Bill of Materials (BOM) in Dynamics 365 Supply Chain Management

Introduction

A Bill of Materials (BOM) is one of the foundational building blocks of discrete manufacturing in Dynamics 365 Supply Chain Management (D365 SCM). It defines the structure of a product, the components required, and the quantities needed to manufacture it. A well‑designed BOM ensures accurate planning, costing, production execution, and inventory control.

This document provides a clear, structured, blog‑style explanation of BOMs in D365 SCM, aligned with real‑world manufacturing processes.

What Is a Bill of Materials?

A BOM is a hierarchical list of all components required to produce a finished item. It includes:

• Raw materials

• Sub‑assemblies

• Semi‑finished goods

• Phantom items

• Service items (optional)

• Packaging materials

Each BOM line defines:

• Component item

• Quantity

• Unit of measure

• Consumption method

• Scrap percentage

• Configuration rules

Types of BOMs in D365 SCM

1. Simple BOM

A single‑level list of components.

2. Multi‑Level BOM

Includes sub‑assemblies and nested structures.

3. Phantom BOM

Used for grouping components without creating physical inventory.

4. Configuration BOM

Used with product configuration models.

5. BOM Versions

Multiple versions can exist for:

• Engineering changes

• Different sites

• Seasonal variations

• Customer‑specific builds

Key Components of a BOM

• BOM Header – Defines the finished product

• BOM Lines – Components and quantities

• BOM Versions – Controls validity and site applicability

• BOM Attributes – Scrap, consumption, configuration

• Route Integration – Links operations to material consumption

How BOMs Work in Production

BOMs integrate with:

• Master planning (material requirements)

• Production orders (picking lists)

• Costing (standard and actual costs)

• Inventory management (availability and reservations)

• Engineering change management (revisions)

When a production order is created or estimated, the BOM is exploded to determine:

• Required materials

• Quantities

• Reservation needs

• Scrap adjustments

BOM and Route Relationship

A BOM defines what is consumed. A route defines how it is produced.

Together they determine:

• Material consumption

• Operation‑based picking

• Cost roll‑up

• Lead time calculation

Common Use Cases

• Standard manufacturing

• Multi‑level assembly production

• Engineering‑driven product structures

• Phantom assemblies for lean flow

• Customer‑specific product variants

Step‑by‑Step Overview of the BOM Lifecycle

Step 1: Create BOM Header

Define the finished product.

Step 2: Add BOM Lines

Add components, quantities, and attributes.

Step 3: Create BOM Version

Assign site, dates, and approval.

Step 4: Approve and Activate

Make the BOM available for planning and production.

Step 5: Use in Production

BOM is exploded during estimation and material picking.

Step 6: Maintain and Update

Apply engineering changes or version updates.

Conclusion

The Bill of Materials is a core building block of manufacturing in Dynamics 365 Supply Chain Management. It drives planning, costing, production execution, and inventory accuracy. A well‑structured BOM ensures efficient operations and supports scalable, flexible manufacturing processes.

BOM Process Flowchart

graph TD
    A[Start] --> B[Create BOM Header]
    B --> C[Add BOM Lines]
    C --> D[Create BOM Version]
    D --> E[Approve and Activate]
    E --> F[Use in Production]
    F --> G[Maintain and Update]
    G --> H[End]