.
BOMs can be designed to reflect varying degrees of complexity, depending upon the
company needs. Utilized as a basic engineering document, the minimal requirements for BOM
information should include
- structure level,
- part number,
- revision level,
- quantity required,
- unit of measure,
- description, and
- make or buy indicator.
BOMs may be single or multi-level, depending upon company inventory and marketing
policies. BOMs can be enhanced to include costing information by including labor and
material costs in each lower level component and adding these costs from the bottom to the
parent level. Application of overhead rates will then provide fully burdened manufacturing
costs. Caution must be exercised when converting engineering BOMs to cost BOMs. Labor and
material standards on cost BOMs are an estimate, and provide an accounting standard for
the fiscal year. Consequently, they are a reference that must be adjusted by both labor
and material variances to obtain actual costs.
The accuracy of BOMs is paramount when considering a switch to computerized MRP
systems. Basic guidelines for BOM structure include:
- Each part number must be uniqueÄno duplication allowed.
- Part number identification system must be compatible with software. For example, some
software requires numeric identification only.
- Units of measure on BOM must be as purchased. For example, if purchased in feet, express
usage in feet.
- Material use must be adjusted for predictable shrinkage.
The engineering BOM and routing sheets are two of the most important documents
associated with the manufacturing process. The importance of maintaining accuracy cannot
be overemphasized when considering the substantial impact that they have on product
costing, inventory, and production management.
You can find more inventory related articles here:
Inventory accounting, memory, and the birth of writing
Amateurs think strategy, Generals think logistics
Ahead of their time
Barcodes, sales and inventory control
Push, pull and production
Lean Manufacturing (minimizing waste with TPS and its descendants)
History of Lean Manufacturing
Engineering bill of materials by Jon Clancy