10 Best Practices To Optimize Bill Of Materials

In a manufacturing company, the bill of materials (BOM) is a very important set of data – it includes all materials needed to make a product, such as raw materials, assemblies, standard components, and sub-assemblies. The BOM data is an important element of manufacturing processes because it helps the company to organize material requirements and supply chain as well as plan and track the production process. In order to optimize the BOM, manufacturers should follow some best practices.

Working with thousands of engineers and manufacturing companies we gathered experience of how to manage and organize the data for engineering BOM, contract manufacturers, and expensive components. We developed best practices on how to reduce costs, manage BOM level, and communicate efficiently with a contract manufacturer. In a nutshell, we found how to manage all important factors that will impact all the materials and help you to produce an effective BOM, find similar components and how to prepare a materials list that can be easy to use, and keep everyone in your team on the same page.

Here are 10 best practices to share about BOM management you can use for your company:

Create Categories

Start by building categories of items you are going to use in a BOM. Every item must have its own category that will help you to organize the BOM-based work. Here are some of the most typical item types you can create: Standard parts, Electronics parts, Mechanical Parts, Custom Parts, Fastener, Packaging.

The categories can be different, but it is important to stick with a classification, which will later help you to make an analysis and easy to define dependencies and communicate with other engineers and contractors/suppliers. The ultimate outcome of this work is to build a chart with cost breakdown based on the categories (hint – we are planning to have a BOM chart analyzer at OpenBOM)

Cost Analysis

I haven’t seen a single manufacturing company that is not interested in cost. To have a cost-effective way to make BOM analysis is super important. The easiest way to do so is to sort in the BOMs based on cost and then focus on the top 20%. Whatever comes from the top 20% usually impacts 80% of your product success, so focus on optimization of the 20% of most expensive components cost.

Share BOM Early

To stay on the same page is a super important part of developing a better BOM. The most critical part is the early involvement of all key stakeholders. Start doing it as early as you can during the design phase, which will guarantee that all critical elements of the design will be analyzed by manufacturing, supply chain, and multiple other departments. It will help you to discover long lead times, procurement types and also will engage multiple departments and people in this process.

Quality of Bill of Materials

It is important to ensure the completeness of the BOM by getting the right information there. Designers usually are not interested in the data needed for procurement and quotation. Therefore, getting information such as manufacturer part number will improve substantially BOM data.

Sorting and filtering the data is also important. Therefore, when you build the BOM, think about using the breakdown of component items (defined above) as a foundation to filter the BOM. You can use user-defined BOM views and later share these views with the right people in your organization is the best way to put a healthy foundation in your master schedule.

PCBA Bill of Materials

Electronics are everywhere these days. So, you need to include electronics components (or PCB design BOM) in your overall product structure is a key to success. Keep in mind that Electronic BOM can be slightly different (eg. Ref Designators), therefore using a proper way to manage electronic BOM and provide complete information about electronic components is important to identify the cost and dependencies of the product on electronic components logistics, and inventory management. 

Packaging

Don’t forget to include packaging materials in a BOM. Forgetting about packaging can lead to a big miss in cost analyzes. At the same time, modern packaging can be expensive and impact the way you sell your finished product.

Lead time

With modern supply chain shortages, lead time is becoming a king of the manufacturing process. It was important before, but now it is paramount. To have the right components on time and at cost is ultimately part of the success of any manufacturing operation.

Revisions and Dates

Bill of materials is a live structure and process. Therefore, from the early beginning think about how you can manage the BOM history of changes, revisions, and dates. It is can be a fatal error, just to send a wrong BOM to the factory and you will get delays, cost impact, and many other problems related to the usage of wrong data (hint: think OpenBOM organizing all the data – history, revisions, changes automatically).

Stay off Excels

Although, Excel (or spreadsheets) are still the most commonly used format and tool to manage BOM, think about 2 major inefficiencies of Excels – (1) manage a single item record and not duplicate the data; (2) manage product structure, rollup cost, and quantities. Both cannot be used to manage BOM and product structures efficiently.

Include Pictures and URLs

You don’t have to do so, but using images and links can make every BOM much better, easy to understand, and, most importantly, eliminate possible mistakes in much earlier development phases. (Pro tip: OpenBOM visual BOM gives you an automatic image extraction from CAD, importing images from other formats).

What is my conclusion?

Data has huge power in managing processes and coordinating people. A properly organized Bill of Materials has a magic power on how to improve your product, optimize cost and ensure the product will be delivered on time. BOM is the foundation of your manufacturing success.

Check out how to start a 14-day Free OpenBOM trial as a next step and contact support to schedule a call with our team. 

Best, Oleg