Bill of Materials (BOM): Complete Guide

Egor Domnin · 2026-02-04 · Manufacturing Basics

What a bill of materials is, what BOM stands for, and real examples for manufacturing. Plus: how to create and manage BOMs.

Bill of Materials (BOM): What It Means and How to Create One

Every manufactured product starts with a list. Before the first material is measured, before the first component is assembled, someone writes down exactly what's needed to make the thing. That list is called a bill of materials—or BOM.

Whether you're building furniture, mixing paint, or producing craft food products, a BOM defines what goes into your finished goods. Some industries call it a recipe, formula, or product structure. The concept is the same: a complete list of materials, quantities, and instructions for making a product.

This guide covers what a BOM is, the different types, real examples from various industries, and how to create and manage bills of materials for your own products.

What Does BOM Stand For?

BOM stands for Bill of Materials. It's the standard term across manufacturing industries worldwide.

In process manufacturing—food, cosmetics, chemicals, paints—you'll often hear the terms "recipe" or "formula" used interchangeably with BOM. A paint formula and a bill of materials serve the same purpose: they define exactly what materials and quantities are needed to produce a batch of product.

The term dates back to early manufacturing, when engineers literally created paper "bills" listing required materials. Today, BOMs live in spreadsheets, ERP systems, and dedicated BOM software—but the core purpose hasn't changed.

What a Bill of Materials Contains

A complete BOM typically includes:

Some BOMs include additional fields like supplier information, lead time, or alternative materials. The level of detail depends on your product complexity and business needs.

Single-Level vs Multi-Level BOM

Bills of materials come in two main structures: single-level and multi-level.

Single-level BOM lists all components in a flat structure. Every material sits at the same level—there's no hierarchy. This works well for simple products where you're combining raw materials directly into a finished good.

Example: A jar of pasta sauce. The BOM lists tomatoes, garlic, olive oil, salt, basil, jar, and lid. All items are direct inputs to the final product.

Multi-level BOM (also called hierarchical or indented BOM) shows parent-child relationships between components. A finished product contains sub-assemblies, and those sub-assemblies contain their own components.

Example: A wooden chair. The BOM shows the chair contains a seat assembly, back assembly, and leg assembly. Each assembly then breaks down into its own components—the seat assembly includes the seat board, screws, and finish.

For most small manufacturers in process industries, single-level BOMs are sufficient. You're typically combining raw materials directly into finished products without intermediate sub-assemblies.

Multi-level BOMs become necessary when you produce semi-finished goods that become inputs for other products—like producing a base paint that then gets used in multiple colored paint variants.

Types of BOM by Function

Beyond structure, BOMs can be categorized by their function in the product lifecycle:

Engineering BOM (EBOM) represents how a product is designed. It focuses on functional components and may include parts that aren't directly used in manufacturing (like design documentation).

Manufacturing BOM (MBOM) represents how a product is actually built. It includes all materials consumed during production, including packaging, consumables, and items the EBOM might exclude. For shop floor operations, the manufacturing BOM is what matters.

Sales BOM represents how a product is sold. It may group multiple items into a single sellable unit or show configurable options for customers.

For most small-to-medium manufacturers, you'll primarily work with manufacturing BOMs. The distinction between EBOM and MBOM matters more in complex engineering environments with separate design and production teams.

Bill of Materials Example

Here are three examples showing how BOMs work across different manufacturing types.

Example 1: Discrete Manufacturing (Wooden Stool)

A simple wooden stool with a single-level BOM:

Output: 1 finished stool

Example 2: Process Manufacturing (Artist Paint)

A batch recipe for oil paint—the type of BOM common in chemical, cosmetic, and paint manufacturing:

Output: 50 jars of Artist Red paint Cost per unit: €5.39

Example 3: Food Production (Hot Sauce)

A recipe-style BOM for a food product:

Output: 40 bottles of hot sauce Cost per unit: €1.33

Notice how all three examples follow the same structure despite being completely different products. That's the power of a standardized BOM—it works across industries.

What Is BOM in Production?

In day-to-day production, the BOM serves as the bridge between "what to make" and "what materials to use."

Here's how it typically works:

1. Production order created — You decide to make 100 jars of red paint
2. BOM referenced — System looks up the red paint recipe
3. Materials calculated — Quantities multiplied by 100 (or by batch size)
4. Inventory checked — Do you have enough materials?
5. Materials reserved or picked — Pulled from inventory for production
6. Production completed — Finished goods added to inventory
7. Materials consumed — Raw materials subtracted from inventory

The manufacturing BOM is what makes this flow possible. Without it, you'd be guessing quantities, manually calculating material needs, and hoping you have enough stock.

For accurate inventory and costing, the BOM must reflect reality. If your actual recipe uses 2.6 kg of pigment but the BOM says 2.5 kg, your inventory will drift out of sync over time. BOM accuracy is critical.

How to Create a Bill of Materials

Creating your first BOM is straightforward. Here's a practical approach:

Step 1: Make the product once while documenting everything. Weigh and measure each material as you use it. Write down exactly what goes in and how much.

Step 2: List every material with its unit of measure. Be specific. "Pigment" isn't enough—you need "Red Pigment #42, RM-001, kg."

Step 3: Assign part numbers or SKUs. Every material needs a unique identifier. Keep it simple: RM-001 for raw materials, PK-001 for packaging, FG-001 for finished goods.

Step 4: Record quantities per batch. How much of each material goes into one production batch? What's the output quantity?

Step 5: Add costs. Pull unit costs from your purchase records. The BOM should calculate total cost automatically.

Step 6: Test and refine. Produce a batch using your BOM. Did quantities match? Adjust as needed.

The goal is a BOM you can hand to anyone, and they can produce the same product with the same results.

BOM Management: Keeping Recipes Accurate

Creating a BOM is one thing. Keeping it accurate over time is another.

Effective BOM management means:

Version control. When you change a recipe—different supplier, adjusted quantities, new packaging—create a new version. Keep history so you can trace what changed and when.

Single source of truth. Your BOM should live in one place. If it's scattered across multiple spreadsheets, someone will use the wrong version.

Regular reviews. Compare BOM quantities to actual consumption periodically. If they don't match, either the BOM is wrong or your production process has drifted.

Clear ownership. Someone should be responsible for BOM accuracy. In small teams, that's often the production manager or owner.

Excel vs BOM Software

You can manage bills of materials in Excel or Google Sheets. Many manufacturers start there, and for simple operations, it works.

Excel makes sense when: - You have fewer than 20-30 products - BOMs rarely change - One person manages everything - You're just getting started

BOM management software makes sense when: - You need BOMs connected to inventory - Materials should auto-consume on production - Multiple people access recipes - You want automatic BOM cost calculation - Products or recipes change frequently

The tipping point usually comes when manual work starts causing errors or eating significant time.

Frequently Asked Questions

What's the difference between BOM and recipe?

They're functionally the same. "Recipe" is commonly used in process industries (food, cosmetics, chemicals) while "BOM" is the broader manufacturing term. A recipe is a type of bill of materials.

Can a BOM include labor and overhead costs?

A standard BOM covers material costs only. For full production cost, you'd add labor (time × rate) and allocated overhead. Some systems support this; others keep it separate.

How often should I review my BOMs?

At minimum, review when changing suppliers, adjusting formulas, or noticing inventory discrepancies. Quarterly reviews are good practice for active products.

What if my yield varies between batches?

Track actual output vs. expected output. If you consistently get 48 jars instead of 50 from a recipe, either adjust the BOM or investigate why you're losing product.

Should every product have a BOM?

If you manufacture it, yes. Even "simple" products benefit from documented recipes. The BOM removes guesswork and ensures consistency.

Wrapping Up

A bill of materials is the foundation of organized manufacturing. It answers the basic question every production run starts with: what do I need, and how much?

For simple products, a spreadsheet BOM works fine. As you grow—more products, more batches, more people involved—the limitations become clear. Tracking inventory, calculating costs, and maintaining accuracy gets harder.

That's when connecting your BOMs to your inventory and production workflow pays off. Instead of manual updates and hoping the numbers match, everything stays in sync automatically.

Tags: Production Planning, Bill of Materials, Manufacturing