After toiling away in your workshop for a few weeks, months, or years, you’ve created a stellar product that you can’t wait for the world to see. That new cash smell is practically wafting into your nose as you think about the future.
Getting your product through the manufacturing process is no small feat, but remember this: Prioritizing organization pays dividends in business. A bill of materials provides the structure needed for a smooth manufacturing run.
Overview: What is a bill of materials?
A bill of materials (BOM) documents the materials and processes necessary for manufacturing a finished product. A BOM is to a manufacturer what an ingredients list is to a baker.
You need a BOM once you transition from a prototype to a manufacturable product. It’s not meant to be a full assembly instruction manual, but it should provide enough detail that someone could roughly see the steps it takes to turn raw materials into a finished product. Think of it like the glossary to the production manual.
A BOM specifies the raw materials, intermediate materials, assemblies, parts, and consumables required to take your product to the manufacturing cycle’s final stage of shipping. Your BOM should provide as much detail as possible to avoid errors and confusion, both of which can lead to manufacturing delays. We all know that feeling of coming home from the grocery store only to realize a core ingredient was forgotten.
Most bills of material follow a hierarchy where the final product is listed at the top with the assemblies and subassemblies below. At the bottom of the order are raw materials. Take a look at an example bill of materials put together by using inventory software Unleashed for manufacturing a bottle of beer.
Engineers, factory workers, suppliers, and management rely on BOMs for different reasons, from cost calculations to procurement to assembly.
The same process can be adapted for a service bill of materials (SBOM), which explains what’s required to keep a product in operation. For example, a bike repair shop might use an SBOM to explain what’s needed for a tuneup.
3 considerations prior to making your bill of materials
Consider your audience, the assembly process, and the software you’ll use to create a BOM.
1. Who’s using the bill of materials
Before BOM creation, think about its users. Ask yourself the following questions.
- Who’s manufacturing my product? Your BOM looks different when the users are your employees or they’re manufacturing workers in a faraway country. Consider whether you can rely on text descriptions or if you’re better off with visual aids to convey the manufacturing process.
- Will I have the opportunity to show my factory workers how to manufacture my product? When your manufacturing facility isn’t right next door, you might need to add more specificity to the BOM so your manufacturer has a 360-degree understanding of your product.
2. What the manufacturing process entails
A BOM follows a hierarchical structure starting with the finished product and ending with the raw materials. To create an accurate BOM, you need the intimate details of the manufacturing process worked out.
But how can you make a BOM for a product you’ve never manufactured? The good news is a BOM doesn’t have a final form and can change according to design tweaks and product research. You can start building a BOM during the product development process and make adjustments after each production run.
3. How you plan to make the bill of materials
You have a few options for creating a BOM — a Microsoft Excel template or manufacturing and inventory management software.
If you already use inventory management software, check to see whether you already have or can add a BOM feature. You can probably get away with using Excel for small, straightforward manufacturing runs.
What to include on your bill of materials list
A BOM can get as granular as needed, but don’t miss these essential items.
1. Part name, identifier, and photo
Compile a comprehensive list of every part, assembly, and sub-assembly associated with your product’s manufacture. Don’t forget consumables such as glue and nails. The BOM structure starts with the final product, and you work your way down to the raw materials.
Label your parts beyond their descriptive names. Include identifiers such as manufacturer part numbers to make it even easier to know what items you’re talking about. Let’s say you manufacture skateboards. In your bill of materials, assign an ID number to each nut, bolt, and wheel to differentiate them from similar parts.
Include a photo of each part to make it that much easier to identify each piece.
2. Descriptions and notes
Provide a thorough description of your final product and each part, assembly, and sub-assembly. A good description will help users differentiate similar parts and understand how each of them works in your product.
You should also have a notes section for each part to convey short messages to BOM users. For example, you might want to add a special note about a problem with receiving defective skateboard wheels from your supplier and advising factory workers to look out for quality issues.
Depending on the product, you might want to include computer-aided design (CAD) drawings for BOM users’ reference. An engineer helping you put together the BOM might need the visual aid to explain a note for the manufacturer.
Your product likely requires more than one of each item, so don’t forget to state the quantity. Include units of measure if they apply. For example, if copper wire is a raw material in your product, indicate each piece’s length in inches, centimeters, or millimeters.
A BOM should explain the vendor and lead time to acquire raw materials. Even if you’re the only person ordering raw materials, BOM users should know the time between placing and receiving an order. That’s how you keep your operation moving.
Your accountant uses the BOM to calculate your raw materials cost and develop a production budget. List the unit cost for each part. Your costs might fluctuate, so make sure to periodically update this section.
Total manufacturing cost comprises direct materials, direct labor, and manufacturing overhead. The BOM can help identify your product’s direct materials cost.
2 ways to create and manage your bill of materials
You’ll probably never mark a BOM as “final.” Here are some tips for creating and managing the document.
1. Spreadsheet or manufacturing software
Small business manufacturers might find spreadsheets suitable for creating their BOMs. You can find BOM templates online with a quick Google search. Your suppliers and manufacturing team have access to Excel and Google Sheets, making compatibility a non-issue.
Larger manufacturing projects — ones with lots of components and assemblies — might require the oomph that only manufacturing management software can provide. You’ll have to take the extra step of exporting your BOM to send to users, but that’s a small price to pay for a powerful software that can save you time in other areas.
2. Versions or live documents
Cloud computing has become the norm in many industries. It eliminates checking out files from a document management system to avoid overwriting others’ work.
Excel and Google Sheets both have live features where multiple people can edit a document simultaneously. By operating in a live document, you’re ensuring that everyone can access the most updated version. The drawback: Your communication about updates needs to be crystal clear because users might download the BOM and not check for updates.
You can also do it the old-fashioned way by creating new versions of the BOM every time you make changes. You’re still carrying the burden of pushing the updated BOM out to users, however.
A bill that leaves you richer
It’s challenging to turn a prototype into a manufacturable product. A BOM provides a roadmap for setting up your manufacturing team for success.
View more information: https://www.fool.com/the-blueprint/bill-of-materials/