What Is a Bill of Materials (BOM)? Example and Excel Template

A bill of materials (BOM) is the list of all materials and parts that go into one product, with the quantity of each item and the process loss percentage. Purchasing orders raw material from it, the warehouse reserves materials by it and the planned cost price is calculated from it. In searches it is called a BOM, a product structure or a parts list, and in a shop’s Excel files it often sits under the name “costing” or “norms”.

Below is the BOM of a storage rack with six material items, four operations and a calculation to the cent. The example is fictional: a metalwork shop makes storage racks.

What is a bill of materials and what does it consist of?

A BOM has two parts. The material part lists components with quantity, unit of measure and loss percentage. The operations part, if the shop keeps one, adds stages, jobs and time norms. The first part answers what goes into the product, the second shows how much labor is in it.

Four departments work from one BOM. Purchasing multiplies its rows by the output plan, the storekeeper builds the issue to the shop from it, the process engineer checks actual use against it and the accountant takes the planned cost price from it. A mistake in one cell reaches all four.

Each BOM is written for a base quantity: one product, a set or a batch. Without that, even correct norms are read differently, because 20 metres of tube per rack and 20 metres for ten racks differ tenfold.

In its flat form a BOM is a single list of components. When a product consists of assemblies the shop makes itself, the BOM becomes multi-level and each assembly gets its own list.

What does a BOM example look like?

The product is a storage rack with four shelves, base quantity one piece.

Loss is calculated from the total quantity. Of 20 metres of tube, 5% (1 m) goes to waste and 19 m stays in the product. For paint, 10% of 0.6 kg gives 0.06 kg of loss and 0.54 kg net. The row amount is calculated on gross quantity, because that is how much material must be bought and issued to the shop.

The shop keeps the operations part of the same BOM as a separate table.

Materials cost €183.80 and operations €35. The planned cost price of the rack is €218.80. At a selling price of €295 the margin is €76.20, or 25.8%.

A batch of 50 racks needs 1,000 m of tube, 200 shelf blanks, 800 brackets, 1,600 sets of bolts, 200 caps and 30 kg of paint. Materials for the batch cost €9,190, operations €1,750, together €10,940. For the buyer it is a matter of multiplying the table by 50.

What does a BOM cost without allowing for losses?

Suppose the process engineer entered only the net quantity in the product. Tube is then 19 m (€90.25), paint 0.54 kg (€7.56), materials come to €178.21 and the rack’s cost price to €213.21. That is understated by €5.59, or 2.6%.

On a batch of 50 units the picture is harsher. Purchasing orders 950 m of tube and 27 kg of paint, while the shop needs 1,000 m and 30 kg. It is short 50 m of tube (€237.50) and 3 kg of paint (€42), €279.50 in total. The shop finds out at cutting, when the second part of the racks already stands without profile.

A check two ways. The per-unit difference is €4.75 for tube and €0.84 for paint, €5.59 in total, and for 50 units €279.50. By the shortage it is €237.50 plus €42, the same €279.50.

How do you describe two variants of the same product?

When a product is made in two configurations, each gets its own BOM with its own name. In the example, next to the standard rack there is a “Premium” with five shelves, a longer frame and more paint. Tube is 24 m gross (5% loss, 22.8 m net), shelf blanks 5, brackets 20, bolts 40 sets, caps 4, and paint 0.7 kg instead of 0.6 kg (10% loss, 0.63 kg net).

Premium materials cost 24 × 4.75 + 5 × 15.50 + 20 × 0.40 + 40 × 0.30 + 4 × 0.60 + 0.7 × 14, which is 114 + 77.50 + 8 + 12 + 2.40 + 9.80 = €223.70. Operations cost €5 more because of the longer frame, €40 in total.

The cost difference is 263.70 − 218.80 = €44.90, or 20.5% of the standard. The Premium price is €70 higher, so the margin in euros rose by €25.10 (101.30 − 76.20). In Bimp such variants are kept as specifications of one product, and in an Excel import they are told apart by the specification name in the first column.

How does a BOM differ from a routing?

The BOM describes what goes into the product. A routing adds how and in what order it is made, which parameters to hold and what to check before handing the product on. In production these details are sometimes combined in one document and sometimes split across several. The Bimp home page gives an overview of how the system holds both.

In the example above the first table is the material part and the second the operations part. Together they form a document that Bimp calls a specification.

Which columns does an Excel BOM template have?

If you have dozens of BOMs, you load them from a file. The Bimp import template has ten columns in a fixed order, and the names cannot be changed. The first three rows of the rack BOM in such a file are below, with made-up article numbers.

The other three items are filled in the same way. The “Cost share” column is used only for disassembly, so for an ordinary product it stays empty. Each specification in the file has its own name in the first column. For one product article number you can give different names, for example “Standard” and “Premium”, to describe two build variants. More on the import is in Importing specifications.

What does Bimp do and what does it leave out?

Bimp is a Ukrainian cloud ERP for manufacturers, and the specification is the basis of production documents. You create it in Production → Specifications. The header sets the product, base quantity, version, currency, type “Product” or “Service” and kind “Main” or “Non-main”. The “Use stages and operations” switch opens the tab with the process chain.

On the “Materials and components” tab you choose the cost calculation method, “By remaining cost price” or “By last purchase price”, and add materials to stages with the columns “Quantity”, “Loss (%)” and “Quantity net”. A material without a quantity or without a link to a stage does not enter the calculation, and the system will not reserve it. The planned cost price is calculated automatically, and the production order takes materials and operations from it. The method affects the figure. The remaining cost price uses the current stock balance, which is closer to actual accounting, while the last purchase price is handier for budget planning. If the price of tube changes, two specifications with different methods will show different costs for the same rack. A material needed only for the calculation, or one written off by other documents, is marked with the “Not used in production” switch. Replacement of a material that is out of stock is set with analogues and a write-off rule by priority, availability or balances. All the fields are described in Specifications.

Before starting production, check that every material is tied to a stage and has a quantity, or the planned cost price will be incomplete. The composition of the product, the norms and the loss percentage are entered by the process engineer. The system does not invent them and does not check them against the drawing. Drawings and 3D models are not part of the specification fields, and they stay in design systems.

What does accounting for losses give on a batch of 50 racks?

On one rack €5.59 looks like a trifle, and it is easy to cross out of the costing. A batch of 50 consists of such trifles worth €279.50, and the buyer will look for that sum among the supplier’s invoices.

Related reading: multi-level bill of materials and material consumption norms.

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