What is a bill of materials (BOM)?

A bill of materials (BOM) is a structured list of what a product is made of. In Turkish, it’s called ürün ağacı (literally “product tree”), reçete, or malzeme listesi.

The finished product sits at the top of the tree. Below it are the subassemblies and parts that go into it, and below those, the raw materials. Each line names a component and how much of it you need for a given output quantity.

What’s in a bill of materials?

A basic BOM line has a component, a quantity, and a unit. Most businesses also keep the following:

• Output quantity: how many units of the finished product the BOM is written for. In chemicals and food, a BOM is often defined for one batch.
• Waste allowance: an extra margin to cover losses such as cutting waste, spillage, or evaporation.
• Levels: each subassembly has its own BOM, and the finished product’s BOM includes these sub-BOMs.
• Phantom assemblies: intermediate items that never go into stock and are used directly to make the parent product. Planning doesn’t create a separate order for them; their components are added straight to the level above.
• Effectivity and alternates: different BOMs for the same product by date, quantity, or plant.

The order of operations and the machine for each step usually live in a separate record called a routing. The BOM answers “what,” and the routing answers “how and where.”

Why does a bill of materials matter?

When a production order is opened, the BOM determines which materials are picked from the warehouse. Material requirements planning (MRP) breaks sales demand down through the BOM into components to work out what needs to be purchased. Run the other way, a “where used” query shows which products are affected when a component changes or its supply runs into trouble.

The BOM is central to costing, too. Under Article 275 of Turkey’s Tax Procedure Law (Vergi Usul Kanunu, VUK), the cost of manufactured goods includes these elements:

• The primary and raw materials consumed in making the product
• The labor attributable to the product
• Its share of manufacturing overhead
• Optionally, its share of general administrative expenses
• For products that must be sold packaged, the cost of the packaging materials

The BOM is the basis for calculating the first of these, the materials consumed.

Bills of materials in IWB

In IWB, you manage bills of materials in Manufacturing. A BOM line’s quantity can be fixed, per batch, a percentage, or a formula. For example, the formula width × height / 1,000,000 gives the square meters of glass needed.

The formula is calculated once when the order is opened and doesn’t change after that. The order takes the BOM as it stands that day, so later changes to the BOM don’t affect open orders.

An alternate BOM is selected by branch, quantity range, and effective date. For a made-to-order job, you can create a one-off order-specific BOM from the order line, and it isn’t listed in the BOM catalog. Phantom assemblies don’t get their own order; their materials are added straight to the level above. Routings are kept separate from BOMs, and several products can share the same routing.

The “Where used” list shows every BOM a material appears in, and you can download the tree as a CSV file. MRP works through the BOM level by level to calculate material requirements. An item that can be manufactured but has no BOM is flagged as an error on the “Data quality” screen.

If a formula has to stay secret, you mark the BOM as confidential. Its contents are then hidden on the BOM record, in the tree, in exports, and on production order lines. Seeing them takes a separate permission, which is off by default. When an order is completed, the materials consumed and the finished product are posted to inventory together.