A bill of materials (BOM) is common in construction and manufacturing businesses. It is an extensive list or a centralized source of information on raw materials and components, along with instructions to construct or repair a particular product.
Different industries use different types of bill of materials templates. For instance, there are bills of material templates used in design engineering and another for manufacturing or assembly.
This article discusses inventory management and shares the step-by-step guide for creating a Bill of Materials in Excel. The template is very helpful in ensuring production’s success and minimizing operational costs.
What is the Purpose of a Bill of Materials?
A bill of materials is important to ensure that all spare parts needed in the construction or manufacturing stage are complete to avoid production delays. It is important that the BOM is accurate to avoid further inconveniences, wasted time, and an increase in operating expenses.
Microsoft Excel Spreadsheet as a Low-Cost Inventory Management Solution
Microsoft Excel is a popular and flexible tool for businesses. It can store and manage data for the business’ daily transactions. It is a low-cost solution for accounting and inventory management purposes.
Excel spreadsheet for inventory management is great for small or startup businesses. However, it is not advisable to be used by medium to large-scale businesses.
A small business can use a bill of materials template as an inventory management solution. A bill of materials template should include spare parts’ names, quantity, assembly reference, method of construction, and other notes.
Using Data Entry Forms for Inventory Management
An important aspect of inventory management is encoding large volumes of data. Data entry is an integral part of all business transactions. Hence, data entry work must be completed.
This is where a data entry form can be very helpful. Using a data entry form can address two common issues. These issues include the task being too time-consuming and error-prone.
Doing data entry is time-consuming because you must manually encode the data set. You will be moving from cell to cell, scrolling up and down, and moving around the spreadsheet. With large volumes of data, human error cannot be avoided, as well as the possibility of encoding something wrong or revising existing data in the spreadsheet.
It is also possible to restrict data entry. Using data validation ensures that the data entered follows specific rules. You can access the data validation function on Excel’s Data tab ribbon.
For instance, when using data validation, you set that all the rows starting from rows 2 to 5 accept only numerical values, and you set the data validation rule to follow.
Creating a Bill of Materials Template Using Excel Spreadsheet
A benefit of using Excel BOM templates is that you can hide project details to display the larger components of the BOM. You can perform the following Excel functions in a bill of materials template: SORT and SUM. Using the SUM function creates an interactive outline of the list of materials.
Here are the steps for creating a bill of materials in Excel:
- Open a new blank workbook.
- Type column headings that reflect the attributes relevant to the project. Column headings include Categories, Quantity, Part Name, and Description.
- Encode all necessary data into the spreadsheet.
- To resize a column or row, highlight a data range, then move the mouse to the lower right edge of the cell. Wait until the cursor becomes a double-headed arrow and adjust to your desired size.
- To sort data, right-click the selected cells and click Custom Sort from the Sort menu. Choose Subassembly1 (Sort by Control), then click Add level to sort by the second field. You will see the materials under each subassembly by sorting the materials list.
- To enable outlines on a subfield, for instance, Subassembly1, click Subtotal on the data tab. Then, click on subassembly1 under the At Each Change control.
- Click the Count function (Use Function Control) and check Subassembly under Add heading.
- Close the dialog box.
The steps above will display all the rows in your materials list with the same subassembly. This makes it easier to view the materials on your spreadsheet.
Setting up an Inventory List Template Using an Excel Spreadsheet
A basic inventory list template includes the following information:
- Product name
- Product number
- Product Description
- Price
- Stock Quantity
- Reorder quantity
- Sold quantity
In an inventory template, what is important is for the spreadsheet to be able to automatically calculate the total sales and profit. The template can also organize your list to show sellable products.
Tips in Managing Existing Excel File for Accurate Tracking of Inventory Movement
1) Avoid Mistakes
Many users notice that Excel spreadsheets are prone to human error. Finding errors can be challenging, especially when working on a spreadsheet with large amounts of data. You can avoid mistakes by diligently checking, auditing, or reviewing your work at the end of your working day.
2) Update
You must update your Excel file regularly because several business data come in every hour. Also, updating your spreadsheet helps minimize errors or mistakes from happening, such as delays in stock order, because you did not see in the list that there needs to be more stock.
3) Upload on Cloud
Uploading your Excel inventory file to a cloud program like OneDrive or Google Sheets is also advisable. An Excel file on a cloud program becomes collaborative because more team members can update the file in real-time. Not to mention, uploading your file to the cloud allows file backup and real-time syncing on all applicable devices.
4) Consolidate Data
Consolidating your data monthly or quarterly is ideal. Consolidation helps you create charts that can outline your sales and profit. Also, creating a monthly pivot table helps to analyze historical data.
Doing this can be time-consuming but very beneficial. You can track sales, especially on holidays which can help optimize your inventory list.
5) Review Data
As mentioned earlier, Excel is a good tool for inventory management, from tracking stocks and calculating sales and profits. However, it is error-prone, and you must review it as often as possible. Reviewing data minimizes expensive mistakes in the future.
Below are some considerations to think about when reviewing data:
- Including lead time in ordering stocks (from supplier to your warehouse)
- Calculating profits from sales or actual per-item profit
- Calculating sales tax using your inventory list
Conclusion
An inventory template, such as a bill of materials, helps reduce stress and headaches. Using this template can be stressful at first, for the layout may be complex, but with constant exposure and use of the program, you will get used to it.
Learning the basics of creating a bill of materials in Excel, a step-by-step guide, is beneficial for your business. A well-reviewed inventory list can minimize errors. It can also give you updated information about your sales and profits to make wise business decisions.
