BOM (Bill Of Material) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and the quantities of each needed to produce an end product. A BOM Profile is a simple diagram for diagnosing a business that can be used to design requirements planning strategies.

To start get a count of part numbers at each level of the BOM such as purchased or raw materials, sub assemblies or components, and finished goods. Now sketch a geometric shape like so …

Possible shapes …

Don’t get lost in the exact numbers, just get some agreement on the general shape of the of the BOM structure.

Here are a few examples …

	Mining bauxite to metal foundry ingots to aluminum pots and pans, cans, aircraft frames.
	Automobiles, Aircraft – many thousands of parts end up in very few finished goods.
	Distributors – purchased parts pass through to the consumer.
	Electronics – many chips, some modules, many consumer options.
	Repair and Overhaul – rebuild aircraft breaks and wheels.

Now take the concept of Demand Segmentation …

and combine the BOM Profile and Demand Segmentation and you get …

The level of the BOM with the fewest part numbers often has the lowest demand variation, that is the lowest demand standard deviation. Demand variation changes up and down the BOM structures. This is due to demand being consolidated or magnified as customer demand variation passes through the levels of the bill of material. The level with the lowest variation is often the best one to forecast at or to carry safety stock. Control of the supply chain is often easier at these points.