A Quick Guide to Work in Progress (WIP)

This guide will discuss: what a work in progress is, how it works, why it’s important to keep an eye on your WIP inventory, and how to best manage it to your advantage.

supply chain manager inspecting work in progress inventory

What is a Work in Progress?

A Work in Progress (WIP) refers to partially finished products and services moving along the production line. It’s often used to indicate a manufacturing system’s efficiency and effectiveness in managing goods throughout the production cycle. Inventory and supply chain managers can use this information to know the status of their production units, examine the health of their supply chain, and adjust their strategy accordingly to meet the production requirements.

Why is it Important to Track Your WIP?

Works in progress are a vital part of the production cycle and inventory management for various reasons. First, they impart valuable insights into the manufacturing process, such as the number of goods under production, the stage of production in which these goods are in, and the pace at which products move from one step to the next.

This information allows managers to assess the status of their production and, by extension, their supply chain. For example, if a significant number of goods under production take a long time to finish, it could be a sign of inefficiency in the process, people, or tools. A high WIP can also indicate bottlenecks that hinder production from progressing smoothly. Using this data, they can find solutions to resolve these problems and restore operations to their optimal state.

By tracking works in progress, organizations can efficiently handle and control their inventory so that they can:

  • Reduce costs in terms of production and storage
  • Free up space in the production floor or storage facility
  • Produce less waste in the production area
  • Decrease the risk of lost, damaged, defective, or expired finished goods

Work in Progress vs. Work in Process: What’s the Difference?

The terms “work in progress” and “work in process” both refer to partially-finished goods in a manufacturing inventory management system; hence, people often use them interchangeably. Although they follow the same concept at their core, these two differ in terms of the pace at which they are completed.

A work-in-process, also called goods-in-process, usually refers to small-scale inventory items that take shorter periods to be completed. Meanwhile, a work-in-progress pertains to large-scale products and services that require a significant amount of time to be accomplished.

How it Works (and Example)

How a work in progress operates will depend on the context it takes place. For example, WIP in accounting counts as a current asset, determined by the amount spent on raw materials and labor required to complete a product or service.

Similarly, a WIP inventory refers to goods being assembled or developed into final products. It takes place in the intermediate stage of the inventory lifecycle, as workers begin processing raw materials in several stages. Once the production process is completed, WIPs turn into finished goods ready for distribution and sale.

To illustrate this, let’s use car manufacturing as an example. First, all raw materials needed to make the car—steel, glass, aluminum, leather, plastics, and more—are gathered. Then, these materials will undergo several steps in the car production process, from creating the parts to assembling these components. In this scenario, all things prior to the completion of the final product (the car) will count as works-in-progress.

WIP in Manufacturing Inventory Management

How Does Work in Progress Work?

Best Practices in Managing WIP Inventory

As mentioned earlier, it’s ideal to keep the work-in-progress inventory to a minimum so as to avoid waste and reduce manufacturing costs. Controlling this aspect requires careful planning and coordination among production teams, suppliers, and other stakeholders.
Here are a few tips to best manage WIP inventory levels and maximize your resources:

Identify Bottlenecks in Your Processes.

Spotting bottlenecks and inefficiencies are key to effectively managing your inventory. As soon as you notice any issue in production, it’s best to start resolving it at its root cause. Assess why things are slowing down and processes take too much time to complete.

This approach allows you to address the problem at its roots, reduce time spent on works in progress, and generate quality products efficiently.

Explore Various Methods of Managing Inventory.

Aside from resolving bottlenecks, consider finding an inventory management technique that works best for your business. For example, the Just-in-Time (JIT) approach allows you to lessen waste, save waiting time, and prevent overproduction by creating products as required.

Optimize Manufacturing Processes.

Another great way to manage your WIP inventory is by enhancing your existing processes and procedures for production. For instance, you can implement guidelines for organizing where items should be placed during production. This will facilitate a smoother progression of tasks and lessen the time it takes to transition from one step to the next.

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Provide Adequate Employee Training.

Process efficiency begins with the people. Thus, it’s important to equip your employees with the skills and knowledge needed to perform their tasks efficiently. For example, you can hold in-person training sessions or use online learning tools like Training.

Upgrade Equipment and Machinery.

Employees are as efficient as their tools allow them to be. While enhancing their skills, it’s also a must to scale up your machinery, especially if it’s the root cause of issues in production. With equipment upgrades, your employees can accomplish their tasks faster while producing quality outputs.