Bill of Materials (BOM) - Meaning & Importance

Published in Operations and Supply Chain Terms by MBA Skool Team

What is Bill of Materials (BOM)?

Bill of materials is a compiled list of raw input goods, sub-assemblies or any intermediary product needed to manufacture the final goods. Bill of materials basically helps in the communication during the production process so as to plan the quantity of goods that would be required to meet the demand. This is an important concept in material management during manufacturing.

Importance of Bill of Materials (BOM)

A BOM is of vital importance in Materials Requirement Planning (MRP) and Enterprise Resource Management (ERP) systems. It provides the Manufacturer’s part number (MPN) which is a series of numbers assigned to the parts by its manufacturer. Since each manufacturer provides its unique MPN to its parts, it becomes easier to track the source of a component by referring to the BOM.

Bill of Materials (BOM)

Ideally a BOM should include below items:

• BOM level

• Part number

• Part name

• Phase

• Description

• Quantity

• Unit of measure

• Procurement Type

• BOM notes

The bill of materials can be formatted in three ways:

1. Single level

2. Indented

3. Modular

Also, to represent the bill of materials in a more easier form, it can also be represented in a tree format.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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