A bill of materials (BOM) provides a list of all the raw materials or services required to build a product.
To create a Bill of Material, in the main page, Go To More > Bill of Material > New
Name: Give any name of your choice.
Product: Select a output product, i.e the product which is being built or produced (not the product which is a raw material)
Auto Create: Tick this checkbox if you wish to auto generate assemblies every time material outbound against sales is created for the output product.
Click Save, in the page that gets opened, Click New in the Bill of Material Lines section.
Select the input product/services (raw materials or input services), add the quantity required to produce one quantity of the output product, you can add standard cost (standard cost should be cost per unit) of the product or you can select to use average cost (system will calculate average cost based on existing inventory costs). For services, Standard cost is mandatory.
Click Save & New and repeat the same step to add additional input products.
Use of Bill of Materials:
When you create a Bill of Material for a product, and 'Auto Create' is ticked yes, whenever you create a material outbound of that product for sales, system will auto generate an assembly for the quantities of the product being outbound against sales.
Also, if a product has a Bill of Material, while creating assemblies, you can select the output product, specify the quantities and click search icon. System will auto populate all the input products required to build the specified quantities of output product.