When the manufacturing of any product takes place, it is required to collect all the raw materials needed to produce that particular product. The manufacturing stages require a massive number of elects depending upon the type of the product, including several components, assemblies, raw materials, subassemblies, etc. Therefore, it is required to manage the raw materials properly and professionally, which led to the rise of the bill of materials.
The Bill of Materials is the comprehensive listing of the raw materials required for the manufacturing process. The Bill of Materials is also called product structure, as it consists of the overall quantity of the raw material needed for production. An optimal bill of materials must include the estimated cost of the raw materials for the product.
Did you know?
The bills of material help ensure the manufacturing process for new products is on track and will evolve as your new product development progresses.
What is the Definition of Bills of Material?
The Bill of Material (BOM) is the source of information about the raw materials required in the production of an item. The Bill of Material is a complete structured listing of the raw materials needed in the manufacturing process. A bill is an optimal BOM if it consists of the record of all the raw materials and their estimated costs and is represented in a hierarchical structure to understand the manufacturing process better. It is required for the BOM to be optimal.
Otherwise, it may cause a significant delay in production. These bills are generated based on the projects and the owner's needs or according to the business needs. The main motive of the bill is to maintain the proper flow of manufacturing and prevent any possible reasons for the delay in the procedure.
The Format of Bill of Materials
The Bill of Materials is formatted in a decent way to better understand the materials used, quantity and overall estimation. The format of the BOM is divided into several parts.
Also Read: What are Raw Materials in the Manufacturing Industry?
1. Part Number
Every part, component, or raw material has a specific number to identify that particular item. You can use these part numbers for referencing a specific element. There are three categories of part numbers, and they are
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Intelligent: These are the category of the part number that you can arrange in a particular manner to define or determine a specific term, i.e., the date of manufacturing, expiry date, the weight of the product, etc.
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Unintelligent: These are the part numbers that do not have any particular meaning towards the components, parts, raw material, etc. These are just the random numbering of the elements during the manufacturing process.
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Vendor Assigned: Usually, sometimes the vendor assigns a number to the parts or components to neglect the confusion and make the sorting easy and convenient.
2. Part Name
Every part or component has its unique name, which helps the employee to identify the product. These assigned names make production easy and convenient.
3. Phase
The phase of a product, component, raw materials, etc., determines the stage of its life cycle. The phase is termed "In Production", "Unreleased", or "In design". It helps in tracking the product's life cycle seamlessly.
4. Description
The description provides more detail than that of a part, component or raw materials. This helps identify the basic working and the role of that particular item in the production—for example, the size of a machine screw.
5. Quantity
The Bill of Materials consists of a column under "quantity". This column identifies the number of parts or components required in the overall construction of a product.
6. Unit Measure
The unit measurement of any product, component or raw material determines the singular entity of a specific element. This is very much essential in the evaluation of the overall cost.
7. Procurement Type
The procurement determines the overall chronology of a product, i.e., from where it is extracted, from where it is designed, from where it will be shipped, etc.
8. Reference Designator
Consider an example of a circuit board. Therefore, the reference designator determines the production location of every little part used in the circuit board.
9. Notes Section
The notes section is the additional section that you must fill according to requirement and need. This section has the extra and detailed knowledge about an element or procedure you need to carry out, which is an exceptional process.
Types Of Manufacturing Industries That Use BOM
The Bill of Material is designed and formatted according to the manufacturing company. Therefore, these bills are different from each other, from industry to industry or company to company. Mostly, the discrete manufacturing industries are the ones that use the Bill of Materials. The Bill of Materials identifies that a particular element is finished, i.e., produced entirely, therefore can be used in production and is liable for counting. Most commonly, the cosmetic industries, paint industries, juice companies, etc., are the process manufacturing industries that widely use the BOM for the proper and convenient manufacturing process flow.
Different Types Of Bills Of Materials
We can categorise The Bill of Materials into different groups based on manufacturing units and the nature of the manufactured or the finished product. Based on the raw materials and their production, we can categorise the BOM into the following groups:
Manufacturing Bill of Materials
The manufacturing Bill of Materials consists of all the parts, components, assemblies or subassemblies required for the final product's manufacturing. It helps in running the production smoothly and seamlessly.
Service Bill of Materials
This bill consists of the list of the elements that are required to fulfil a service by a person, for example, installing, restocking, repairing, etc.
Production Bill of Materials
The production Bill of Materials consists of all those materials converted into the final product after the initial production procedure.
Multi-level Bill of Materials
The multi-level Bill of Materials consists of all the elements, raw materials, components etc., that you require in the production. It includes a detailed description of each element.
Engineering Bill of Materials
The Engineering Bill of the material consists of all the parts, components and elements required for the construction of a particular product based on the drawings, relations and the requirement of the firm.
Sales Bill of Materials
The Sales Bill of Materials consists of all the items being purchased and sold accordingly.
Single-level Bill of Materials
A single-level Bill of Materials comprises all those elements required only up to one level, i.e., these are the products used in small scale business work.
Also Read: GST Billing Software Return Filing & Accounting Software
Format Of Cost Estimation Using Bill Of Material
The cost estimation using a BOM is quite convenient. However, you can do the formatting of the Bill of Materials that considers the cost estimation quite differently. The Bill of Materials used for cost estimation has several columns, including the serial number, item name, quantity of items, rate per unit quantity, cost estimation and overall cost evaluation. You can fill these particular columns according to the purchased product, and the rate per quantity of that product will give you the overall cost of the purchased product. Listing down the products one by one on the bill will provide you with the overall summation of the cost of all the purchased products, giving out its total evaluation.
Examples Of Bill Of Materials
One of the general examples of the Bill of Materials is depicted in the following table, which displays the bill of the materials required in smartphone production.
|
Type of Product |
Name of Inventory |
Quantity |
|
Components |
LED Display |
1 Nos. |
|
Components |
Memory and Storage |
1 Nos. |
|
Components |
Battery |
1 Nos. |
|
Components |
Camera |
2 Nos. |
|
Components |
Processor |
1 Nos. |
Conclusion
When it comes to manufacturing companies, it is essential to record the production. Therefore, the BOM is used to run the procedure seamlessly and conveniently. The Bill of Materials is the record that keeps the quantity of the products manufactured. A particular name, designation and description make it easy for the manufacturing industries to sort, maintain and arrange the products accordingly. These bills of materials are used by several vendors in the field of engineering, sales, services, etc., to keep the overall purchasing and selling of the products. Based on raw material production, we can categorise the BOM into many groups.
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