Bill of Materials (BOM)

A BOM is organized in levels: the end item sits at level 0, its subassemblies at level 1, their components below. Each line carries a quantity per parent, a unit of measure and often a scrap factor. The engineering BOM (EBOM) describes the product as designed; the manufacturing BOM (MBOM) adds what the shop floor actually consumes – packaging, consumables, intermediate stages – and arranges components in the order of assembly. Planning and inventory deduction run on the MBOM. Component demand per period is:

• Component requirement = planned quantity of the parent × quantity per parent ÷ (1 − scrap rate)

Bill of materials in practice

A BOM error does not show in the BOM itself. It shows up in inventory. A product needs 0.50 m of cable according to the BOM, but cutting leaves offcuts and the line actually uses 0.55 m. At 2,000 units a week, backflushing deducts 1,000 m while 1,100 m leaves the shelf. After four weeks the system holds 400 m of cable that does not exist, MRP nets its requirements against that stock and orders 400 m too late, and the line stops while the screen still shows material. A 10% scrap factor on the component line makes MRP plan 1,100 m a week and keeps system stock aligned with the shelf.

The same drift appears with a wrong unit of measure (a box of 100 entered as one piece) or with an engineering change that has no effectivity date, so old and new components are both planned. That is why recurring inventory differences on backflushed components are worth checking against the BOM before anyone recounts the warehouse.

Logio reviews BOM structure, scrap factors and the link between the BOM, the master production schedule and MRP in production capacity planning and supply chain management engagements. Veritico STOCK also works with a bill of materials for production.

Related terms

• Material Requirements Planning (MRP)
• Master Production Schedule (MPS)
• Phantom Inventory
• Kanban