BOM (Bill of Materials)

A bill of materials (BOM) is the list of components, sub-assemblies, and raw materials needed to make a manufactured item. In Dynamics 365 it appears in three flavours: production BOMs (in Business Central Premium and Supply Chain Management — used for discrete manufacturing, with versioning and certification), assembly BOMs (in Business Central Essentials — simpler, single-level, for kitting and light assembly), and formulas (in Dynamics 365 Supply Chain Management — for process manufacturing with proportional ingredients, scaling, yields, and co-products / by-products). BOMs are paired with routings that describe the operations needed; together they drive MRP (planning) and production order execution.

In practice, BOM accuracy is one of the highest-leverage pieces of master data in any manufacturing implementation, because everything downstream depends on it: MRP calculates component requirements straight from the BOM, costing rolls up component cost through the BOM structure, and a production order's expected consumption is generated from it. A BOM that's slightly wrong (a superseded component, a quantity that doesn't match how the product is actually built today) produces confidently wrong planning suggestions and cost calculations without any error being raised — the system has no way to know the BOM itself is stale.

Where confusion shows up: BOM versioning exists specifically so an engineering change (a new revision of a component) can be introduced with an effective date rather than overwriting history — a production order started under the old BOM version should keep using it even after a new version is certified, and getting this wrong retroactively changes the recorded cost and consumption of orders that already ran. Formula BOMs (proportional ingredients, yields, co-products) look similar to production BOMs on the surface but are a genuinely different calculation model built for process manufacturing's scaling and yield behaviour, not just a BOM with extra fields.