Bill Of Materials - BOM


DEFINITION of 'Bill Of Materials - BOM'

A comprehensive list of raw materials, components and assemblies required to build or manufacture a product. A bill of materials (BOM) is usually in a hierarchical format, with the topmost level showing the end product, and the bottom level displaying individual components and materials.

BREAKING DOWN 'Bill Of Materials - BOM'

Bills of materials come in different types specific to engineering (used in the design process), manufacturing (used in the manufacturing process), and so on. A manufacturing BOM is of vital importance in materials requirement planning (MRP) and enterprise resource planning (ERP) systems.

A BOM "explosion" displays an assembly or sub-assembly broken down into its individual components and parts, while a BOM "implosion" displays the linkage of individual parts to an assembly.

  1. Flexible Manufacturing System - ...

    A method for producing goods that is readily adaptable to changes ...
  2. Manufacturing Resource Planning ...

    An integrated information system used by businesses. Manufacturing ...
  3. Materials Requirement Planning ...

    One of the first software based integrated information systems ...
  4. Enterprise Resource Planning - ...

    A process by which a company (often a manufacturer) manages and ...
  5. Economic Order Quantity - EOQ

    An inventory-related equation that determines the optimum order ...
  6. Supply Chain

    The network created amongst different companies producing, handling ...
Related Articles
  1. Fundamental Analysis

    Vital Link: Manufacturing And Economic Recovery

    Manufacturing output is one of the clearest signs that an economy is recovering from a recession.
  2. Professionals

    Career Advice: Accounting Vs. Bookkeeping

    Learn the nuances that separate the similar careers of accounting and bookkeeping, and identify which is better for you based on your skills and career goals.
  3. Investing Basics

    Explaining Noncurrent Liabilities

    Noncurrent liabilities are financial obligations a company owes a year or more into the future.
  4. Economics

    Explaining Accounting Conservatism

    Accounting conservatism is a principal that requires accounting rules be applied with high degrees of verification.
  5. Economics

    Explaining Double Entry Accounting

    Double entry is an accounting and bookkeeping term describing the method of entering transactions into the accounting records.
  6. Economics

    What's an Allowance for Doubtful Accounts?

    The allowance for doubtful accounts represents the percentage of the accounts receivable the company expects to write-off as uncollectible.
  7. Economics

    What's Recorded in a Cash Book?

    A cash book is an accounting book that records all cash receipts and cash payments before they’re recorded in a business’s general ledger.
  8. Economics

    Understanding Accounts Receivable Aging

    Company managers use accounts receivable aging reports to monitor overdue accounts.
  9. Economics

    Explaining Accounting Profit

    Accounting profit is the net earnings of a business as calculated under Generally Accepted Accounting Principles (GAAP).
  10. Economics

    Explaining the Accounting Equation

    The accounting equation is the basis for double-entry accounting, and requires that every business transaction affect two accounts equally.
  1. How is a Limited Liability Company (LLC) taxed?

    To generate financial states using grouping schedule codes for trial balances, bookkeeping and double-entry bookkeeping requires ... Read Full Answer >>
  2. Does location matter for taxes when calculating gross sales?

    Tax policies regarding gross sales differ by state and region. Some city jurisdictions, counties and states require a percentage ... Read Full Answer >>
  3. What is the best software for calculating trial balances?

    Trial balance software is used to generate reports comparing the total debits and total credits in a double entry book keeping ... Read Full Answer >>
  4. What's the difference between a trial balance and a balance sheet?

    There are many differences between a trial balance and a balance sheet. For example, a trial balance is an internal report ... Read Full Answer >>
  5. What's the difference between a trial balance and an adjusted trial balance?

    A trial balance is a simple accounting report that gives a picture of a business at periodic intervals, such as monthly or ... Read Full Answer >>
  6. What is the difference between an accrual and an account payable?

    The difference between an accrual and an account payable is that an accrual is an accounting adjustment for revenue that ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Purchasing Power

    The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing ...
  2. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  3. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  4. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  5. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  6. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!