To create a manufacturing bill of materials, identify the product and the BOM’s purpose, add each directly consumed component or subassembly with its quantity per parent, capture relevant process details, then review and release the correct version for production or planning. The exact fields and workflow depend on your ERP or PLM system.
Decide what the BOM needs to do
A bill of materials defines the components required to produce a product. Combined with a route or production flow describing operations and resources, it can also support estimated product-cost calculations. Microsoft Learn describes BOMs and their role in Dynamics 365 Supply Chain Management.
Before creating a record, identify the finished item and whether the structure is for early design, engineering, planning, production, costing, or another purpose. These views can differ: an engineering design may not reflect the actual way a factory builds the product. Simple operations may combine planning, production, and costing purposes in one structure; frequent engineering changes or alternative production routes can justify separate structures.
Build the BOM record
- Create the parent record. In your system of record, create a BOM identity and descriptive name. Connect it to the relevant finished product or variant, and specify the site or validity conditions if your system uses them.
- Add direct components. For every material, ingredient, component, or service consumed directly by the parent, add a line with its item identifier and quantity needed per parent. Use consistent, compatible units of measure. Microsoft’s Business Central instructions use the “Quantity per” field for this value: Create production BOMs in Business Central.
- Add relevant process details. Where the manufacturing process requires them, enter expected scrap, quantity or dimension formulas, or a routing link that associates a component with a particular operation. These are not universal requirements; confirm what each field means and how units are interpreted in your system.
- Reference subassemblies where appropriate. Add a child BOM when a component is a separately produced or tracked assembly. Use a phantom structure for a logical group of components that is not independently stocked or produced.
Choose the right structure for subassemblies
A regular subassembly represents an intermediate item that can be produced, stocked, or tracked separately. A phantom is a way to group or reuse component sets without creating a separate inventory-tracked production item; its components expand into the parent order. The distinction affects how work and material demand are represented, so base it on the actual production process rather than on convenience alone.
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Phantoms can simplify logical groupings, but avoid excessive phantom depth in highly repetitive manufacturing: Microsoft documentation cautions that deep phantom hierarchies can affect performance. See the Dynamics 365 BOM documentation and Business Central production BOM guidance.
Set versions, validity, and approval
A BOM is not ready for operational use just because its lines are entered. Establish a revision or version identity and the conditions under which it applies. Depending on the system, those conditions can include effective dates, site, quantity, product dimensions, or variant. Set the required approval or certification status, and activate or designate the intended version as the default if the system supports that step. Microsoft’s Dynamics 365 workflow requires approved BOM versions for planning and manufacturing, while Business Central documents certification and version start dates.
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Check that validity rules are not overlapping or ambiguous. When a revision changes, confirm that the right version applies to the intended product, site, date, and quantity before planning or production uses it.
Review the structure before release
Use this checklist to catch errors that can distort material demand or production execution:
- Parent item, BOM identity, and intended purpose are correct.
- Each component or child assembly has the correct item identifier and line type.
- Quantities are expressed per the intended parent quantity, with compatible units.
- Scrap allowances are included only where expected and defined consistently with the shop process.
- Operation-specific consumption has the appropriate routing link, if applicable.
- Revision, effective dates, product or site applicability, approval, and active/default status are correct.
- The released structure yields the expected material requirements for the product and production scenario.
If the BOM is used for costing, also confirm that the BOM version and associated route or resources are the ones intended for the cost calculation. The BOM and production route together provide the basis for estimating product cost in Dynamics 365.
Choose a BOM type that matches the lifecycle
| Type | Main job | Practical consideration |
|---|---|---|
| Draft or sketch | Early material definition and rough cost estimation | Microsoft notes this type is not usually used in ERP. |
| Engineering | Represent the designed product and support engineering work | It may need conversion or adaptation if the design structure differs from the production build. |
| Planning | Calculate component demand from finished-product demand | May be combined with production or costing in simpler implementations. |
| Production | Represent materials and resources actually used to build an item | Keep it aligned with production realities and the applicable production version. |
| Costing | Estimate product cost from the expected material and resource mix | Its purpose or structure may differ from the production view. |
Terminology is software-specific. SAP Manufacturing Execution, for example, documents master, shop-order, SFC-specific, configurable, and rework BOM types; those labels should not be treated as universal categories. See SAP Manufacturing Execution documentation.
Common mistakes and how to avoid them
- Using the design structure as the production structure without checking it. Make sure the released BOM reflects how the product is actually built; the engineering view may not be suitable for repetitive production.
- Entering a quantity against the wrong parent basis. Verify the “per parent” quantity and units before release.
- Making optional fields mandatory by assumption. Scrap and routing links are useful when the process calls for them, not requirements for every BOM.
- Releasing a revision without checking its validity. Review effective dates and other applicability conditions alongside approval status.
- Building an unnecessarily deep phantom hierarchy. Use a phantom for logical grouping, but consider planning and performance behavior in repetitive production.
- Maintaining disconnected copies without change ownership. If revisions, product variants, CAD data, or supplier information must stay connected, a BOM, PLM, or manufacturing ERP workflow may help centralize records. Siemens discusses this integration from a vendor perspective in its guide, How do I efficiently create and manage a single, accurate BOM?
When to use BOM or PLM software
A spreadsheet may be adequate for a limited, stable structure, but recurring revisions, multiple variants, approvals, or links to engineering and supplier data make a controlled system of record more important. BOM and PLM tools can connect product structures across engineering and manufacturing workflows; ERP systems can connect them to planning and production. Select an approach based on the processes and integrations you need, rather than assuming every organization needs separate BOM types or a particular product.
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