Introduction

Manufacturers rely on the information that is included in the bill of

materials (BOM) to build a product. The bill of materials typically
includes part names, part numbers, part revisions and the quantities
required to build an assembly. Thorough BOMs can include more
descriptive information too, for example, the unit of measure or
procurement type. BOMs that have printed circuit board assemblies
(PCBAs) contain a column for listing reference designators.
To manage what can be a tremendous amount of information,
companies often use either Excel spreadsheets or a dedicated BOM
management system like Arena PLM. Below are examples of how a bill
of materials for a GPS navigation product would look in each system.

The BOM defines how a product or service is designed, what parts are ordered and how it is assembled. It follows the
product every step of the wayfrom the idea all the way through to the user.

2. Create a routing for Item ##1040 using the following table

From purchasing, manufacturing, assembling, and ultimately selling products, keeping track of the
entire production process stage-by-stage can be a challenge. Many small to midsized enterprises
(SMEs) that use enterprise resource planning (ERP) applications, like SAP Business One, have
found that having Bill of Materials (BOM) at their disposal can help them overcome these common
production related challenges; making the overall production process much more efficient, accurate,
and timely.

For many companies, the production process starts with raw materials and the creation of
a production order which contains all of the materials and steps required to produce an item within a
predefined time frame. The materials required for a production order can be found in the BOM
generated by SAP Business One. The BOM contains a hierarchical arrangement of components that
lists all of the raw materials and child or sub items required to assemble and produce a finished
product.
Without an integrated ERP solution, the generation of BOM and the overall production process is
much more complex and error prone due to the challenges associated with manual processes and
in-house legacy systems. These challenges include things like managing of inventory across
multiple warehouse locations; tracking and recording inventory movements; ensuring enough raw
material and parts are created and ordered at the time of production; calculating shortages or
surplus inventory; and access to real-time information.

About Bills of Material

Use a bill of material to detail the specific items and quantities that are used to assemble the parent
item, define the items as parents or components in the assembly, and provide the foundation for
Product Costing and Master Production Schedule programs. It is the basis for creating a parts list for
a work order in the Shop Floor Control system.
A bill of material defines the manufacture of any of the following:

Finished products (end items)

Subassemblies

Components

A properly structured bill of material:

Supports the Product Costing system

Allows for efficient storage and maintenance of bill of material information

Reflects material flow and how the product is built

Permits easy order entry

Allows the system to display the master schedule in the fewest end items
possible

Allows for forecasting of optional product features

An inaccurate bill leads to:

Poor material planning

Material shortages

Inaccurate product costing

Increased production costs

Delayed shipments

Excess and obsolete inventory

Poor specification control

Increased product liability

A bill of material is used as a master list when generating parts lists for work orders, cost rollups,
lead time rollups, MPS/MRP/DRP generation, and kit processing for sales orders.

Creating a Bill of Materials

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Creating a Bill of Materials

All manufacturers building products, regardless of their industry, get
started by creating a bill of materials (BOM). The BOM, which is
essentially a comprehensive list of parts, items, assemblies and subassemblies, can be understood as the recipe and shopping list for
creating a final product. A BOM explains what to buy, how to buy and
where to buy, and includes instructions for how to assemble the
product.

Because the bill of materials pulls together all sorts of product

information, it is common that several disciplines (design and
engineering, document control, operations, manufacturing,
purchasing, contract manufacturers and more) will consume data
contained within the BOM record to get the job done right. The BOM
guides positive results from business activities like parts sourcing,
outsourcing and manufacturing, so it is important to create a BOM
that is well organized, correct and up-to-date.
And for companies that outsource manufacturing activities, it is
especially important to create an accurate and revision-controlled bill
of materials. Any time the BOM is handed off to a contract
manufacturer (CM) or supplier, it should be correct and complete
otherwise you can expect production delays.

What to include in an effective bill of materials

Because one of the main functions of the BOM is to ensure that the
product is built right, it is best to include specific pieces of product
data in the BOM record. Whether you are creating your first bill of
materials or are looking for ways to improve how you create a bill of
materials, here is a high level list of information to include in your
BOM record:

BOM LevelAssign each part or assembly a number to detail

where it fits in the hierarchy of the BOM. This allows anyone with an
understanding of the BOM structure to quickly decipher the BOM.

Part NumberAssign a part number to each part or assembly in

order to reference and identify parts quickly. It is common for
manufacturers to choose either an intelligent or non-intelligent part
numbering scheme. Whichever scheme you use, make sure you avoid
creating multiple part numbers for the same part.

Part NameRecord the unique name of each part or assembly.

This will help you identify parts more easily.

PhaseRecord what stage each part is at in its lifecycle. For parts

in production, it is common to use a term like In Production to
indicate the stage of the part. New parts that have not yet been
approved can be classified as 'Unreleased' or 'In Design'. This is
helpful during new product introduction (NPI) because it allows you

to easily track progress and create realistic project timelines.

DescriptionProvide a detailed description of each part that will

help you and others distinguish between similar parts and identify
specific parts more easily.

QuantityRecord the number of parts to be used in each

assembly or subassembly to help guide purchasing and manufacturing
decisions and activities.

Unit of MeasureClassify the measurement in which a part will

be used or purchased. It is common to use each, but standard
measures like inches, feet, ounces and drops are also suitable
classifications. Be consistent across all similar part types because the
information will help make sure the right quantities are procured and
delivered to the production line.

Procurement TypeDocument how each part is purchased or

made (i.e. off-the-shelf or made-to-specification) to create efficiencies
in manufacturing, planning and procurement activities.

Reference DesignatorsIf your product contains printed circuit

board assemblies (PCBAs), you should include reference designators
that detail where the part fits on the board in your BOM. Capturing
this information in the BOM can save time and help you avoid
confusion down the road.

BOM NotesCapture other relevant notes to keep everyone who

interacts with your BOM on the same page.
Documenting all this information in your BOM will keep business
activities and manufacturing tasks on target. In addition to capturing
this information, you should also consider the following questions
when creating a bill of materials.

4 key questions you must answer before creating a bill

of materials
1.

Will you document consumables in your BOM record?

Many manufacturers second-guess the decision to include glue, wires,
fasteners and other non-modeled parts like labels and boxes in their
BOM record. But if the part does not make it into your BOM, it might
not make it into your product. So take the time to document these
parts.

2.

How will you attach files to your BOM record?

As you create your BOM, keep records of supporting documentation
like CAD drawings, part datasheets and work instructions. It is best to
also associate these files with their specific BOM level items.

3.

Who is going to use the BOM record?

It is important to include as many details as possible in your BOM.
You may never interact face-to-face with some of the people utilizing
your BOM, so it should convey all the information they might need

throughout the products lifecycle.

4.

How will you reconcile your BOM record?

Your BOM record may go through several iterations during the design
phase, so you should have a way to distinguish between multiple BOM
record versions. That way, when it is time for production, you can be
sure each person who uses your BOM is consulting the correct version.

An accurate BOM supports efficient manufacturing

processes
Creating a bill of materials is not only a necessary step in the product
development process, it is also what makes your product design a
reality. Before you create a BOM record, it is important to consider
who will utilize the information and how you will maintain and
manage all associated product documentation like part datasheets and
CAD files. Develop more efficient manufacturing practices by
capturing detailed part information when creating a bill of materials.

Choosing a BOM management

tool

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As a product idea moves from conception through prototype and

production, a well-managed bill of materials (BOM) is a critical part of
the product development process. To properly manage the BOM, most
organizations select a BOM management tool to help ensure the most
current product revisions are seen by all members of the production
team.

What is a Bill of Materials?

When it comes to building a product, the bill of materials is the single
most important deliverable that an engineering team hands off to a
manufacturing team. At its simplest conceptual level, the BOM is a list
of parts needed to create a finished product. In real-world usage,
however, the BOM is not just a parts listit is a complex collection of
individual pieces of information and the relationships between them.
In addition to describing a wide variety of parts and how they relate to
one another within a product, the BOM is also a vendor list that
specifies how huge sums of money are spent.

The importance of the BOM is widely recognized in the manufacturing

community and billions of dollars have been spent to develop tools
that help support the management of BOMs throughout the design
and manufacturing process.

Why is a BOM management tool important?

Organizations find BOM management tools helpful in mitigating the
difficulties of product sharing between the manufacturing and
engineering departments. The engineering project manager, who must
estimate costs and analyze engineering tasks, is generally the first
member of the organization to compile the BOM. The manufacturing
department, who uses the BOM to build the product, is not often
involved in the creation of the BOM. This handoff can present a
challenge if the parties giving and receiving product data are not on
the same page. A BOM management tool can help combine input from
engineering and manufacturing teams and ensure both teams work
from the same product data.
As the design process moves from early development through the
handoff to production, a BOM can become increasingly complex and
difficult to maintainespecially for organizations who do not have a
proper BOM management tool. Frequently, engineering project
managers have to create and maintain several versions of the BOM to
meet the needs of different audiences, including engineers, contract
manufacturers (CMs), Printed Circuit Board (PCB) design services and
other vendors. Without a dedicated BOM management tool to handle

continually evolving versions of the BOM, product data sharing can be

a time consuming and tedious task, not to mention error prone.
Because some organizations choose not to implement a BOM
management tool, serious consequences can come from poorly
managed BOMs. For example, if management does not have a way to
access product costs during the development phase, when at least 70%
of product costs are determined, an organization can miss cost saving
opportunities.
Additionally, it becomes more difficult for the design team to
collaborate with the supply chain and one another. Finally, the
company retains little of the knowledge assembled during a products
development because it has no way to organize the information and no
place to store it. This can present major problems down the road.

What to look for in a BOM management solution

There are tools specifically equipped to help small to mid-size
manufacturers with their BOM management needs. When looking for
a BOM management tool, it is important to invest in a tool that will
support both short-term and long-term product development
strategies.

Three key features to look for in a BOM management

tool
In order to ensure that a BOM management tool will help an
organization efficiently manage product data and streamline the

product development process, an organization should select a BOM

management tool with the following key features.
Firstly, it is important that the BOM management tool empowers the
BOM as a data framework, so it can serve as the single product data
source for the entire organization in a single location. Secondly, it
should place the BOM into a collaborative workspace so that design
team members can work with the data in a structure that encourages
progress, creates visibility and enables smoother operation throughout
the design chain. Lastly, the tool should be accessible outside the
boundaries of the organization, so that the design chain and supply
chain become integrated partners in product development.
A BOM management tool that combines these three elements will
improve the efficiency of the bill of materials for individual users and
overall data sharing across all levels of the supply chain.

Does Excel work as a BOM management tool?

In almost all organizations, from single-person consultancies to
Fortune 500 corporations, theengineering BOM (EBOM) is initially
created and maintained in a spreadsheet program such as Microsoft
Excel.
While this may be a good place to start, spreadsheets are not ideal
BOM management tools. A BOM is a complex collection of
information about parts, vendors, manufacturers and the relationships

between them used by a wide variety of people within the enterprise

and throughout the supply chain.
Because of the inherent complexity of BOMs, efficient BOM
management demands a multi-user, relational database that can
support a multitude of data types, entries and relationships and can be
accessed by everyone who needs to see itregardless of their
geographic location. Since a spreadsheet is neither multi-user nor
relational, using one as a BOM management tool creates a severe
mismatch between the tool and the task.

BOM Management with Arena PLM

Arena provides a dedicated BOM management tool that engineers and
manufacturers can utilize to manage bill of materials and related
product data. With Arena PLM, the bill of materials is maintained in a
centralized location making it easy to keep product data up-to-date.
BOMs stored in Arena PLM, can be shared with suppliers and contract
manufacturers; so partners have access to the product data they need
to build the right product with the right parts. For more information
on Arena PLM, check out our product page.

Manufacturing BOM: Critical for

Successfully Building a Product

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The devil is in the detailsand the details of a product

are all in the manufacturing bill of materials
The bill of materials is the core of any hardware product. Having an
accurate, clean manufacturing bill of materials (MBOM) is important
because it provides details on all the parts required to build a
shippable product. Unlike the engineering bill of materials
(EBOM) which is organized according to the design of a product, the
manufacturing BOM is structured to support how a product is
assembled. Without a good MBOM, your product is at risk of being
built slowly, incorrectly or not at all.

What is a manufacturing BOM?

The manufacturing BOM, also referred to as the manufacturing bill of
materials or MBOM, contains all the parts and assemblies required to
build a complete and shippable product. This includes packaging
materials like colored boxes, CDs and printed quickstart guides. It also
incorporates items that are used in the assembly process, like liquid
adhesives or tape. Both off-the-shelf (OTS) components and custom,
made-to-specification (MTS) parts belong on a manufacturing bill of
materials, as well as non-tangible items like firmware. Any item that
can be found in the final boxed product needs to be included at some
level of the manufacturing BOM.
Some parts require processinglike pad printing, painting or
programmingbefore they are ready to be assembled into a final
product. While only the altered part is assembled into the final

product, both the pre-processed base part and the finished part are
represented on the manufacturing BOM. The manufacturing team
needs to know about all the processing steps in order to make critical
decisions about which steps will be performed in-house and which will
get outsourced to a separate vendor. The location of the processing
may be changed during the life of the product to reduce costs, improve
quality or increase flexibility.

Only the programmed chip is in the final product, but the blank IC and the correct revision of firmware are needed
to create the programmed chip. Manufacturing often changes the location of easily transferred processes like
programming depending on the production lifecycle stage. For example, beta and early production units may be
programmed in-house while mature products with stable software can be programmed at the electronics
manufacturing services (EMS) vendor who supplies the PCBAs.

Why is the manufacturing BOM important?

The manufacturing BOM enables the final transition from product
concept to a concrete, touchable object. The more accurate and
complete the contents of the manufacturing bill of materials are, the
better the decisions you can make about how to get the product
efficiently and cost-effectively into the customers hand.

How and where a part will be made impacts the purchasing of

components and processed parts, the availability of inventory and the
contents of build kits on the manufacturing line. It determines what
steps happen on the assembly floor during the production run and
what happens ahead of time (possibly at another vendor). Options like
these create trade-offs between time, money and control, and those
decisions need to be managed as part of the new product introduction
(NPI) process. The accuracy and completeness of a manufacturing bill
of materials allow a company to make better trade-offs and improve its
ability to successfully ramp, build and introduce a new product.
The manufacturing bill of materials drives manufacturing, operations,
purchasing and logistics for a product. The information from the
MBOM feeds the business systems used to order parts and build the
product. These include enterprise resource planning (ERP), materials
resource planning (MRP) and manufacturing execution system (MES)
solutions.
Inaccuracies in a manufacturing BOM lead to problems: If the wrong
parts or wrong quantities of parts are ordered, a company will not be
able to build enough productor any product at all. This leaves the
company with unusable components that need to be returned or extra
parts that tie up money in inventory. For manufacturing and
operations departments that are already running lean, cleaning up
these mistakes is a hassle that wastes time and money. Depending on
the size of the original mistake, the amount of money lost could be
large enough to impact the companys bottom line.

How does an MBOM differ from an EBOM?

Manufacturing Bill of Materials (MBOM) vs. Engineering Bill of
Materials (EBOM)
MBOM

Organized into subassemblies that reflect the manufacturing process

Represents the physical product, packaging and included documentation

Contains all components required to build the product MTS, OTS,

mechanical, electrical, software & firmware

EBOM

Organized according to CAD/EDA tool and engineers preferences and

processes

Represents only the physical product being engineered, not the

packaging or manufacturing consumables

Often includes items for a single engineering discipline only, summarizing

or excluding items from other disciplines

The major differences between the manufacturing bill of materials

(MBOM) and the engineering bill of materials (EBOM) are in their
structure and depth. Manufacturing BOMs must contain all the parts
and assemblies. If an item needs to be purchased, processed or
inventoried to make the product then it needs to be represented on the
MBOM. All these parts are structured into the manufacturing bill of
materials based on how the product is assembled. For instance, if a
product has ten 6-32 screws, each screw is listed in the manufacturing
BOM in the subassembly where it is used. On the other hand, the
engineering BOM for this product may only have one line item that

lists the 6-32 screw with a quantity of 10. The engineering BOM may
not provide any information about how parts relate to each other.
In fact, there may be more than one engineering BOM because
different engineering departments each create their own. The
structure of the mechanical BOM is generally derived from the
mechanical CAD model. That BOM is organized according to the
engineers design process and often contains groups of unassociated
parts collected together for the engineers convenience in working with
the model. Mechanical BOMs commonly list printed circuit board
assemblies (PCBAs) as a single item because adding hundreds of tiny
components is tedious, slows work on the CAD model and adds little
value to the mechanical design process. Electrical BOMs, on the other
hand, only show all the components that make up the PCBAs; they
dont deal with the rest of the product at all. And the firmware
required for a product may not be listed on either the mechanical or
the electrical BOM!
In addition to being more complete, MBOMs tend to have more levels
to describe each stage of the assembly process in more detail. For
example, the lens subassembly that needs time to cure will be called
out separately with its own part number and manufacturing work
instructions (MWI). In the EBOM, the individual lenses and mounts
would exist, but they would be included in a larger optical assembly.
For the mechanical engineers, the many subassemblies needed by
manufacturing add layers of complexity to the structure and make it
harder to work with the CAD model.

Better manufacturing BOMs enable better decisions

A detailed manufacturing bill of materials is critical to the successful
management of manufacturing resources. With a deep and accurate
MBOM, the new product introduction (NPI) process is smoother, and
the ramp to full production is more controlled. With knowledge about
ALL components and steps in the manufacturing process, the
operations team can make appropriate trade-offs throughout the life
of a product.
Engineering
Engineering items are items that your engineering
function creates and that are not ready for
production (created in Oracle Engineering).
Manufacturing items are items you use in
production (created in Oracle Inventory).
How do they differ?
Engineering items have the item attribute
engineering item selected.
Manufacturing items have the item attribute
engineering item.
Engineering items are not visible in Oracle
Inventory.

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Engineering and Manufacturing Items

The windows that you use to create engineering and manufacturing items are
identical. They differ only in the following ways:

 You create and change engineering items using the Oracle Engineering
windows. You can create and change manufacturing items using the
Oracle Inventory forms.
When your engineering items are ready for production, you can transfer or
copy them to Oracle Inventory as manufacturing items. When you transfer
an engineering item, it becomes a manufacturing item. When you copy an
engineering item, it remains and you create a manufacturing item with a
different item number.

Specify Components of BOM

You use bills of material to specify the component items that you use to:
Manufacture assemblies and subassemblies
Configure sales orders
Explode aggregate forecasts
Calculate standard cost

Bill of materials or BOM.

BOM is the term used to describe the "parts list" of components needed to complete a saleable
Finished Goods (end-item).
Referred as recipe.

A bill of material is a formally structured list for a father item or factory made item (semifinished or subassembly or finished) which lists all the component parts of the father item with
the name, quantity, and unit of measure of each component, called child item in ERP.
Whenever the design changes user should update the BOM. ERP will give revision number
automatically. User can make BOM up to n level, in other words there is no limit in ERP for
making multi-level BOM. The semi-finished goods is also called Factory made item.

Topics discussed: Bill Of Materials, BOM, ERP Modules, BOM For Food, BOM For
Plastic, BOM For Discreet Production, Where BOM Is Used, What Is BOM, Bill Of
Materials For Manufacturing Industry

Examples of BOM such as, BOM for automobile ancillary, BOM for discreet product, BOM for
construction industry, BOM for corrugated box, BOM for large industrial systems, BOM for
special purpose machines, BOM for project base industry BOM for assembled products, etc. is
shown above. To view various examples of BOM click on the thumbnail view above.

These

examples are just to learn the concept of the BOM, actual BOM may be somewhat different
than shown above.

BOM module is an important module in ERP. BOM is a pivot around which ERP rotates.
However, this requires good amount of time and effort to make the master data file. Usually
the technical person, design experts, or a person who knows how the final product is made
prepares the BOM. In other words, anybody and everybody in an organization is not
permitted to access the BOM master. This is one time effort, but must be done to get full
benefit of ERP software. If the product is not standard or child items are not standard, it may
result into many BOMs, that is why it may be a good idea to standardize the child items as
much as possible.

In ERP create the BOM master database. User can export the BOM to MS Excel sheet format.
The BOM view shows father item and child items relationship graphically.

The BOM may change depending on the Finished Goods (end-product) and production method.
For example, in case of process production, there will be only one child (main raw material)
and one father item. Whereas in case of assembly production, there may be many child
items. Add similar BOM feature allows creating a BOM from existing BOM of a similar product
and then saving after minor changes as new BOM tremendous time saving feature for large
BOM.

Bill of Material with "Copy similar BOM" feature. User can print the BOM using 'BOM reports
menu' in MS Excelsheet format. The excel sheet can be saved as soft copy or user can print
the excel sheet from Excel.

Bill of Material for furniture industry. Left side shows "child items".

Where BOM is used? The BOM is integrated with many ERP business processes as follows:

BOM can be used for preparing a work order (job card) for own production or at the
third party. This work order shows the list of child items that is required to produce the
father item. BOM is also used in preparing the cost sheet. Marketing executives can
use BOM for preparing estimates. BOM can be used for MRP or Material Requirement
Planning. To compute the shortage quantity the BOM is exploded automatically by ERP

software to list the item/s required to be purchased to fulfill a given sales order (ORI).
This MRP report, in turn will help purchase officer to procure items. BOM master is also
helpful in keeping track of revision numbers or engineering changes, called R number.
This R number is also reflected on the work orders etc. to help user.