Odoo BOM Explained: Types, Setup & What Manufacturers Get Wrong

Introduction

Manufacturing can get messy very quickly when product details aren’t properly organized. Something as small as a missing screw, the wrong quantity, or a skipped step in production can lead to delays, rising costs, and unhappy customers. That’s exactly why the Odoo Bill of Materials plays such an important role.

A Bill of Materials, or BoM, is at the heart of manufacturing in Odoo. It clearly defines what components are needed to create a finished product, how much of each item is required, and, when necessary, the steps or operations that need to be followed during production.

Think of it like a recipe. If the recipe has mistakes, the final dish won’t turn out right. But when everything is clearly defined, the entire process becomes smoother, faster, and far more reliable.

For manufacturers aiming to improve efficiency, reduce waste, and stay in control of their production, having a clear understanding of BOMs in Odoo isn’t just helpful - it’s essential.

What is a Bill of Materials in Odoo?

An odoo bill of materials is a document inside Odoo Manufacturing that defines every component needed to manufacture or deliver a finished product. It can also include operations, work instructions, and production-related details.

For example, if you manufacture a wooden table, your Odoo BOM may include:

• 1 tabletop
• 4 legs
• 12 screws
• 1 polish kit
• 1 packaging box

That may sound simple, but the real value comes from what Odoo does with that information. Once a BoM is properly configured, the system can support manufacturing orders, component planning, and smoother production tracking.

Another major benefit is flexibility. In Odoo BoM management, one product can have multiple BoMs. This is especially useful if you manufacture product variants, offer custom items, or handle different production methods for the same product.

Types of BOM in Odoo

When creating a BoM in Odoo, you can choose between three different BoM types. Each type serves a different business need.

1. Manufacture this Product

This is the most common BoM type in Odoo.

When you choose Manufacture this Product, it means the product is made in-house using the components listed on the BoM. From start to finish, your company manages the production process.

This setup is ideal for businesses that fully control their own manufacturing.

2. Kit

A Kit in Odoo is a set of unassembled components sold together as one product.

This is useful when you are not manufacturing a completely new finished item, but instead grouping multiple items into a bundle. For example, if you sell a furniture set with a table and chairs packed together, a Kit BoM can help manage those products more clearly.

Kits are especially useful for businesses that want simpler packaging, easier sales handling, and better control over grouped products.

3. Subcontracting

The Subcontracting BoM type is used when some or all of the manufacturing is outsourced to an outside manufacturer.

This is a powerful option for companies that do not produce every part internally. For example, you may assemble the final product in-house but send a key component to an outside vendor for processing.

This feature must be enabled in the Manufacturing settings before it can be used.

For growing businesses that work with vendors or external factories, subcontracting can make Custom BoM in Odoo much more flexible and practical.

How to Set Up a BOM in Odoo: Step by Step

Setting up a BoM in Odoo isn’t complicated, but it does require attention to detail. Even a small mistake at this stage can lead to bigger issues later in manufacturing orders and stock planning. That’s why many businesses choose to work with an experienced Odoo ERP software development company to ensure everything is set up correctly from the start.

Here is the step-by-step process.

Step 1: Go to Bills of Materials

In Odoo, navigate to:

Manufacturing app → Products → Bills of Materials.

Click Create to start a new BoM.

Step 2: Select the product

In the Product field, choose the finished product that the BoM will be linked to.

You can also create a BoM directly from the BoM smart button on the product template. In that case, the product field is already filled in.

Step 3: Choose the BoM type

Now choose one of the three BoM types:

• Manufacture this Product
• Kit
• Subcontracting

For most manufacturers, manufacturing this product is the standard choice.

Step 4: Add components

Click Add a Line and enter all the components needed to produce the final product.

For each item, add:

• Component name
• Quantity required

Be very careful here. If component quantities are wrong, your production orders will also be wrong.

Step 5: Save the BoM

Once all components are added, click Save.

At this point, you have created the simplest version of an Odoo BOM. This type of setup works well when production is managed mainly through manufacturing orders without additional operations or instructions.

Step 6: Add operations if needed

Some products need more than just a list of components. They also need steps such as cutting, assembling, polishing, testing, or packing.

To add these, first enable Work Orders in:

Manufacturing app → Configuration → Settings → Operations.

Then open the BoM and go to the Operations tab.

Click Add a line and define:

• Operation name
• Work Center
• Default duration

You can also attach work instructions through different worksheet types, such as:

• Text descriptions
• PDF files
• Google Slide presentations

This makes complex production easier for teams to follow.

Step 7: Add by-products if required

Some manufacturing processes create extra usable outputs, called by-products.

To use this feature, enable By-Products in:

Manufacturing app → Configuration → Settings → Operations.

Then open the By-products tab inside the BoM and click Add a line.

Here, you can define:

• By-product name
• Quantity
• Unit of Measure

If your BoM includes operations, you can also mention which operation produces that by-product.

This is useful for industries where leftover material or secondary products still have value.

Multi-Level BOMs: What They Are and When You Need Them

A multi-level BoM is used when a finished product is made up of subassemblies, and each subassembly has its own BoM.

For example, if you manufacture a machine, that machine may contain:

• a motor unit
• a control panel
• an outer frame

Each of these can have its own BoM with different parts and quantities.

This is where Odoo BoM management becomes more advanced and much more useful. Instead of putting everything into one large, confusing list, you can organize the structure in layers.

Multi-level BOMs are ideal for:

• complex products
• machinery manufacturing
• electronics
• furniture with multiple parts
• custom assembly businesses

If your products are simple, you may not need this. But if you produce anything with multiple assemblies, this structure can save time and reduce mistakes.

Common BOM Mistakes That Break Your Manufacturing Orders

Many manufacturers think their production issues are caused by the software. In reality, the problem is often a poor BoM setup.

Here are some of the most common mistakes.

1. Wrong quantities per unit

This is one of the biggest errors in any odoo bill of materials.

If the quantity of a component is wrong, Odoo will calculate incorrect material needs. That means overstocking, shortages, delays, and waste.

2. Missing units of measure

Units matter more than many businesses realize.

If your component should be measured in meters, kilograms, liters, or pieces, the wrong unit can create serious production confusion.

3. Not enabling Work Orders before adding operations

Some manufacturers try to create operations without first enabling the Work Orders feature.

This confuses because the system will not fully support those production steps until the feature is activated in settings.

4. Forgetting product variants

Odoo allows multiple BoMs to be linked to a product, and even product variants can have their own specific BoMs.

This matters for businesses selling items in different sizes, colors, materials, or configurations.

For variant-based production, there are two main setup options:

• Create one BoM per variant by specifying the product variant
• Create one master BoM and use Apply on Variants for specific components

If this is ignored, manufacturers often end up with incorrect component planning.

5. Skipping by-products

If your production creates by-products and you do not record them, your inventory and production reporting can become incomplete.

This is common in food processing, metal work, chemical production, and industries where leftovers still have business value.

How BOM Connects to the Rest of Odoo Manufacturing

One of the biggest strengths of BOMs in Odoo is that they do not work in isolation.

A BoM connects with the wider manufacturing process by supporting:

• manufacturing orders
• product variants
• work orders
• by-products
• outsourced production
• production instructions

This means the BoM is not just a document. It becomes the foundation for the full production workflow inside Odoo.

That is also why many manufacturers exploring Odoo ERP for US Manufacturing pay close attention to the BoM setup. If the BoM is strong, the rest of the manufacturing flow becomes more reliable.

And if your business is comparing solutions while searching for the Best ERP software for manufacturing companies, this is one of the reasons Odoo stands out. It allows manufacturers to manage simple and complex production flows in one system.

Conclusion

A properly set up Odoo BOM can make manufacturing more organized, more accurate, and much easier to manage.

It helps define what goes into a product, how production should happen, which variants need different materials, and whether by-products or subcontracting should be included.

But the biggest lesson is this: even a powerful ERP system can only work well if the BoM is set up correctly.

When businesses ignore details like quantities, units, operations, product variants, or by-products, manufacturing problems are almost guaranteed.

That is why smart manufacturers focus on strong Odoo BoM management from the beginning.