What Is BOM Management?

What Is a Bill of Materials (BOM)?

Widely referred to as a BOM in engineering, manufacturing, and related fields, a bill of materials is a complete inventory of all the materials, components, and parts that are required to manufacture a specific product. BOMs often also include further specifications for those materials and components, including the quantities needed for the manufacturing process and the cost of each item. A bill of materials is also sometimes called a product structure or production recipe, depending on the industry. 

In some cases, BOMs may also serve as blueprints for manufacturing the product, providing detailed instructions for engineers, designers, and other professionals on the processes required to make the item. 

Why Are BOMs Important? 

BOMs are an indispensable document in engineering, manufacturing, and procurement. They can even play a critical role in compliance, serving as a key internal record documenting the raw substances, materials, and components that go into a particular product. Comprehensive, up-to-date BOMs can provide a multitude of practical functions for organizations.

• Inventory for sourcing and procurement professionals
• Centralized resource for understanding materials costs and carrying out budgeting matters
• Master document for record-keeping and compliance issues
• Reference for component engineers responsible for managing materials and components for specific products
• Substantive form of documentation for supply chain due diligence
• Guide when identifying malfunctioning parts and executing repairs

Who Uses BOMs?

Because of the essential nature of a bill of materials and the broad value of understanding a given product’s constituent parts, a BOM has a great deal of cross-functionality within organizations.  

Because of the essential nature of a bill of materials and the broad value of understanding a given product’s constituent parts, a BOM has a great deal of cross-functionality within organizations.  

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A number of different kinds of engineers depend on BOMs on a regular basis, including new product introduction (NPI) engineers, design engineers, and component engineers. Bills of materials also serve an important function for professionals engaged in purchasing and procurement, who need to effectively, affordably source all the materials and parts for their company’s products. Additionally, for larger organizations focused on adhering to environmental regulations, compliance teams rely on BOMs to ensure that products do not contain banned substances and the amount of restricted materials being used in them is safely below legal thresholds. 

How Is a Bill of Materials Structured?

A bill of materials is typically structured in a hierarchical fashion. At the top of the BOM is the completed product. Underneath the product are the various subassemblies required to manufacture the product. And beneath the subassemblies are the individual materials, components, and parts that are incorporated into its manufacturing process. The materials level may also include further specifications like part numbers, quantities, and costs. 

This hierarchical structure and its graphical visualization—in which the completed product sits at the top and is broken down, tier by tier, into its various subassemblies and constituent materials—is often referred to as a bill of materials “explosion.” Alternatively, some BOM displays may use an “implosion” organizational style. In these BOMs, all the individual components appear at the top and are incorporated into increasingly sophisticated subassemblies as they move downward before funneling into the final product at bottom.

What Is BOM Management?

To those unfamiliar with them, bills of materials may seem like fixed, unchanging documents. After all, if the materials and manufacturing processes for a given product changed too frequently, it would not only be expensive, but would likely indicate something ineffective or unprofitable about its production. 

But that line of thinking doesn’t faithfully account for just how complex and intricate many commodities are today. Consumer electronics like smartphones, laptops, and televisions often have several thousand components. (A single modern automobile can have up to three thousand semiconductor chips alone.) All these parts function as variables that may need to be swapped out at different times over the lifecycle of the product.

This is where BOM management comes into play. The component engineers and other professionals responsible for BOM management have to make adjustments to their bills of materials for a variety of reasons, including: 

• When a supplier isn’t able to deliver a specific part or subassembly on time.
• They receive a product discontinuance notice (PDN) notifying them that a particular component will soon fall into obsolescence.
• An imminent environmental regulation is set to restrict a substance that serves as a raw material in their BOM. 

These are just a few hypothetical scenarios where BOM management is required to keep a bill of materials relevant, up to date, and legally compliant. While these tweaks might be largely invisible to the consumer, products and their “recipes” are fluid and continuously evolving based on changes in government regulation, supply chain dynamics, customer expectations, and even advancements within their industry (like discovering cheaper, more efficient materials for manufacturing a product). It is all these subtle but substantive modifications that make up the work of BOM management. 

While these tweaks might be largely invisible to the consumer, products and their “recipes” are fluid and continuously evolving based on changes in government regulation, supply chain dynamics, customer expectations, and even advancements within their industry (like discovering cheaper, more efficient materials for manufacturing a product).

What Are the Benefits of Effective BOM Management?

When BOMs are well-maintained and accurately reflect the parts and materials currently being sourced and the most up-to-date manufacturing practices, they function as an essential resource for many different corners of an organization. Manufacturers that manage their BOMs with consistency and diligence are benefitting their companies in a myriad of ways.

• Streamlining sourcing and procurement processes
• Enhancing risk management
• Maintaining good record-keeping practices
• Cultivating robust institutional knowledge within a company (rather than relying on the expertise of individuals). 
• Providing a critical reference tool for engineers undertaking product redesigns or refreshes.

What Are the Primary Challenges Inherent in BOM Management?

While bills of materials are well-traveled, widely-distributed documents that many professionals consult on a regular basis, that doesn’t mean BOMs don’t come with inherent challenges. The most complex BOMs can have thousands of components—including various large subassemblies—that are unwieldy and even overwhelming for even the most experienced component engineers and procurement experts. In these instances, maintaining a BOM over time and ensuring that it’s updated regularly to capture evolving processes takes time, diligence, and often the input and expertise of multiple professionals. 

Because of their versatility and applicability to an array of different functions, BOMs are often utilized by multiple teams and departments within a single organization. But the more versions of the same BOM that exist within a company, the greater the chance for discrepancies and inconsistencies across those documents. This can result in erroneous orders to suppliers, compliance issues, and other operational snafus. Professionals must take it upon themselves to make sure that all changes to a specific bill of materials are passed down to all versions of the BOM in circulation within the company, creating an “update cascade” that facilitates uniformity and standardization. 

Finally, as more and more businesses start to recognize the limitations of using Microsoft Excel for BOM management, engineers are going to face the challenge of undertaking digital transformation with these documents. Transitioning from a format that engineering teams have been using for decades and are comfortable operating in can come with a certain level of pushback and growing pains. The ultimate benefits, however, largely justify what might at worst be described as a temporarily bumpy process. Companies that implement digital BOMs—often through software-as-a-service (SaaS)—are better able to navigate the growing complexities of their parts and assemblies; reduce the level of human error connected to BOM management; and embrace the kinds of innovations and advancements that can keep their products compelling and distinctive within a dynamic, competitive marketplace. 

What Is BOM Management Software?

BOM management software—also referred to as BOM management tools or, as mentioned above, BOM software-as-a-service—is a technologically sophisticated new approach to a longstanding manufacturing document. For organizations interested in carrying out comprehensive digital transformation efforts, implementing BOM management software should be perceived as an essential measure. 

For organizations interested in carrying out comprehensive digital transformation efforts, implementing BOM management software should be perceived as an essential measure. 

These platforms allow companies to access a single, centralized digital BOM that is more efficient, flexible, and easily disseminated than Excel spreadsheets manually maintained by engineers. BOM management software and the digital BOMs they support can seamlessly incorporate changes to parts, subassemblies, and vendors, integrate with other data systems, and keep all employees, teams, and other stakeholders literally on the same page when working with a specific product. Along with supply chain risk management (SCRM) platforms like Z2Data, BOM management software can serve as a critical resource for manufacturers keen to maximize visibility and efficiency within their organizations.