Multi-Level BOM (Indented BOM): Benefits, Tips, and Use Cases

A multi-level BOM is a bill of materials that represents the composition of subassemblies in addition to the final product. This type of BOM becomes indispensable when a certain level of product complexity is reached, but there are also situations where a multi-level BOM is unwarranted.

What is a multi-level BOM (indented BOM)?

A multi-level BOM, also referred to as an indented BOM, is a bill of materials that details the composition of the product as well as the composition of the subassemblies used in the product. While a single-level BOM would only include the highest-level components and materials used in the making of a product, a multi-level bill of materials also breaks down the BOMs of the components, the components of the components, and so forth.

Indented BOMs are therefore used by manufacturers that also produce the subassemblies used in their products. Manufacturers that buy all of their subassemblies only require single-level BOMs.

For example, a furniture manufacturer that makes wooden dressers could create an indented BOM that would include:

1. Frame + three drawers as the first-level BOM
2. The BOMs of both the frame and the drawers as second-level BOMs

The example above is extremely simplified – more often, multi-level BOMs are much more intricate.

Benefits of multi-level BOMs

1. Easier management of complex BOMs and variants

For companies making complex and configurable products, multi-level BOMs make product structures easier to manage. Instead of creating confusing flat lists of parts, manufacturers can organize products into logical assemblies. This makes BOM management clearer, especially when multiple product versions share the same components.

2. Better production planning and scheduling

Multi-level BOMs support better production planning by showing how components, subassemblies, and finished goods are connected. This helps manufacturers understand what needs to be made or purchased before the next stage of the production process can begin. For complex products, this structure makes it much easier to plan work in the correct order and avoid missing important dependencies. By understanding the full product structure, manufacturers can optimize the manufacturing process and keep production moving more smoothly.

3. More accurate material requirements planning

A multi-level BOM provides manufacturers with a more comprehensive view of their material requirements at every production level. Instead of only seeing the materials needed for the final product, teams can also see what is required for each subassembly. This is especially useful for material planning, where accurate BOM data helps determine what to buy, how much to buy, and when to make the purchases.

4. Stronger inventory management

Multi-level BOMs improve inventory management by linking raw materials and subassemblies directly to finished goods. This helps manufacturers monitor stock levels, avoid shortages, and reduce excess inventory. When the BOM is connected to demand and production plans, companies can make better decisions about what materials to keep in stock and when to reorder them.

5. Better procurement planning

A clear multi-level BOM helps procurement teams plan purchases more accurately. Since each part and subassembly is connected to the final product, buyers can see upcoming demand earlier and account for supplier lead times. This supports a more reliable supply chain and reduces the risk of production delays caused by late or missing materials.

6. Better cost control

Multi-level BOMs help manufacturers control and reduce production costs by making material usage more visible. Teams can identify expensive components, compare alternative materials, reduce waste, and avoid over-ordering. Over time, this helps companies optimize purchasing and production decisions while keeping costs under better control.

7. Improved traceability

Multi-level BOMs support better manufacturing traceability by showing exactly which materials and subassemblies are used in each finished product. This is important for quality control, warranty claims, compliance, and recalls. If a defective component is found, the manufacturer can trace where it was used and identify which finished goods may be affected.

When should I use multi-level BOMs?

Multi-level BOMs can be used with any product that contains a subassembly, but their usefulness grows exponentially as the product becomes more elaborate. They become practically indispensable once you reach a certain product complexity and need to manage the manufacturing of many subassemblies. Indented BOMs are also a great help if you use some of your subassemblies in multiple products.

Having tens, hundreds, or even thousands of subassemblies expressed with separate single-level BOMs makes it very difficult to coordinate and schedule production and purchasing, and to track your inventory. And managing everything in this manner gets even more complicated if you offer customization options.

Indented BOMs are also a good option if you use material kitting to simplify picking. In this case, material kits constitute lower-level BOMs that are used to manufacture the main product.

Even though multi-level BOMs and subassemblies are often associated with discrete manufacturing, process manufacturers can also make use of indented BOMs. For example, a baker could use a batch of dough as a subassembly (consisting of flour, yeast, oil, butter, and eggs) to bake various types of pastries. Or a cleaning agent manufacturer could use its core formula (the subassembly) in variously scented products or in different-sized containers.

When should I not use multi-level BOMs?

In the context of production and materials planning, the detailed structure of a product may be irrelevant, and using a multi-level BOM could even become detrimental as too many details could make one lose sight of the big picture.

For example, when the production process is fairly short, it would be reasonable to flatten the BOM and treat all components as a single-level BOM. This is done to simplify the purchasing process.

i.e., if some components are used in several sub-assemblies of a product, the component quantities should be summed and ordered together. By doing this, you can minimize the time spent on purchasing activities and reduce the risk of ordering errors. Using the just-in-time model to synchronize deliveries with individual operations would needlessly complicate matters in environments with short throughput times.

In addition, when your product has many subassemblies but a single production operation – assembly – is performed in a single continuous operation, using a multi-level BOM would not make sense from a production scheduling perspective. Instead of scheduling multiple blocks, a flattened BOM would allow the production scheduler to schedule a single operation. Furthermore, the assembly worker would need to report the start and finish times of a single operation instead of dozens.

The answer to when to use multi-level BOMs and when not to is therefore dependent on many factors, not just the product structure. Too many details can overcomplicate simple steps, while too few can leave you missing important nuances.

Using spreadsheets to manage multi-level BOMs

Excel has been used in production planning for decades, and it is not impossible to manage the production of multi-level products in spreadsheets – but it is difficult and risky. Even though spreadsheets are very affordable and free templates are available online for managing various aspects of manufacturing, they can become disastrously expensive once errors start to add up.

According to some reports, 90% of all spreadsheets with more than 150 rows contain errors. Managing your multi-level BOMs, however, may require thousands of rows, further compounding the risk of errors.

Spreadsheet-based production management systems are also notoriously unintuitive and clunky, becoming increasingly inconvenient as their complexity grows. Although the basics of Excel can be learned in a few days, using it at this level requires a seasoned expert.

Setting up the relations, macros, and formulas needed for multi-level BOM management and production planning is best left to Excel professionals. But luckily, there’s a much better option available even for small manufacturers with tight budgets.

Read more about Production Planning with Excel.

Managing multi-level BOMs in a manufacturing ERP

A modern manufacturing ERP system like MRPeasy that can handle multi-level BOMs is invaluable for manufacturers of complex products who are struggling with BOM management and production planning. Allowing you to easily create multi-level BOMs and instantly tie them to shop floor and inventory management, this software drastically reduces the work required to manage the production of items with a multi-level structure.

In practice, each sub-level item or subassembly within an ERP system is a separate stock-keeping unit (SKU). It could be:

1. Produced and stocked independently and used from stock as necessary.
2. Only produced within a larger process and used right away in a subsequent step – in a higher level product –, never to appear in stock.
3. A phantom item that consolidates items for organizational purposes, e.g., when it makes sense to pick a group of parts from stock all at once, to be used together in a production step.

Once you have set up the bills of materials and production routings in the system, you can create manufacturing orders for your products. The manufacturing orders then include MOs for all subassemblies required to manufacture the end products, allowing you to book the necessary quantities of raw materials and components from stock and automatically schedule the manufacturing operations needed to complete the orders.

If you offer customization options for your multi-level products, a robust manufacturing ERP system with both multi-level BOM and product configuration capabilities allows you to effortlessly manage the production of hundreds of configurable subassemblies. Compared with using separate single-level BOMs for all your subassemblies, this functionality drastically reduces paperwork and the time spent on MO creation, material planning, and production scheduling.

If you have already set up your indented BOMs in spreadsheets or if you use CAD software to design complex products, MRPeasy also allows you to easily import them in bulk as a CSV file. This way, you can avoid wasting time on manual data entry and minimize the resources required to set up the system.

Read more about importing multi-level BOMs to MRPeasy from our User Manual.

Real-life multi-level BOM use cases

MRPeasy case studies show how manufacturers use multi-level BOMs to streamline production planning, improve change management, and keep better control over the full product lifecycle from product development to production runs.

Managing complex technical products

For manufacturers of electronics, industrial equipment, and advanced machinery, multi-level BOMs make it easier to manage large product structures with many dependencies. Exacta Technologies, a computer hardware manufacturer, uses MRPeasy to control complex product configurations and engineering updates.

“Our product set is large and complex,” says Chris Landen, Managing Director. “MRPeasy allows us to manage multi-level and configurable BOMs while controlling revisions and engineering changes properly.”

Improving visibility across assemblies

Multi-level BOMs also help teams understand how each subassembly fits into the finished product. Nexus ACS, a manufacturer of industrial control systems, highlights this visibility benefit.

“What set MRPeasy apart was the ability to manage multi-level bills of materials with nested assemblies and manufacturing order processes,” says Jason David, President. “It gave us a simpler way to view everything in a product or project, using the expanded bill of materials where we can see items and subassemblies in one view, export to PDF or Excel, and make sure everything is covered.”

Supporting change management and revisions

When products evolve over time, BOM change management becomes critical. Radar systems manufacturer Blighter Surveillance Systems uses MRPeasy to manage detailed product structures and revisions for products comprising up to 60,000 components. 

“We needed a system where we could define our own individual part numbers, control revisions, and manage multi-level BOMs,” says James Watt, Supply Chain Coordinator.

Managing variants and configurable products

Multi-level BOMs are also valuable for manufacturers that make product variants or customized items. Lens metrology equipment manufacturer Optimec Systems is one of the companies that uses parameterized BOMs to reduce manual work.  

“MRPeasy’s ability to manage complex parameterized BOMs saves us a huge amount of time,” says Matthew Cleere, Director of Operations.

Connecting BOMs with sales and e-commerce demand

For companies selling through direct sales or e-commerce channels, accurate BOMs help turn orders into production faster. When a customer order is received, the BOM defines the materials, subassemblies, and operations needed to complete the work order. This helps manufacturers plan procurement, check stock levels, and schedule production more reliably, reducing the risk of delays between order placement and delivery.

“I could never do it without MRPeasy,” says Eric Roering from Fontana Candle, a candle maker that manages nearly 1000 BOMs, including multi-level ones. “We do a lot of big sales during the holiday season and MRPeasy allows me to sell ahead with confidence. Instead of putting only the 100 candles that I have in stock on sale, I can put up 10,000 candles that haven’t been made yet and still know that I will be able to deliver them on time. It has allowed us to keep our service levels and customer satisfaction up. Because customers hate it when something is out of stock.”

Key takeaways

• A multi-level BOM, also referred to as an indented BOM, is a bill of materials that details the composition of the product as well as the composition of the subassemblies used in the product.
• Indented BOMs are used by manufacturers that also produce the subassemblies used in their products.
• Manufacturers that buy all of their subassemblies only require single-level BOMs.
• A multi-level BOM is useful if your product is very complex, if you use the same subassembly in multiple products, or if you want to use material kitting to simplify inventory management and handling.
• The use of a multi-level BOM is unwarranted if the throughput time is short or if the manufacturing process only consists of one assembly operation performed all at once.
• When dealing with multi-level BOMs, using a manufacturing ERP system is essential to properly manage production and materials planning.

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