Bill of Materials (BOM): Single vs Multi-Level, With an Example

By P-Soft Expert Team October 17, 2026 11 min read

A bill of materials (BOM) is the authoritative list of every raw material, component and sub-assembly needed to build one unit of a product, with the exact quantity of each. When the BOM is accurate, purchasing, stock reservation, production planning and product costing all calculate from the same source; when it is not, every department ends up with its own numbers.

Manufacturers call it many things: product structure, parts list, recipe, formula or simply “the BOM”. Whatever the name, it is the backbone of material planning. This guide walks through what a good BOM contains, when a flat list is enough and when you need levels, how a customer order turns into material requirements, how to manage revisions, and which kind of software keeps all of this tied to real inventory instead of a spreadsheet nobody trusts.

What is a bill of materials, and how is it different from a recipe or routing?

At its simplest, a BOM answers one question: to make one finished item, how much of each input do we consume? Process industries such as food, chemicals, coatings or plastics compounding usually call this a formula or recipe, because inputs are blended by weight or ratio and the order of mixing can matter. Discrete manufacturers, who assemble countable parts, tend to say BOM or product structure.

A BOM describes what goes into the product, not how it is made. Operations, machines, set-up and cycle times belong in a separate document, usually called the routing or the list of work steps. Keeping the two apart matters: when a single spreadsheet tries to hold both, it typically ends up doing neither job properly.

What columns does a BOM need?

Field	What it holds	What goes wrong without it
Item code	A unique ID shared by stores, purchasing and production	Departments discuss different items while using the same name
Description and spec	Name, material, grade, dimensions	Look-alike materials get substituted by mistake
Quantity per parent	Consumption for one unit or one standard batch	No material calculation can be trusted
Unit of measure	Pieces, kg, metres, litres	Stores count in kg, the shop floor in pieces, and stock never reconciles
Level	Position of the line in the product tree	Nobody knows which sub-assembly must be built first
Make / buy / subcontract	How the line is sourced	Requirements land with the wrong team
Scrap allowance	Expected loss such as cutting offcuts or spillage	Production always runs a little short
Revision and effective date	Which version applies to which order	Old orders get built to the new design

Single-level vs multi-level BOM

A single-level (flat) BOM lists every input directly under the finished product. That works for items made in one step from raw materials, such as a blended powder or a simple moulded part. Once the product contains sub-assemblies that are themselves manufactured, a flat list hides too much.

Hypothetical example: a stainless-steel catering trolley consists of a welded frame, two shelves and a castor kit. The welded frame is made from four uprights and four cross rails; each upright is cut from stainless tube stock. The castor kit holds four castors and sixteen bolts. As a multi-level BOM:

Level 0: catering trolley
Level 1: welded frame (1), shelf (2), castor kit (1)
Level 2 under the frame: upright (4), cross rail (4); under the castor kit: castor (4), bolt (16)
Level 3 under each upright: stainless tube, in metres

Criterion	Single-level	Multi-level
Best for	Simple, blended or one-step products	Assembled products with built sub-assemblies
Set-up effort	Quick	Needs disciplined coding of sub-assemblies
Planning value	Raw material totals only	Shows when each sub-assembly must be ready
Work in progress	Invisible	Finished sub-assemblies can be stocked and tracked
Design changes	Must be repeated in every product	Changing one sub-assembly updates every parent that uses it

A useful test: if you stock a sub-assembly separately, buy it separately or use it in more than one product, give it its own item code and its own level.

How a BOM drives material requirements and reservation

The BOM earns its keep the moment an order arrives. Suppose (hypothetical figures) a hospital kitchen orders 25 trolleys. Exploding the BOM level by level gives:

25 trolleys need 25 welded frames, 50 shelves and 25 castor kits.
25 frames need 100 uprights and 100 cross rails; 25 castor kits need 100 castors and 400 bolts.
If each upright takes 0.9 m of tube, the net need is 90 m, plus the cutting allowance.
Subtract unallocated stock and finished sub-assemblies on hand to get the net quantity to buy or make.

Then comes reservation. Stock that looks available on screen today may be issued to another job tomorrow. Reserving material against a specific order or project ring-fences that quantity, so two jobs do not end up competing for the same tube. The more orders you run in parallel, the more reservation matters.

After the job, compare actual consumption with the BOM quantity. If actual use is always higher, either the scrap allowance is wrong or there is loss on the shop floor that nobody records. Our guide to manufacturing scrap tracking covers how to capture it.

BOM revision control and engineering changes

Product structures keep changing: a supplier is replaced, a customer wants a thicker shelf, engineering removes a part to cut cost. Well-run plants usually follow a routine like this:

Every change creates a new revision; the old one is kept so you can still see how past orders were built.
Each revision gets an effective date or a first order number.
Engineering approves the change, and finance or sales signs off when cost is affected.
Stock of any part being phased out is checked first, so obsolete items are used up or written off deliberately.
The reason for the change is written down in a sentence or two, because nobody remembers it six months later.

Common BOM mistakes

Mismatched units: sheet metal bought by weight but listed per sheet, with no conversion factor defined.
Missing consumables: welding wire, paint, adhesive and packaging are left out and always bought in a rush.
One code for many things: a generic “bolt” with no size or grade means stores cannot tell what to deduct.
A BOM that lives in one head: if only the supervisor knows what each product really needs, their holiday stops the line.
No scrap allowance: the net figure is correct on paper and short on the floor every single time.

BOM software for factory warehouses: Avadar Industry

Avadar is Barsavosh’s inventory software, and its Industry edition is built for factories and production warehouses. In Avadar Industry you define the product structure and production formula next to live stock. Production projects record material sent out, material returned and material consumed, with scrap recorded separately, and you can reserve material exclusively for a project so its share is not used elsewhere.

Because goods movements in Avadar are booked by scanning barcodes and QR codes (or by manual entry), material issued to a project is visible from the moment it leaves the shelf. Production and projects are included in Avadar Industry from the Pro plan and in Elite; the Start plan covers core receiving, issuing, transfers and stocktaking. Avadar can be hosted in the cloud or installed on a server you control, and its interface is in Persian.

Make-to-order BOMs: materials and work steps per part in Data

If you build to customer drawings, every order may have its own parts list. In Data, Barsavosh’s manufacturing ERP, each part carries its materials, material prices and work steps, and these pass through a formal approval workflow between departments. The production plan for each order shows material requirements alongside scheduling. These features are in the Data Pro and Elite plans. Data’s warehouse module also covers breaking down and combining items and project parts. Data is deployed on a server inside the factory.

Once the BOM is settled, the next question is sequencing; read how to schedule make-to-order production step by step.

Which tool fits your BOM needs?

Your situation	Closer fit
Repeat products with stable formulas; focus on stock, batches and material reservation per project	Avadar Industry, Pro or Elite plan
Engineer-to-order or make-to-order work with technical and price review of each order	Data, Pro or Elite plan
Barcode-based receiving and issuing only, no production module yet	Avadar, Start plan

BOM set-up checklist

Finalise unique item codes; no BOM is reliable without them.
Map levels and manufactured sub-assemblies for each product.
Define units of measure and purchase-to-use conversion factors.
Estimate scrap allowances from actual consumption history, not guesswork.
Name who approves changes and write down the revision rule.
After a few orders, compare actual use with the BOM and correct it.

If your item master and formulas currently sit in Excel or another system, the Barsavosh team migrates that data into the new product; the scope is agreed in the contract and plan.

Frequently Asked Questions

What is the difference between a BOM and a formula?

Both list the inputs for one unit of product. “Formula” or “recipe” is common in process industries with weights and ratios; “BOM” is used for assembled products made of countable parts.

When do I need a multi-level BOM?

When the product contains sub-assemblies that are manufactured, stocked separately or shared across several products.

What is a scrap allowance in a BOM?

The expected loss of a material, such as offcuts or spillage, added to the net quantity so that the real requirement is planned correctly.

Which Avadar Industry plan includes product structure?

Production and projects, including product structure, production formula and material reservation per project, are in the Pro and Elite plans.

Does Data store materials for each part?

Yes. In the Data Pro and Elite plans, each part holds its materials, material prices and work steps, approved through a workflow between departments.

To see a product structure and project material reservation in action, explore Avadar Industry and request a demo.