What is a Bill of Materials? Come on, get to know the meaning, types and benefits

If you are involved in the manufacturing business world, you will often hear the term Bill of Materials. So, what exactly is a Bill of Materials? This term is often abbreviated to BOM and has an important role in the production process.

For those of you who want to know more, let's look at the complete discussion about the meaning, types and benefits of a Bill of Materials. Listen until the end, OK! So that this article can be useful for you!

Understanding Bill of Materials

A Bill of Materials is a complete list containing the raw materials, components and instructions required to make a product. BOM is not just a list, you know. 

So, BOM is an important guide that ensures the production process runs smoothly from start to finish. The parable is like you are making a cake. 

The recipe you use is similar to BOM. All the ingredients needed, from flour, sugar, to butter, are clearly listed. Likewise with the manufacturing steps. So, this BOM is a kind of "recipe" for the world of manufacturing.

What is a Bill of Materials and its Function?

In general, the Bill of Materials is a tool that helps companies detail all the requirements for producing an item. 

So, with BOM, the production process becomes more organized. 

For example, if there is an error in raw materials, the BOM can help find where the problem is. 

You also don't need to worry about raw material stocks running out suddenly. The BOM ensures you have a complete record of what the requirements are and how much needs to be available.

Read Also: 5 Important Tips for Restaurant Kitchen Management for Beginners

Types of Bill of Materials

Talking about the Bill of Materials, it turns out there are several types that you need to know. Each type of BOM has a different function according to the company's needs. Come on, let's discuss them one by one!

1. Manufacturing Bill of Material (MBOM)

This type is used in the manufacturing process. MBOM includes raw materials, sub-components, and tools needed to produce goods. 

If your company focuses on production, MBOM is the most frequently used.

2. Engineering Bill of Material (EBOM)

EBOM focuses more on product design. This type records all components based on technical specifications. 

EBOM is usually created by the engineering team before the product is mass produced.

3. Sales Bill of Material (SBOM)

SBOM is used for sales. So, this BOM focuses on how the final product is offered to consumers, including details of components that can be customized.

Benefits of Bill of Materials

The Bill of Materials (BOM) has many benefits that make the production process in manufacturing companies more organized and effective. 

If you are curious about how BOM can help business, let's look at the following explanation!

1. Optimizing Production Process

When you're cooking your favorite food, but the ingredients aren't complete, it's bound to be a hassle, right? 

It's the same with the production of goods. With a BOM, all the raw materials and components needed are neatly registered from the start. 

So, you won't be confused about what is missing. The production process runs more smoothly without obstacles that waste time.

2. Reduce Production Errors

Small errors in production often lead to big losses. For example, choosing the wrong raw materials or installing the wrong components. 

Well, the BOM functions as a guide that ensures all production steps are carried out correctly. 

If there is a wrong part, you can immediately check it in the BOM. Of course, this helps you minimize the risk of production failure.

3. Control Production Costs

It is very important to know how much costs will be incurred during the production process. BOM helps you calculate raw material needs precisely. 

From here, you can estimate your budget in a more controlled manner. Unnecessary expenses can be reduced, so that your business remains profitable without wasting money.

4. Makes Planning Easier

The production process requires careful planning. BOM helps you design a structured work schedule. 

You can know when raw materials need to be prepared, how much is needed, and how long production takes.

5. Supports Decision Making

Sometimes, you have to make quick decisions to overcome production problems. 

For example, when the main raw material suddenly runs out, you need to look for alternatives. 

Through BOM, you can immediately check the need for other raw materials that are still available.

6. Increase Operational Efficiency

BOMs also help companies work more efficiently overall. All data related to raw materials, components and production instructions have been well documented. 

In essence, the BOM makes it easier for each part of the company to work according to their respective duties. No more confusion or miscommunication between teams.

From all these benefits, it is clear that BOM is an important key for manufacturing companies. If all processes are well organized, not only will product quality increase, but also the company's overall profits. 

Especially if you integrate BOM with modern technology such as an ERP system. Everything becomes more practical and efficient!

Read Also: The Importance of Having Good Operational Management in the Restaurant Business

Differences between Bill of Materials and Other Production Documents

Many people confuse BOMs with other production documents, such as work plans or stock records. In fact, each document has a different function. Well, here are the differences:

• BOM: Focuses on raw materials and components required for production.

• Work Plan: Focus more on the production timeline.

• Stock Records: Used to monitor the availability of raw materials in the warehouse.

So, the BOM is a kind of map that guides you in the production process, while other documents are more supporting.

Bill of Material (BOM) in the Culinary Business

Source: ESB

Although the term Bill of Material (BOM) is commonly associated with the manufacturing industry, this concept is highly relevant and critical in the culinary business as well. 

The difference lies in its application: while BOM in manufacturing is used to assemble products, in the culinary industry BOM functions as a structured recipe directly connected to restaurant operations and financial management.

In the context of the culinary business, a BOM is a detailed list of raw materials, including quantities and costs, required to produce a single menu portion. 

BOM does not only record what ingredients are used, but also how much is used, how the process flows, and how it impacts inventory levels and Cost of Goods Sold (COGS).

For example, for a menu item such as Ayam Geprek with Sambal Matah, the BOM would include:

• Raw chicken (in grams)
• Flour
• Cooking oil
• Sambal matah (which may consist of shallots, chilies, oil, and other seasonings)

When one portion of the menu is sold, the inventory of each ingredient is automatically reduced according to the BOM, and the ingredient cost is immediately calculated as part of the COGS. 

This is what makes BOM a fundamental foundation for a well-organized and controlled restaurant operation.

Why Is BOM Important for the Culinary Business?

Without BOM, many restaurants face common challenges such as:

• Inventory running out without a clear cause
• Inconsistent COGS even for the same menu items
• Difficulty identifying which menu items are the most profitable
• Kitchen costs leaking without being noticed.

By managing BOM digitally, culinary business owners can:

• Control ingredient usage with precision
• Maintain consistency in taste and cost across all outlets
• Accurately calculate COGS per menu item
• Make business decisions based on data rather than assumptions.

Culinary BOM and ERP Systems

To be truly effective, BOM management must be integrated into a digital system. Through an ERP system such as ESB Core, BOM can be directly connected to:

• Inventory management
• Sales
• Semi-finished goods production
• Financial reports (COGS, profit & loss, and cash flow).

With this approach, kitchen recipes are no longer just cooking guidelines, but also business control tools that help restaurants grow more efficiently and sustainably.

Bill of Material (BOM) FAQs

1. What is a Bill of Material (BOM)?

A Bill of Material (BOM) is a comprehensive list of raw materials, components, and instructions required to produce a product or a menu item. 

It serves as a guideline to ensure the production process runs in a structured, efficient, and controlled manner.

2. What is the main function of a Bill of Material in the production process?

BOM helps businesses plan raw material requirements, prevent production errors, control costs, ensure inventory availability, and keep the production process organized and efficient.

3. What are the different types of Bill of Material?

In general, there are three main types of BOM:

• Manufacturing BOM (MBOM) for production processes,
• Engineering BOM (EBOM) for product design and technical specifications,
• Sales BOM (SBOM) for sales purposes and product configuration.

4. Is Bill of Material only used in the manufacturing industry?

No. In addition to manufacturing, BOM is also highly important in the culinary business. 

In restaurants, BOM functions as a structured recipe that records ingredients, quantities, costs, and their impact on inventory and Cost of Goods Sold (COGS).

5. Why should Bill of Material be managed using an ERP system?

With an ERP system, BOM can be directly integrated with inventory, sales, production, and financial reports. 

This helps businesses calculate COGS accurately, control inventory in real time, and make data-driven decisions instead of relying on assumptions.

Conclusion

Managing Bill of Material (BOM) manually is no longer effective, especially for businesses aiming to scale in a more structured and controlled manner. With digital systems, BOM goes beyond being a simple ingredient list—it becomes the foundation for inventory control, accurate COGS calculation, and data-driven decision-making.

Through an ERP system like ESB Core, BOM management is fully integrated with inventory, sales, production, and financial reporting. As a result, business operations become more efficient, transparent, and ready for growth.

Learn more about how ESB Core helps your business manage BOM and operations end-to-end.

Contact the ESB Team for a consultation and discover an ERP solution tailored to your culinary business needs.