Why is it Important to Have a Bill of Materials?

Regardless of what your business is, one of the first things your manufacture will ask for you is your bill of materials. It doesn’t matter if you are just starting a business or looking for a manufacturer to manufacture your product, all manufacturers will ask you to provide a Bill of Materials (BOM) when you are trying to cut off your Cost of Goods Sold (COGS). 


What is a Bill of Materials?

A Bill of Materials is a basic necessity in the manufacturing world and it plays a vital role in any product development. To explain it simply, unless you have a Bill of Material, you cannot manufacture a product. In essence, a bill of materials is an all-inclusive list that records all the details of the components and sub-assembled parts and all the raw materials required to build your product. 

No matter what you are manufacturing, a Bill of Materials helps you to manage and oversee your resources as well as identify materials accurately in order to reduce spending wastefully. A bill of materials gives you accurate information which can help you to make better decisions to manufacture your product with cost-effective and efficiency.


What Should a Bill of Materials Include?

Much like a cooking recipe, a Bill of Material makes sure that your product has the proper and correct ingredients that includes materials and components to make them correctly. No matter if you are planning your Bill of Material or studying ways to improve your bill of materials, here are some important things you need to include in your Bill of Materials record: –


Number: This field enables you to document and keep track of the number of parts and components that you will use in your product.


Part Number: You would need to assign a number to each part for reference and distinguishing your parts in an easier manner. Each part should have its own unique part member. Avoid creating multiple part numbers for the same part as confusion will hinder your manufacturing process.


Part name: This requires you to give a unique name for each part or assembly and this will help you distinguish parts and components more efficiently. Similar to the part number, each part should be assigned with a unique name.


Material: It is important to know what material your product is made of, depending on your product’s function, and necessary to determine where to shave off costs. By simply labelling it as “plastic” will not be good enough; the specific type of plastic should be labelled.


Description: This section includes a full description of each part. The description is where you can go into detail about the use of the parts.  


Picture: A picture is worth a thousand words. Photographs are useful in helping to identify parts more efficiently.


Color: Each part needs a color labelled with it. To make the color labelling as objective as possible, label your parts with a pantone color instead of just saying “blue” or “green.” This will make sure that production will be as consistent as possible.


Finish/texture: Similar to color, texture and finish of a product is one of the most important aspects in the customer purchasing process and can be the contrast between an end customer purchasing your product or going with your competitor. Do not be lazy and remember to include the type of texture or finish you are looking for.


Quantity: This enables you to record down the number of parts used in each assembly and will help you make decisions for purchasing and manufacturing. For instance, you might require five of the same screws for assembly, so you should include ‘5’ under Quantity.


Unit: This enables you to categorize the measurement in which a part will be used or purchased. Standard measures will consist of pieces, centimeters, inches, feet and yards. As a rule of thumb, you might want to remain constant throughout to help make sure that the right quantities are procured and distributed to the production line.  


Unit price: This allows you to keep track of the price for each part number. Generally, this assumes that the quantity is one.


Total cost: This is estimated by multiplying the unit price by the quantity. This will get you a set for the entire quantity for each part number.


Lead time: Lead time is the number of days, weeks or months that it would take to make that particular part. Before you can place a purchase order, you would need to know the lead time for the final product.


Tooling: For most of the customized parts, there is a requirement to open your own tools. This column will include you with a cost associated with opening a tool that you might need for that specific part.


Supplier: It is important to record and remember the name of the supplier that gives you with that part. If you have sources from multiple suppliers, it might be a bit confusing, so one should remember to keep track of which supplier you are using for production becomes critical.


Notes/remarks: Keep everyone who is involved with your bill of materials on the same page by including other relevant notes.

To conclude, creating a bill of materials is not just a basic development step – it’s an important stage to make sure total consistency throughout the manufacturing process. A well-defined bill of materials will tell you when and how much of each individual part you would need to buy for your manufacturing process.