From bill of materials to inventory

Your company almost certainly has a bill of materials (BOM) for every product it makes. It is the best starting point for an LCA, but it is not an inventory yet. A costing BOM lists what ends up in the product. An inventory has to list everything the product causes: the material you bought and scrapped, the box it ships in, the truck that brought the steel, the electricity the line used.

If you have ever built a standard cost, you already know most of the moves. This lesson walks through them.

What a BOM leaves out

A typical engineering or costing BOM gives you part numbers, descriptions, quantities and units. To use it for an LCA, you add six things:

Add	Why	Where to find it
Unit conversions	Databases are mostly per kg, per kWh or per tonne-kilometre, not per piece, metre or litre	Drawings, datasheets, supplier specs
Scrap and yield	You pay for (and cause the emissions of) what you buy, not what ends up in the product	Routing data, standard cost, production records
Packaging	Pallets, boxes, film and straps are real material flows	Packaging specs, logistics
Transport	Emission factors for materials usually stop at the supplier’s gate	Supplier addresses, incoterms, freight records
Energy	Electricity, gas and other fuels used in your own process	Meter readings, energy bills, allocated per unit
Production waste	Scrap and waste have to go somewhere: recycling, incineration, landfill	Waste contractor reports, permits

Each line then gets mapped to a dataset: a named entry in a database that gives an emission factor for that input. Lesson 2 covers how to choose them.

Units and conversions

Databases talk in physical units. Your BOM may not. Convert first, and write the conversion down so a reviewer can follow it.

• Pieces to mass: a bracket listed as “1 pc” needs its mass from the drawing or by weighing a sample.
• Area or length to mass: sheet metal listed in m² needs thickness and density. For example, 0.5 m² of 1 mm steel sheet at a density of 7,850 kg/m³ is 0.5 × 0.001 × 7,850 = 3.925 kg.
• Volume to mass: paint, adhesives and oils are often bought by the litre. Multiply by the density on the datasheet.
• Energy: gas may be billed in m³ or kWh; check which, and whether the kWh figure uses the gross or net calorific value your dataset expects.

Tip

Keep a “source” column next to every conversion. “Density 1.25 kg/L, datasheet rev. C” takes five seconds to write and saves an hour in review.

Scrap and yield: the costing parallel

This is where cost accountants have a head start. In a standard cost, the material cost of a part is based on the gross quantity you buy, not the net quantity that ends up in the part. If you cut a 4 kg panel from sheet with an 80% yield (the share of purchased material that ends up in the product), you have to buy 4 ÷ 0.8 = 5 kg of sheet. You pay for 5 kg.

The environment pays for 5 kg too. The steel mill made 5 kg, and your emission factor applies to every one of them. Using the net 4 kg is one of the most common inventory errors, and it always makes the product look better than it is.

The offcut does not disappear. It becomes production waste and goes to a waste treatment, usually recycling for metals. How recycling is credited depends on your standard (LCA 301 will cover this). In this lesson we use the simple cut-off approach: the scrap leaves your system with no burden and no credit, and the recycler’s emissions belong to whoever uses the recycled material.

ExplainerHypothetical teaching numbers

Unit cost vs carbon cost

1. Scene 1 of 6

   One painted steel panel

   Start with the bill of materials.

   InputQuantity

   Steel4 kg

   Paint0.25 kg

   Electricity (assembly)3 kWh

   The same list you already use for costing.

   The bill of materials for one painted steel panel: 4 kg of steel, 0.25 kg of paint and 3 kWh of electricity for assembly. It is the same list a costing team already uses.

2. Scene 2 of 6

   Price every line

   quantity × price = cost

   InputQuantity€

   Steel4 kg€3.20

   Paint0.25 kg€2.00

   Electricity3 kWh€0.45

   Per panel€5.65

   Unit costing: multiply each quantity by its price. Steel costs €3.20, paint €2.00 and electricity €0.45, so one panel costs €5.65.

3. Scene 3 of 6

   Give every line an emission factor

   quantity × emission factor = carbon

   Input€kg CO₂-eq

   Steel€3.207.942

   Paint€2.000.645

   Electricity€0.451.130

   Per panel€5.659.717

   Life cycle assessment uses the same list and the same maths, with an emission factor in place of the price. Steel gives 7.942 kg CO₂-eq, paint 0.645 and electricity 1.130, so one panel carries 9.717 kg CO₂-eq.

4. Scene 4 of 6

   Already inside the number

   The steel price already includes the mill’s energy bill.

   The steel emission factor already includes the mill’s emissions.

   A sketch of a steel mill sending 4 kg of steel to the panel. You do not add the mill’s energy bill to the price of steel, because the price already includes it. In the same way, the steel emission factor already includes the mill’s emissions. That is what cradle-to-gate means.

5. Scene 5 of 6

   Same list, different hotspot

   Steel’s share

   of cost57%

   of carbon82%

   Paint’s share

   of cost35%

   of carbon7%

   Steel is 57% of the panel’s cost but 82% of its carbon. Paint is 35% of the cost but only 7% of the carbon. The cost view and the carbon view point at different priorities.

6. Scene 6 of 6

   Unit costing for the environment

   Σ quantity × price = cost per unit

   Σ quantity × emission factor = impact per unit

   Same bill of materials. Same maths.

   Check every number by hand in LCA 101, lesson 8.

   Summary: the sum of quantity times price gives cost per unit; the sum of quantity times emission factor gives impact per unit. If you can cost a product, you can learn to assess it. Lesson 7 of LCA 101 works through these numbers by hand.

Packaging, transport, energy and waste

• Packaging: include what ships with the product (box, pallet share, film). A reusable pallet used 20 times contributes one twentieth of a pallet per trip.
• Transport: calculate tonne-kilometres (tkm), the mass moved in tonnes multiplied by the distance in km. 5 kg over 500 km is 0.005 t × 500 km = 2.5 tkm. Multiply by a transport dataset for the right mode (truck, ship, rail). Remember to use the gross mass you bought, not the net mass in the product.
• Energy: if you only have a site-level meter, allocate it to products by a sensible key (machine hours, mass, units produced) and say which key you used.
• Waste: list each waste stream with its mass and treatment route.

Worked example: the steel panel, properly

In LCA 101 lesson 8 we calculated a painted steel panel from a simplified BOM. Here is the same panel as a real BOM would arrive, turned into a full inventory.

Hypothetical data

All quantities and emission factors below are invented for teaching. The steel, paint and electricity factors are the cradle-to-gate results from the LCA 101 worked example. The cardboard, transport and incineration factors are round hypothetical values. Results are rounded for display. None represents a real product, supplier or database.

The costing BOM (per panel):

Line	Description	Quantity	Unit
10	Steel sheet, cut to size	4.0	kg (net)
20	Paint, applied	0.24	L purchased
30	Cardboard box	0.4	kg

What the production and logistics teams tell you:

• Cutting yield is 80%. Offcuts go to a metal recycler.
• Paint density is 1.25 kg/L. Of the paint bought, 0.25 kg ends up on the panel; the rest is overspray, collected and incinerated.
• Assembly uses 3 kWh of grid electricity per panel.
• Steel sheet arrives by truck from a mill 500 km away.

1. Convert and gross up.

   Steel bought    4.0 ÷ 0.80            = 5.00 kg
   Steel scrap     5.00 − 4.0            = 1.00 kg  (to recycling)
   Paint bought    0.24 L × 1.25 kg/L    = 0.30 kg
   Paint waste     0.30 − 0.25           = 0.05 kg  (to incineration)
   Steel transport 0.005 t × 500 km      = 2.5 tkm

2. Map each line to a dataset and multiply.

   Inventory line	Amount	Factor (hypothetical)	kg CO₂-eq
   Steel sheet	5.00 kg	1.9855 per kg	9.9275
   Paint	0.30 kg	2.5792 per kg	0.7738
   Electricity, grid	3 kWh	0.3766 per kWh	1.1298
   Cardboard	0.4 kg	1.0 per kg	0.4000
   Truck transport of steel	2.5 tkm	0.1 per tkm	0.2500
   Paint waste, incineration	0.05 kg	2.0 per kg	0.1000
   Steel scrap, recycling	1.00 kg	0 (cut-off)	0
   Total per panel			12.5811

3. Compare with the simple version. The LCA 101 answer was 9.717 kg CO₂-eq. The full inventory gives 12.581, about 30% more (12.581 ÷ 9.717 = 1.295). More than two thirds of the gap is the scrapped steel alone: 1.0 kg × 1.9855 = 1.986 kg CO₂-eq.

Two lessons for the buyer and the planner hide in that table. First, steel is still the hotspot (9.928 of 12.581, or 79%), so the conclusion from LCA 101 holds. Second, the yield is a lever you control. Better nesting of parts on the sheet cuts cost and carbon at the same time, and you only see the carbon side if the inventory uses gross quantities.

Exercise

The production engineer improves the cutting layout and yield rises from 80% to 90%. Nothing else changes. Recalculate the steel bought, the steel transport and the total per panel. How much steel cost does this save at €0.80 per kg, and how much carbon?

Answer

Steel bought: 4.0 ÷ 0.90 = 4.4444 kg. Steel: 4.4444 × 1.9855 = 8.8244 kg CO₂-eq. Transport: 0.0044444 t × 500 km = 2.2222 tkm × 0.1 = 0.2222 kg CO₂-eq. Paint, electricity, cardboard and paint waste are unchanged (0.7738 + 1.1298 + 0.4000 + 0.1000 = 2.4036). Total: 8.8244 + 0.2222 + 2.4036 = 11.450 kg CO₂-eq per panel.

Saving: 5.000 − 4.444 = 0.556 kg of steel per panel. Cost: 0.556 × €0.80 = €0.44 per panel. Carbon: 12.581 − 11.450 = 1.131 kg CO₂-eq per panel, a 9% cut, with no change to the product.

What you should now be able to do

• List the six things a costing BOM leaves out, and where to find each one.
• Convert BOM units to the physical units a database uses, and record the source.
• Gross up material inputs for scrap and yield, and explain why net quantities understate the result.
• Calculate transport in tonne-kilometres.
• Build a small inventory from a BOM and name its hotspot.

Sources

• ISO 14044:2006, Environmental management: Life cycle assessment: Requirements and guidelines (inventory analysis and data collection), iso.org.
• All example data: hypothetical, created for this lesson.

Checked: 2026-09-29