KB196: Bill of Materials (BOM): Meaning, Types & Benefits

KB196: Bill of Materials (BOM): Meaning, Types & Benefits

KB196: Bill of Materials (BOM): Meaning, Types & Benefits 150 150 Shrutidhara

The Bill of Materials (BOM) is a comprehensive list of raw materials, components, and quantities necessary to manufacture a particular product. Moreover, by combining a BOM with a production flow or route, businesses can easily estimate production costs.

A bill of materials contains the following information:

  1. BOM ID
  2. BOM Name
  3. BOM Lines
  4. BOM Versions

While, on the one hand, BOM Lines specify the components. BOM versions, on the other hand, refer to both the products and the time period for using the BOM.


Furthermore, depending on the business context and requirements, there are different types of Bill of Materials.

Sketching BOM

Businesses can use this BOM to estimate the materials required in the initial design stages along with the costs and product attributes. However, businesses using Enterprise Resource Planning or ERP can pass this BOM up

Engineering BOM

In most cases, engineering Bill of Materials is used when new products are designed from existing product portfolios. It helps businesses in simplifying the design process and categorizing complex products into modules.

Planning BOM

Planning BOMs are used to plan material requirements. Moreover, to determine the need for components and raw materials, it considers the demand for finished goods.

Production BOM

The Production Bill of Materials includes the actual resources used during the production.

Costing BOM

In order to estimate the cost of a product, costing BOM is used. It describes the mix of materials and resources that are expected to be used. By using the costing BOM, businesses can create a representative estimate of costs over a period. This helps them to reduce variances.

Phantom BOM

“A Phantom BOM is a non-stocked assembled item. Moreover, it is composed of components and sub-components that can be reused to simplify the BOM creation process. In manufacturing, it represents an item that is physically built, but rarely stocked, before moving to the next stage or level.”


By using Bill of Materials, businesses can benefit in several ways

  • Streamline the raw material procurement process
  • Provide a cost estimate for materials
  • Improve inventory management & control
  • Ensure accurate records are maintained
  • Maintain a robust supply chain and minimize waste
  • Effectively monitor and plan material requirements

Why Choose Us?

We are a Microsoft Partner based in Vadodara, Gujarat, with offices across India & overseas. With over a decade of experience in Business Management Consulting, we strongly believe in and work towards Microsoft’s vision of facilitating a holistic and unified Digital Transformation for all our clients. Our highly skilled & knowledgeable Techno-Functional Consultants not only adhere to a customer-centric approach & provide our clients with round-the-clock support but also have an exceptional track record when it comes to project management and service delivery. We are committed to providing our clients with the best possible service and experience, and we firmly believe that our team of experts is the best in the business. If you’re looking for a partner that can help you with your digital transformation, look no further than us.

For more information or to book a free consultation with one of our experts, please write to us at enquiry@dhyey.com.