The growth of management science over the last half century has created a lot of systems and documents that help administrators in the running of companies. The following article explains how the bill of materials has been a revolutionary document that brings significant benefits to the manner in which modern businesses operate.
A bill of materials (BOM) in manufacturing parlance is a list of all the components required to create a product. It is usually circulated between departments in a factory as well as between the manufacturers and their suppliers. To put it simply, a BOM is a type of shopping list indicating what and how much it is necessary to produce a final product. A BOM is a valuable resource for several players in the manufacturing chain. Without a BOM, manufacturers would not be in a position to know what is present and what is missing in a manufacturing process. An organised list of all the components required to prepare a product helps accountants to estimate the product cost and by extension the product price. BOM have several advantages such as the following - firstly, they help to improve the management of resources within a manufacturing set-up. BOMs kept by production supervisors help them to discover product shelf life and replacement thresholds. Secondly, the presence of unnecessary components in a BOM is likely to alert everyone handling it. This cuts down unnecessary costs that may affect product profitability.
Thirdly, BOMs boost the maintenance of accurate records, helping in the conservation of funds as well as raw materials. This also enables a factory to control its inventory levels and ensure that inputs are available whenever they are needed. The problem of time-lapses caused by material shortages is minimised and product output maximised. Lastly, the ultimate benefit of a BOM is that it cuts down manufacturing costs and materials management, making a manufacturer leaner and more efficient. Different types of manufacturers use one or several types of BOMs. The different types of BOMS include engineering, sales, manufacturing and service bill of materials. These rely on the use to which they are to be subjected. Thus, the lists can be very long and detailed, necessitating their division into hierarchical levels with product structure details to accommodate each component according to its importance.