Digital BOMs are essential for digital transformation

Too many companies operate with immature BOM management processes, often supported by Excel. Here’s what you should be doing.

Developing, revising and managing bills of materials (BOMs) is a fundamental part of the work of many engineers. Companies struggle with inefficiencies, rework and quality issues when they lack adequate control over the product and service definitions that BOMs provide. Engineers who include digital BOMs in their digital transformation scope can reap many benefits.

Too many companies operate with immature BOM management processes, often supported by Excel, the most misused tool in engineering. That situation risks delayed time in the market, quality problems, poor productivity, excess cost and disappointed customers.

By digitally transformation your BOM management processes, you can significantly improve the maturity of BOM-related business processes and related data management practices. Here’s how.

What is a BOM, and how have they evolved?

A bill of materials lists the raw materials, parts, components, sub-assemblies and related quantities needed to manufacture an end product or deliver a service. It may include instructions for manufacturing, maintaining or repairing the product or service.

A BOM can evolve from a simple list of parts into an extensive hierarchical, multifaceted collection of information and relationships for a complex product. For example, a BOM first defines products as they are being designed to create Engineering BOMs (EBOMs), then as built using Manufacturing BOMs (MBOMs) and later as maintained with Service BOMs (SBOMs).

Some companies digitally transformed their BOM data and related processes as they introduced more and more computer-based digital applications. Engineers manage digital BOMs using licensed or custom software and digital data management tools.

BOM versions support multiple business processes in addition to engineering design work. These processes include:

  • Purchasing to order parts and components on time
  • Supply chain to manage inventory levels
  • Production planning to ensure machine capacity and configurations are available
  • Manufacturing to ensure products are built to the BOM specification
  • Technical publication writing to produce accurate end-user manuals
  • Maintenance or service to perform this work accurately

Multiple digital BOM versions for various processes. (Image: OpenBOM.)

Multiple digital BOM versions for various processes. (Image: OpenBOM.)

The wrong way to manage BOMs

Too many companies manage BOMs through inadequate methods, including unstructured documents, Excel workbooks or embedding the BOM into CAD drawings. The central problem is that an effective BOM requires a hierarchical structure that these methods cannot support. Also, these approaches are challenging to maintain and share, not visible to the rest of the organization, and difficult to search.

These approaches ignore that the BOM is a critical resource for many activities along the product lifecycle. It can’t be locked up in Engineering.

Engineers initially develop BOMs to estimate product costs and analyze engineering tasks using an engineering-centric view. Later, many departments will copy the BOM data into their own spreadsheets or systems to add their own data and perspective. This enrichment and transformation creates data anomalies, leading to outdated and misleading BOM information.

These issues can be overcome by managing BOMs using a suitable software package. Then, engineers can increase the visibility of the BOM for other essential processes, such as concurrent design for manufacturing, service procedures, product documentation, sales collateral and vendor communication.

Many companies use Excel to support BOM-related business processes much longer than is prudent. Engineers can spot one or more of the following indicators that their  company is suffering the negative consequences of overusing Excel:

  • BOMs are hampering digital transformation progress
  • The growing number of BOMs has become too difficult to manage
  • “Where used” queries for specific BOM parts or components have become unreliable
  • BOM data summarization through pivot tables and rollup formulas requires frequent developer attention
  • The inability to associate file attachments with particular BOM parts or components is becoming a data management problem
  • The lack of support for BOM versioning has led to awkward workarounds
  • Integrating BOM data sources and sinks requires too much effort or has become unreliable

For a more extensive discussion of Excel limitations, read Engineers are World Leaders in Misusing Excel.

Recognizing when to adopt a digital BOM

Companies with inadequate BOM-related business processes will encounter various business issues. Engineers can champion the implementation of a digital BOM when they observe one or more of these symptoms:

  • Errors in manufacturing
  • High scrap rates and rework effort
  • Wrong parts are being ordered
  • Production delays due to part shortages
  • Inability to confidently implement engineering changes
  • Challenges in personalizing products
  • Poor traceability of parts
  • Slow review and approval processes for design changes
  • Inability to share product and production information with downstream departments and their supporting systems

Benefits of digital BOMs

Mature digital BOM management processes focus on accurate and timely information. Companies that implement these processes experience many operational benefits, including the ability to:

  • Manage product complexity to improve customer satisfaction without reducing quality
  • Offer increased product variation and personalization without losing control or sacrificing margins
  • Improve efficiency to boost staff productivity and reduce costs
  • Automate processes as a result of digital transformation
  • Prevent mistakes and associated rework to reduce costs and avoid warranty claims
  • Ensure thorough change management and impact traceability
  • Support multiple views of the BOM for various stakeholders and not just the engineering view
  • Enable the use of digital twins to accelerate product development and improve problem resolution
  • Improve parts, components and vendor management for consistent quality and more predictable pricing
  • Enhance BOM integration, communication and collaboration across departments and with supply chain vendors to smooth product delivery

At the strategic level, companies with mature digital BOM management processes exhibit increased innovation to respond to market changes, agility to minimize the impact of shortages and supply chain disruption, and faster time to market to build market share. These benefits lead to increased revenue, profitability and market leadership.

Selecting a digital BOM SaaS

Once engineers recognize the shortcomings of their Excel-based BOM management processes, they must select a replacement BOM Software-as-a-Service (SaaS). Consider the following selection criteria as you embark on a digital transformation of your BOM practices.

Software functionality

Superior BOM software will offer functionality for:

  • Developing complex product structures
  • Managing BOM revisions and changes
  • Supporting product variability
  • Managing structured data and documents associated with BOM elements
  • Integrating BOM data with other systems
  • Transforming BOMs to meet the needs of other stakeholders
  • Visualizing products defined by the BOM
  • Analyzing the impact of part and component changes across BOMs
  • Reporting and documenting BOMs
  • Ease-of-use for end-users


Does the BOM software vendor score highly on the following criteria?

  • Financial viability
  • Knowledge of engineering, manufacturing, service and product lifecycles
  • Customer references and reviews
  • Implementation services
  • Support services


Make sure you understand the initial and ongoing costs of implementing any BOM software:

  • Acquisition cost
  • Implementation cost
  • Operating cost

Implementing digital BOMs

Even the best BOM SaaS doesn’t implement itself. Below is a list of the high-level deliverables your BOM implementation project should include, organized by project phase.


  • The project sponsor has been named
  • A project manager has been engaged
  • A consensus on the project goal has been achieved with stakeholders
  • The project objectives support the project goal
  • A consensus about the project scope statements has been achieved
  • The project charter has been approved


  • The project team has been organized
  • A reasonably complete project plan exists
  • The BOM SaaS has been selected and contracted
  • The project steering committee has been organized
  • A risk management plan exists
  • A BOM system cutover plan exists
  • The end-user training plan exists


  • A BOM system requirements document exists
  • A BOM reference data standards document exists
  • The stakeholder engagement plan exists
  • A BOM integration software design document exists
  • A BOM data import design for existing BOMs document exists
  • Risks are being managed


  • The BOM SaaS environment is accessible to the project team
  • BOM integration software exists
  • BOM data import software exists
  • End-user training is occurring
  • The BOM reference data has been created


  • The BOM SaaS software has been tested
  • The BOM integration software test has been completed
  • BOM data import software has been tested
  • The BOM reference data has been tested


  • An operations plan exists
  • The BOM data import software has been executed and checked for accuracy and completeness
  • The BOM integration software is running routinely
  • End-users are routinely using the BOM SaaS system


  • The project sponsor has accepted the project
  • Lessons learned have been documented

Implementing digital BOM management as part of a digital transformation initiative delivers a foundational element that serves engineering, manufacturing and service activity well.

Written by

Yogi Schulz

Yogi Schulz has over 40 years of Information Technology experience in various industries. He writes for ITWorldCanada and other trade publications. Yogi works extensively in the petroleum industry to select and implement financial, production revenue accounting, land & contracts, and geotechnical systems. He manages projects that arise from changes in business requirements, from the need to leverage technology opportunities and from mergers. His specialties include IT strategy, web strategy, and systems project management.