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A Bill of Materials Analysis Can Reveal Hidden Costs

A bill of materials (BOM) is a critical component of any company’s production process. It includes information on parts, assemblies, and raw materials. It also contains a description and part number of each item.

A multi-level BOM is a hierarchical structure that shows the relationship between components, sub-assemblies, and assemblies. It is sometimes referred to as an indented BOM.


Whether you’re using a physical product or a software-as-a-service bill of materials (BOM), it’s important to keep track of the individual parts and assemblies needed for production. A BOM can help you manage the complexities of a manufacturing process, including sourcing from multiple locations and contract manufacturers. It can also help you reduce production errors and shipping delays.

The structure of a BOM can vary from one company to another. For example, in a highly technical field such as automobile manufacturing, a BOM may be created by a technical designer. However, in a more streamlined production environment, it can be built by an administrative functional area such as planning or purchasing provided the information is accurate.

A BOM is a hierarchical data model that shows the relationship between various components and assemblies. It includes part numbers, descriptions, quantities, and costs. It can also include a list of documentation that is required for each assembly, such as the Assembly Drawing, the assembly procedure, and the test procedures. In addition to BOMs, there are other hierarchical models that can be used to display the relationships between different products. These include the Time-Phased Product Structure and Engineering Bill of Materials.

A BOM can be analyzed using network analysis techniques. These methods can provide valuable insights into the criticality of parts and assemblies. For example, the centrality of a part can indicate how many finished products it affects. This information can be used to improve reordering and production planning processes.


A BOM is a list of all the parts and materials needed to build a product. It includes the part number, description, and quantity for each component in a specific item. It also includes any required tools or equipment and any other consumables needed for production. A well-designed BOM can help reduce waste and streamline production, saving time and money. It can also help companies track inventory and manage supplier relationships.

The structure of a BOM varies by industry and product category. For example, a circuit board BOM may use a hierarchical format that lists sub-assemblies and their components according to their design, assembly line, tool, unit, or detail. This type of BOM is sometimes referred to as a modular BOM or an intelligent/significant numbering system. This system allows businesses to quickly identify a component based on its name, number, or description.

In software development, a BOM can provide information about open source components, third-party software, and proprietary code. It can help you develop and deliver secure and reliable software that meets security and compliance requirements. It is important to use a powerful software composition analysis (SCA) tool that can generate an SBOM for your application and provide a continuous update of the open source risks in your code. This will allow you to make informed decisions about your software’s future direction.


A BOM is a complete list of all the assemblies, components, and materials that go into a finished product. The structure of a BOM is organized in a hierarchical way. It includes a top-level description of the finished product, and then lists the sub assembly, the components, and the raw materials that go into it. This information is useful for planning procurement and inventory. It is also important to know how to manage changes in the BOM record. It should be easy to identify the revision history of a BOM and track what iterations were used for the original design and the corresponding engineering change orders (ECOs).

A multi-level bill of materials, or an indented bill of materials, is a useful tool for managing complex products. It displays all the parts and assemblies in parent-child relationships, making it easier to locate specific components. This can save time and money in sourcing. It can also help managers control inventory and reduce production delays and waste.

Having accurate details about each component is essential for efficient manufacturing and supply chain management. It can help project management teams synchronize the schedule of manufacturing activities and ensure that all the parts are delivered to the assembly site. Moreover, it can help manufacturers make better decisions about cost and quality by identifying the basic costs of each component. This will allow them to make proper trade-offs between the needs of customers and the business.


A thorough bill of materials analysis can reveal hidden costs that may be eating into profits. These can include extra expenditures for expedited shipping, over-specification of components and unnecessary engineering changes. These hidden costs can be a major challenge for businesses. However, there are many ways to identify and mitigate these costs. These strategies include careful examination of procurement processes, close scrutiny of BOMs, leveraging technology for data analytics and maintaining open lines of communication.

A BOM is a detailed list of all the individual parts, sub-assemblies and raw materials needed to produce a product. It also identifies the quantity of each item required to build a final product. It is an essential tool for various crucial operations, including production planning, inventory management and cost estimation. The BOM is used by both physical products and software-as-a-service products.

BOMs can be complex, with multiple layers and interdependencies. In such cases, a network analysis is an effective technique for identifying key centrality measures and graphical representation of the BOM structure. A centrality measure indicates the relative importance of a part, indicating its impact on the availability of a finished product. It can be based on the number of finished products that use the part, or the total number of starting materials, assemblies and subassemblies it is used in.

A typical cost analysis starts with a breakdown of the BOM into the different categories of materials, parts and assembly costs. This will help you identify areas of opportunity. For example, you might notice that a high cost image processing IC is responsible for 15% of the overall BOM cost. This could be an area for a design change to lower the component cost.