User Manual

BOM (Bill of Materials)

From Stock -> Items -> An item's details or Production planning -> BOM it is possible to add a bill of materials (BOM) to your products.

A Bill of Materials lays the foundation for

  • material planning for production,
  • planning material purchases,
  • estimation of material costs when quoting.

Jump to:

  1. What is a Bill of Materials (BOM)? How is it used?
  2. How is a Bill of Materials used in production scheduling?
  3. How to add a Bill of Materials in MRPeasy?
  4. How to create a multi-level BOM?
  5. How to report scrap and wastage (Additional products)?
  6. How to set up the BOM with parameters?
  7. How to import a BOM?
  8. How to bulk edit BOMs?
  9. How is the cost of the BOM estimated?
  10. How is the actual cost of materials for a product calculated?
  11. How to update the BOM of already planned Manufacturing Orders?
  12. How to track changes to a Bill of Materials (revisions)?

What is a Bill of Materials?

In MRPeasy, a Bill of Materials (BOM) is the list of materials that are needed to create one unit of product. In other words:

  • for discrete manufacturing, like electronics, industrial equipment, etc., it's the list of parts;
  • for process manufacturing, like food, pharmaceutics, etc., it is the formula or recipe which lists the quantities of ingredients per a unit of product.

When a manufacturing order is created, the BOM is multiplied by the order quantity to calculate total material requirements.

The bill of materials usually consists of several parts, and it could also include other consumables which don't make up the product (e.g. gloves, water, fasteners, etc.).

Single- and multi-level BOMs:

  • A product can have a single-level assembly structure, where it is directly made from raw materials, or
  • it could have multi-level sub-assemblies, where each sub-assembly has its own BOM and manufacturing instructions.
For example, a Bill of Materials of a table:
Part code Part description Quantity Unit of measurement
A-00001 Table top 1 pcs
A-00002 Table leg 4 pcs
A-00003 Varnish 0.5 l

An "engineering BOM" is not always the same as the "manufacturing BOM" or "MRP BOM":

  • The engineering BOM states exact quantities of parts or ingredients inside the product, including the detailed assembly structure of the product. 
    - Often does not reflect everything that is actually consumed during production.
    - This kind of bill of materials is a typical output of a CAD program and is used by the engineering department as the technical specification.
  • The manufacturing BOM or MRP BOM takes into account wastage and other consumables used in production; considers the material requirements planning goals; and corresponds to the process of how the product is actually manufactured.
    - Some structures, and parts, might even not be included. For example, when materials planning for some material is not necessary, or that level of detail, each sub-assembly planning separately, is not necessary.
    - The assembly structure is often simplified, if possible, even to a single level.
    - This kind of bill of materials is used for production planning in an MRP system, where it's necessary to know the gross number of all materials for planning purposes and inventory picking.
  • The main difference? 
    - For example, while the engineering BOM states that a 1-meter stick contains 1-meter of stick, the manufacturing BOM will say that making of a 1-meter stick consumes 1.2 meters of a stick (incl. 0.2m of scrap).
    For example, when the engineering BOM states that Part A will be used, the manufacturing BOM will say that Part A alternative will be used, because in reality, the shop-floor uses another material.
    - For example, when the engineering BOM defines each sub-assembly separately, the manufacturing BOM will not define the sub-assemblies separately, but only includes the total material requirements for making the sub-assemblies.

How is a Bill of Materials used for production scheduling?

  1. The software will multiply the materials in the BOM with the requested number of products.
  2. The availability of materials in checked.
  3. If some materials are not available, their lead times are used to calculate estimated availability dates.

Adding Bills of Materials

For adding a Bill of Materials:

  1. Go to Stock -> Items -> An item's details or Production planning -> BOM 
  2. Click on Create a BOM Add to add a BOM.
Or import the Bills of Materials from a CSV file at Production planning -> BOM -> Import from CSV.

Creating a multi-level BOM for a product:

  1. Create separate articles for the sub-assemblies and the product.
  2. Add BOMs to the sub-assemblies.
  3. Add the sub-assembly articles to the BOM of the product.

Demo video

Bill of materials revisions:

BOMs and Routings are associated:

  • It is possible to associate a particular BOM with a particular Routing which go together.
  • For production planning, a product must have both a BOM and a Routing. And both associated with each-other.

If you have a product with parameters or configurations, it is possible to utlize the Matrix BOM functionality to automatically create a number of variations.

If some part is used a fixed amount, irrelevant to the order quantity, it can be entered as Fixed Quantity on the BOM (e.g. a user manual, gloves, tools boxed with the products, etc.). To use this, the Fixed Quantity function needs to be turned on at Settings -> System settings -> Professional functions -> Fixed quantity: Yes.

Additional products, scrap in a Bill of Materials

If the Co-Product BOM functionality is turned on at Settings -> System settings -> Professional functions -> Co-Product BOM: Yes, then it is possible to define which additional items can be created (and reported) as a result of making the product.

This functionality is mainly for reporting scrap or wastage, which needs to be tracked in inventory for further processing.

The worker can report the quantity of the additional product during production.

The cost of the additional products is 0.

Matrix BOM, Products with parameters, configurations

If the BOM with Parameters functionality is turned on and the item has parameters, then it's possible to define a relational BOM where

  • the quantities of parts may differ according to parameter values,
  • the parts may change according to parameter values.

Look: Examples of BOMs with Parameters, Matrix BOM.

Estimating the cost of a BOM

When a BOM is saved, MRPeasy tries to estimate its cost by totaling the costs of materials used in it. 

The cost cannot be estimated if:

  • the cost of some raw material is unknown (no lots at stock and it neither has no vendors);
  • the Matrix BOM functionality is enabled and the BOM includes a relation.

The actual cost of the product is only available after the Manufacturing Order finishes, then based on reporting, the manufacturing costs are added up, and materials have been used from particular stock lots (what is a stock lot?).

Calculating the actual material cost for a product

In general, a manufactured item's cost comprises of three components:

  1. The cost of materials.
  2. The manufacturing overhead cost.
  3. The cost of labor.

The final cost of materials is calculated when a product has been manufacturing via a Manufacturing Order:

  1. When a Manufacturing Order is created, materials are automatically booked to it (default by FIFO; or by FEFO, for perishable goods) from specific stock lots, based on the items BOM.
  2. If some materials were not available, these must be booked later to the MO.
  3. Each item has its own actual cost, which it was purchased with, saved in the stock lot details.
  4. When booked materials are reported consumed and the manufacturing order is finished, the actual cost of materials is added up and divided by the number of products.

The material cost of a product is:

  • The cost of materials = Cost of consumed materials in the MO / Number of products on the order

Read also:

  1. What is a stock lot?
  2. How are manufacturing overhead and labor costs calculated?
  3. How to schedule a Manufacturing Order?
  4. How to book, add or release materials from a Manufacturing Order?

Updating the BOM of already scheduled Manufacturing Orders

If the BOM is updated and there are manufacturing orders (MO) that are based on this BOM, then the software shows a list of MOs that have not been started yet and gives an option to pick and choose which ones to update:

  1. Change the BOM.
  2. Save.
  3. Proceed to updating BOMs.
  4. Choose which MOs you wish to recalculate.
  5. Confirm the new schedule for the MOs.

It is also possible to manually update MOs, in every status: How to book, add or release materials of a Manufacturing Order.