Bill of Materials (BOM): Meaning, Example, and Format

What is a bill of materials (BOM)?  

A bill of materials (BOM) is a structured list of every component, subassembly, and raw material needed to build one unit of a product, with the quantity and unit of measure for each. It tells engineering, purchasing, and production what the product is made of and in what amounts.

In simple terms, it is the recipe for an assembled product. Food, cosmetics, and chemical makers call it exactly that, a recipe or formula.

Several teams rely on the BOM:

• Engineering uses it to define the product.

• Purchasing uses it to know what to buy.

• Production uses it to know what to build with.

• Finance uses it to work out what the product costs.

It is also the starting point for material requirements planning (MRP), which uses the BOM to work out what to order and when.

A BOM covers materials only. Build steps and times sit in a separate record called the routing, and labor is normally costed there too. Construction uses a similar-sounding document, the bill of quantities, which is covered in the FAQs.

What a bill of materials includes  

Each line in a BOM describes one part. Software names the fields differently, but most BOMs carry the ones below.

Three of these fields trip people up more than the rest.

Quantity is per parent, not per finished product: Each quantity tells you how many go into the item directly above it in the BOM. Say a panel uses two LED modules, and each module holds two LED strips. The strip line reads, because two strips go into one module. The finished panel actually needs 4. Most systems read quantities this way, but check yours before you enter anything.

Units must convert: Suppose you buy wire in 100-meter rolls and use it by the meter. You need to record that 1 roll equals 100 meters. Without that conversion, a need for 125 meters can turn into an order for 125 rolls.

One part gets one part number: Some businesses use codes that carry meaning, like FRM-4040 for a frame. Others use plain running numbers. Either works. What breaks a BOM is giving the same physical part two part numbers. That splits its stock and its cost across two records.

Bill of materials example  

Here is a simple BOM for the 40 W LED panel from the opening. One of its parts is a printed circuit board (PCB) base plate. All figures in this guide are illustrative and use a single, unnamed currency.

Every part goes straight into the finished panel, so this is a single-level BOM.

Single-level vs. multi-level BOM  

A single-level BOM, also called a flat BOM, lists every part directly under the finished product, like the example above. A multi-level BOM, also called an indented BOM, groups parts into subassemblies.

In the LED panel, the LED strips, PCB base plate, and thermal tape could be built first into an LED module. In a multi-level BOM, that module gets its own part number, such as SUB-LED-40, and its own short list of parts. The panel's BOM then lists one LED module instead of three separate parts. The panel still contains exactly the same materials.

Most small assemblers need only one level. Add a level when a subassembly is built ahead of time, stocked on its own, or used in more than one product. If a level exists only on paper, it adds work and gives nothing back.

Types of bill of materials  

Different teams need different things from a BOM. Engineers need to know what the product is. Production needs to know how it is built. Sales and service need to know what the customer bought and what can be replaced. That is why there are several types.

You may also see "modular BOM," a close cousin of the configurable BOM for products built from interchangeable modules. Enterprise resource planning (ERP) software vendors also use names like production BOM, assembly BOM, and template BOM. These are their own labels for variations on the types above.

Engineering BOM (EBOM)  

The engineering bill of materials describes the product as it was designed. For the LED panel, it lists the parts on the drawing, with specifications attached. It leaves out the carton, because packaging is not part of the design.

Manufacturing BOM (MBOM)  

The manufacturing bill of materials describes the product as it is actually built. Purchasing and production work from day to day. The example earlier in this guide is an MBOM, which is why it includes the carton.

Sales, service, and configurable BOMs  

• Sales BOM: Everything that ships when a customer orders one product.

• Service BOM: The parts a technician can replace, such as the panel's driver.

• Configurable BOM: For products sold in many variants. It lists every option and which combinations are allowed.

SBOM can stand for sales bill of materials, service bill of materials, or, in cybersecurity, software bill of materials. Write the full name to avoid confusion.

From EBOM to MBOM: what changes  

When a design becomes a build, the MBOM adds what the production line needs but the drawing leaves out:

• Packaging and labels, such as the panel's carton.

• Consumables, like adhesives, that are used on the line but never drawn.

• Scrap allowances for parts that lose material when cut.

• Subassemblies that match how the line works, such as building the LED module first.

• Approved alternates for when the usual part is unavailable.

• Phantom assemblies: These are groupings that exist in the BOM but are built and used straight away, never stocked. If the LED module went straight from its bench into the frame, it could be set up as a phantom.

How to create a bill of materials  

1. Define the finished product and its part number: Write the BOM to make exactly one unit.

2. Decide the structure: Choose how many levels you need. For each subassembly, write down why it exists: it is built ahead, stocked, or shared. If you cannot name a reason, keep the BOM flat.

3. List every part, including consumables and packaging: Work from the physical build, not the drawing. Tape, glue, labels, and cartons stop a line just as surely as a missing driver.

4. Assign part numbers using one scheme: Search for an existing part number before creating a new one.

5. Set quantity and unit for each line: Enter quantities per parent, in the unit the part is used in, and record how that converts to the unit you buy in.

6. Mark each part make or buy: For bought parts, add the usual supplier and their lead time.

7. Attach drawings and instructions where they are used: The LED module's assembly instruction belongs with the module, not with the finished panel.

8. Review, then release: Walk through the draft with the people who build and buy, then release it as revision A.

In a larger business, each team adds its own layer. Design defines the product, engineering sets part numbers, purchasing adds suppliers, and production adds process notes. In a small business, one or two people often do all of this, which is why the review in step 8 matters.

How a BOM drives costing and purchasing  

Costing a product from its BOM  

Each line cost is the quantity multiplied by the unit cost. In the example, the panel uses half a meter of thermal tape at 24.00 per meter, so that line costs 12.00. Add every line and you get the panel's material cost: 747.00.

In a multi-level BOM, each subassembly carries its parts' cost up as one figure. The LED module would show 228.00 (156.00 for the strips, 60.00 for the base plate, and 12.00 for the tape). The panel would still total 747.00.

This is material cost only. Labor, machine time, and overhead are added separately to reach the full cost of the product.

Scrap needs planning too. Suppose you lose 3% of the diffuser sheet when cutting (illustrative). Plan for 1.03 sheets per panel. That line rises from 95.00 to 1.03 × 95.00 = 97.85, and the panel's material cost becomes 749.85. Some systems record scrap on the BOM and others on the routing. Use one, never both.

From BOM to purchase list  

To work out what to buy for a production run, multiply each BOM line by the number of units. This is called BOM explosion.

For 250 panels at four clips each, you need 4 × 250 = 1,000 clips. Subtract what is already in stock, allow for any safety stock you keep, and the rest is what you order. An MRP system does the same calculation automatically, across every order and every level.

Common BOM mistakes and how to avoid them  

Entering quantities on the wrong basis  

A quantity might be entered per side, per pair, or per finished product when the system reads it per parent. The shortage then grows with every unit in the run. If the drawing shows two clips per side and someone enters 2 instead of 4, a 250-unit run ends up 500 clips short. To avoid this, note what each quantity is per, and check the first build against the BOM line by line.

Giving one part two part numbers  

When the same physical part is created twice, its stock is split across two records, orders are duplicated, and the part carries two different costs. Search for an existing part number before adding a new one, and merge any duplicates as soon as you find them.

Mixing up buying and using units  

If you buy in one unit and use in another without recording the conversion, orders come out wrong by that conversion factor. For example, you might order rolls when you meant meters. Record both units and the conversion between them.

Leaving out packaging and consumables  

When cartons, tape or glue are missing from the BOM, nobody orders them, and the line stops when they run out. List parts by walking through the actual build rather than reading them off the drawing.

Counting scrap twice  

Scrap recorded on both the BOM and the routing inflates material plans and overstates cost. Record it in one place only.

Skipping version control  

Without revisions, the shop floor could end up building last month's design. Give every BOM a revision number, and issue the current one with each order.

Editing a live BOM directly  

Changing a released BOM in place quietly alters orders already in progress, and leaves no record of why. Make changes through a new revision instead.

Keeping alternates in someone's head  

If only one person knows which substitute parts are approved, the line stops when the usual part runs out and that person is away. Record approved alternates on the BOM line, along with any conditions on their use.

Keeping BOMs accurate: revisions and change control  

BOM management is the ongoing work of keeping the BOM matched to what you actually build. Four habits cover most of it.

• Version every BOM. Give each release a revision letter or number, and mark it as draft or released. Only released BOMs should drive buying and production.

• Record every change. An engineering change order (ECO) is the formal record of a change: what changed, why, who approved it and when it starts. Tie every BOM change to one.

• Decide when each change takes effect. A change can start on a date or from a specific batch. That decides whether orders already in progress finish on the old version or switch to the new one. This timing rule is called effectivity.

• Measure accuracy. During a build or an audit, check BOM lines against what was actually used. 48 correct lines out of 50 checked gives 96% (illustrative). Watch the trend over time. Check high-value items most often, the same way cycle counting uses ABC analysis to set priorities.

Spreadsheet or inventory system?  

A spreadsheet is fine for a few products with one or two levels, few changes and one person keeping it up to date. It starts to struggle when copies drift apart, when you need to see what is short, or when every purchase list has to be worked out by hand. If you are starting in a spreadsheet, the bill of materials template has these fields set up, with the LED panel pre-filled.

An inventory or ERP system makes sense once the BOM drives purchasing and stock, more than one person edits it, or you need cost and stock levels in one place. The stock figures it draws on need to be current.

Product lifecycle management (PLM) software suits businesses with frequent design changes, computer-aided design (CAD) files tied to parts, and regulations that require every change to be traced. It is a different kind of tool, and most small assemblers do not need it.

Where Zoho Inventory fits  

Zoho Inventory handles single-level BOMs through composite items. A composite item is a finished product made up of a list of component items. That list can include services, such as labor charges.

When you bundle a composite item, Zoho Inventory takes the components out of stock and adds the finished item to stock. Every component must be in stock in sufficient quantity before the bundle can be created. Cost of goods sold is recorded when the composite item is sold, not when it is bundled. You can edit the components at the point of bundling.

Serial and batch tracking, multi-warehouse stock, reorder levels and preferred vendors all apply to the components. Deeply nested product structures, engineering change control and shop-floor routing belong in a manufacturing ERP or PLM system.