SUPPLY CHAIN MANAGEMENT | 5 minute read
As we touched upon in the last article of our product manufacturing series, creating a Bill of Materials (BOM) is a critical step in the manufacturing process. A BOM gives you a complete overview of the quantities of raw materials, components, and parts needed to manufacture each end product, as well as supplementary materials like user guides and packaging.
Let’s take a deeper dive into the elements of a BOM and how to compile your own.
A BOM is a list of all materials required to produce a product showing the quantity of each required. These may be raw materials, intermediate materials, subassemblies, parts, and consumables. This list does not contain the breakdown of where the materials are used or when they are needed, but it may be organized in a hierarchical manner that maps to some of the production steps.
The Bill of Materials often includes materials that are not related to production of the product, such as shipping materials or included documentation. The Bill of Materials is a subset of the Bill of Resources. The Manufacturing Bill is the subset of the Bill of Materials that is related to production.
How a BOM is formatted will vary depending on the type of product being built. Traditionally there are two distinct types of BOM associated with a product. The first BOM is used during the engineering phase of the product (EBOM), when the product is still being developed and versions are still being iterated on. The second type of BOM – the MBOM – is used when a product is complete and needs to be made available for mass production and distribution to various sales channels and ultimately, consumers.
In order to create an effective Bill of Materials, you need to compile the following components:
The exact method for compiling your Bill of Materials will depend on a number of factors, such as how far you are into the design phase and how much knowledge you have about what’s required for your product. Asking yourself the following questions can help give you the information you need to start putting together your BOM:
What am I manufacturing?
Before you jump into creating a Bill of Materials, you should have started the design phase of your project. While your design may change over time, it’s important to have an initial design underway so you can start compiling information about the parts you will need to manufacture your product.
How will I manage my BOM?
Most Bills of Materials go through multiple iterations as your product and processes evolve, which means it’s also likely to be handled by multiple people. Before you get started, establish a system for managing your BOM so that the latest version is always in use by anyone accessing it. This could involve tracking changes and creating identifiers for different versions, or using a live document that can be updated and accessed by different parties in real-time.
Do I need to itemize consumables?
It’s common for manufacturers to overlook mass-quantity consumable items like glue, wires, fasteners, labels, boxes, and other packaging materials in the BOM. It’s crucial that all necessary materials are included in your BOM or else you risk inaccuracies and delays in your procurement and production processes.
Are there files that I need to attach to my BOM?
Many BOMs require supporting documentation, such as computer-aided design (CAD) drawings, datasheets, and subassembly instructions. Make sure any attached files are correctly matched to specific BOM-level items so that anyone accessing your BOM has all the information they need in the one place.
What software will I use to create my BOM?
Choosing the right software to create and manage your Bill of Materials helps you maintain an accurate BOM record from the outset. Many companies opt for Excel, but as your business evolves and your projects become more complex, you will find you need a more advanced program specifically designed for BOMs with real-time tracking and updating capabilities.
The QuickBooks Commerce for Manufacturing system has been designed to support manufacturers with managing Bills of Materials and Production Orders. For manufacturers that require deeper functionality – such as managing production priorities and tracking tasks for raw materials, sub-assemblies and ready-made stock – QuickBooks Commerce integrates seamlessly with Katana MRP to enable end-to-end production planning and manufacturing floor-level control.
