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Bill of Materials: What it is and Why you Have to Use it

A bill of materials is the foundational document for any type of enterprise that manufactures a product. If this sounds like potentially a large majority of businesses, you’re onto something.

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It is. A product can be anything from a loaf of bread to a custom-built home, a proprietary formulation of a cutting-edge prescription drug, or a model-year car with endlessly configurable packages laced with incentives and connected to as many different financing options.

In any of these cases, it’s vital that the businesses that produce, manufacture, and sell these products to invest in systems that help them make sense of their own product offerings.

Cloud-based or automated BOM solutions help industry professionals track changes in their BOMs, manage the rollout of new and innovative product offerings, outsource production of key components and sub-assemblies to manufacturing partners while ensuring those sub-assemblies are built to specification, and to understand the amounts of required raw materials needed to hit production targets driving the price of their stock on Wall Street. 

In any of the examples I mentioned above, the bill of materials serves as a blueprint that defines a product and all the assemblies, sub-assemblies, parts, and pieces that comprise it. Think of a BOM as grandma’s famous lasagna recipe.

Even though grandma has been dead for years, her grandchildren can still make her lasagna exactly as she used to, all made possible by the simple fact that she took the time to write the recipe down, and in doing so, gave her family a common definition of the product.

Indeed through the very act of meticulously recording changes, keeping some details proprietary (“the secret ingredient is love”), and insisting that whoever makes the lasagna follow the most precise and exacting measurements as outlined in the recipe/BOM, grandma was, in her wisdom, investing in a rigorous bill of the materials management system. 

So, what happens when grandma has six thousand recipes, each with over 20 ingredients and specific order of operations with which to assemble? What happens when grandma knits sweaters?

What happens when grandma builds airframes for commercial airlines and needs to conduct a veritable orchestra of manufacturing partners with exacting specifications? The answer is, she turns to data.

Data drives so much of our current business landscape, and that is likely to continue as the benefits of data aggregation continue to pay dividends.

By centralizing the data records for all their parts, ingredients, sub-assemblies, SKUs, finishes, styles, sizes, packages, financing options, or otherwise nuanced product offerings, businesses create a single source of truth for their staff and partners.

What’s more, BOM systems like OpenBom (see their website at https://www.openbom.com/) can also serve as a central repository of all the data embedded into commonly used manufacturing and design filetypes like CAD, PLM, PDM, and Autodesk, thus eliminating the need for an extra layer of overhead for data entry.

Simply put, a designer makes an update to a schematic for a sub-assembly on a large piece of farm equipment, and the BOM management system fully integrates the resulting CAD file. 

Bill of materials management is a critical investment that needs to be made in the sustained success and competitiveness of a manufacturing organization. And just like grandma’s lasagna recipe, it will ensure business owners can build a lasting financial legacy for their own grandchildren to enjoy long after they’re gone.