Bill of Materials (BOM)
Also known as: BOM
A bill of materials (BOM) is a structured list of all the raw materials, components and quantities needed to manufacture or assemble a product.
A BOM tells procurement exactly what to buy and in what quantity to build a given product. It underpins direct procurement and production planning, linking each finished item to its component parts, sub-assemblies and materials — often in a multi-level hierarchy.
Accurate BOMs prevent both shortages and over-ordering. They feed material requirements planning, help calculate product cost, and let buyers aggregate demand across products to negotiate better pricing on shared components.
Frequently asked questions
- What is a bill of materials?
- A bill of materials is a structured list of every raw material, component and quantity required to make a product — the shopping list for manufacturing.
- Why is a BOM important in procurement?
- It defines exactly what and how much to buy for production, prevents shortages and over-ordering, and lets buyers aggregate demand for shared components.
Related terms
Direct Spend
Direct spend is money spent on goods and materials that go directly into the products or services an organisation sells.
Read definitionDemand Aggregation
Demand aggregation is combining purchasing requirements across departments, sites or buyers to increase volume and unlock better pricing.
Read definitionSafety Stock
Safety stock is extra inventory held as a buffer to protect against unexpected demand spikes or supply delays.
Read definitionExplore related across the knowledge graph
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