Welcome to the NZRT Wiki Podcast. Today we’re looking at Bill of Materials, or BOM for short.

So what exactly is a Bill of Materials? Think of it as the recipe for a finished product. It tells you every component you need, how much of each one, and how they all fit together before you can produce your end result. If you’ve ever followed a recipe that said “to make this dish, you need these ingredients in these amounts,” a BOM works on exactly the same principle, just applied to manufacturing and assembly.

Let’s walk through the structure of a BOM, because this is where it gets really clear. Imagine you’re looking at a diagram on screen. At the very top you have your finished product. Hanging off that finished product are three components: Component A, Component B, and Component C. Component A requires two pieces. Component B requires half a kilogram. And Component C requires one metre. Now here’s where it gets interesting. Component B itself has a child underneath it called Sub-component B1. That means your BOM isn’t just a flat list. It can be multi-level, going deeper and deeper as needed. You might have a component that is itself made up of other parts, and those parts might have their own sub-parts. This nesting is what makes a BOM powerful, because it captures the full picture of what goes into your product at every level of assembly.

Now let’s talk about the key fields you’ll encounter when you’re working with a BOM in practice.

First, you have your finished product itself, along with the quantity that particular BOM produces. So if one run of this BOM produces ten units, that’s recorded right at the top level.

Next, you have your individual components, each with their own quantities and units. And as you saw in the structure example, those units can vary. One component might be measured in pieces, another in kilograms, another in metres. The system handles all of that, so you don’t have to convert anything manually.

Then there’s something called the scrap factor. This one’s worth paying attention to. When you set a scrap factor on a component, the system automatically over-allocates that material. In other words, if you know from experience that you lose a certain percentage of a raw material during production due to waste or off-cuts or spoilage, you tell the BOM that, and it will automatically request more than the theoretical minimum. You don’t have to manually calculate that buffer every time you create a manufacturing order. It’s baked right in.

Finally, there’s the work centre field. This tells the system where in your facility or production setup a particular component or assembly step happens. Different components might be processed in different locations, and the work centre field captures that routing information.

Now, a BOM doesn’t exist in isolation. It connects to two other important areas of the system. The first is Manufacturing Orders. When you actually want to produce something, you create a Manufacturing Order, and that order executes the BOM. Think of the BOM as the plan and the Manufacturing Order as the action. The BOM says “here’s what you need and how much,” and the Manufacturing Order says “okay, let’s actually make it now.”

The second connected area is Stock and Warehouse Management. When a Manufacturing Order is created from a BOM, the system uses the component list to reserve stock from your warehouse. So if you need two pieces of Component A, the system checks whether you have them available, and reserves them so they don’t get allocated to something else in the meantime. This tight link between your BOM and your stock levels means you always have visibility into whether you actually have what you need before you commit to production.

To bring it all together: a BOM is your single source of truth for what a product is made of. Get it right, and everything downstream, your manufacturing orders, your stock reservations, your scrap allowances, flows from it automatically. Get it wrong, and you’ll find yourself short on materials or producing more waste than you planned for.

Whether you’re setting up a BOM for the first time or reviewing an existing one, the key things to check are that every component is listed with the correct quantity and the right unit of measure, that scrap factors reflect your real-world waste experience, and that work centres are assigned where relevant.

That’s it for this episode of the NZRT Wiki Podcast. Thanks for listening.