written by | April 25, 2022

Bill of Materials Definition, Examples, Format and Types

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Table of Content


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

  • 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.

  • 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.

  • 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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FAQs

Q: What type of manufacturing industry uses the Bill of Materials?

Ans:

Most commonly, the discrete manufacturing industries use the Bill of Materials to record their productions. Some of the process manufacturing industries that use the Bill of Materials are paint companies, juice companies, cosmetic industries, etc.

Q: What are the types of Bill of Materials?

Ans:

Based on raw material production, we can categorise the Bill of Materials into several groups, namely, Manufacturing Bill of Material, Sales Bill of Material, Multilevel Bill of Material, single-level Bill of Material, etc.

Q: What is the structural format of the Bill of Materials?

Ans:

The Bill of Materials consists of several columns, and each column has its particular designation. Some of the components of the structure of the Bill of Materials are part name, phase, measurement unit, part number, description, quantity, etc.

Q: What is the Bill of Materials?

Ans:

The Bill of Materials is the record that keeps the information about the products, parts, components or raw materials used in the manufacturing industry to produce products.

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The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.