Understanding multi-level BOMs in ERPNext

What is a multi-level BOM?

A Bill of Materials (BOM) is the recipe for a product. It lists the raw materials, components and sub-assemblies needed to make a finished good.

In a multi-level BOM, sub-assemblies have their own BOMs. This gives a tree structure where:

• The top level is your finished product
• Sub-assemblies are intermediate items with their own BOMs
• Raw materials are at the bottom level

Real-world example

Say you make water pumps. Your BOM structure might look like this:

Water Pump (Finished Good)
├── Motor Assembly (Sub-assembly)
│   ├── Motor Housing
│   ├── Copper Windings
│   ├── Bearings
│   └── Shaft
├── Impeller Assembly (Sub-assembly)
│   ├── Impeller
│   ├── Seals
│   └── Mounting Hardware
├── Pump Casing
└── Control Panel (Sub-assembly)
    ├── PCB
    ├── Display
    └── Wiring Harness

Setting up multi-level BOMs in ERPNext

Step 1: Create item masters

First, create all items in the system:

• Mark raw materials as "Maintain Stock"
• Mark sub-assemblies as "Maintain Stock" too; each one gets its own BOM in the next step
• Mark finished goods similarly

Step 2: Create bottom-level BOMs

Start from the bottom of the tree. Create BOMs for sub-assemblies first:

1. Go to Manufacturing > BOM > New
2. Select the sub-assembly item
3. Add raw materials with quantities
4. Save and Submit

Step 3: Create parent BOMs

Now create the top-level BOM:

1. Create a new BOM for the finished product
2. Add sub-assemblies as items
3. ERPNext will recognise that these have their own BOMs
4. Save and Submit

Step 4: Enable cascading BOMs

ERPNext gives you two ways to handle the levels:

1. Production Plan: plan the finished product and turn on sub-assembly items. The plan creates separate work orders for each sub-assembly, so production can run level by level.
2. "Use Multi-Level BOM" on a Work Order: the work order pulls in the raw materials of every sub-assembly directly, with no separate sub-assembly work orders. This suits sub-assemblies that are never stocked.

Best practices for multi-level BOMs

1. Plan your structure first

Before creating BOMs in the system:

• Map out your whole product structure
• Identify which items should be sub-assemblies
• Determine stocking points

2. Use meaningful item codes

Use item codes that show the level:

• FG-PUMP-001 (Finished Good)
• SA-MOTOR-001 (Sub-assembly)
• RM-COPPER-001 (Raw Material)

3. Manage BOM versions

ERPNext allows multiple BOM versions:

• Keep older versions for reference
• Set default BOM for production
• Track changes over time

4. Handle variants properly

For products with variants (different sizes, colours):

• Create template items with attributes
• Use variant-based BOMs
• Let ERPNext auto-generate variant BOMs

Common challenges and solutions

Challenge 1: Phantom items

Some intermediate items are never stocked. They are assembled and used straight away.

Solution: Give them a BOM, and use "Use Multi-Level BOM" on the work order. Their components are then issued directly, without a separate work order or stock entry for the intermediate item.

Challenge 2: Scrap and wastage

Every process loses some material.

Solution: List expected scrap in the BOM's Secondary Items table (type Scrap), and set a scrap warehouse on the work order so the scrap is tracked as stock.

Challenge 3: Operations and routing

BOMs need to include manufacturing operations.

Solution: Set up Operations and Routing in ERPNext to record labour and machine time along with materials.

Reporting with multi-level BOMs

ERPNext has useful reports for this:

• BOM Explorer: the BOM shown as a tree
• BOM Stock Analysis: check whether there is enough material to build
• BOM Variance Report: compare a work order's planned and actual cost
• Production Planning Report: Plan material requirements

Need help with BOMs?

Getting multi-level BOMs right affects planning, costing and stock every day. We can help with:

• Analysing your product structure
• Setting up BOMs in ERPNext
• Training your team on BOM management

Book a walkthrough of ERPNext set up for a plant like yours.