Work in progress(WIP)
Work in progress (WIP) is a form of inventory, usually unfinished goods which still require further work, processing, assembly and or inspection. This type of inventory is usually found within steps or sub-processes of a production process. Only raw materials which have commenced to move through their value adding processes can be classified as WIP. Raw materials which have still not been worked with are still classified as raw materials. Work in progress is usually the major type of inventory in a one bin or two bin system.
More detail on inventory management and control systems as well as definitions for related terms can be found on the inventory management pages.
Most factory and production processes will have some level of work in progress due to many reasons. Some operations use work in progress between production steps in order to meet peak demand or volatile demand patterns.
The presence of unnecessary work in progress can also be an indicator of an unreliable supply chain, lack of proper production planning, excessive manual labour required in the production process, production line balancing or supply chain which are causing unnecessary delays and build-up of work in progress inventory. This may warrant further analysis. An efficient productive system should only pull materials through when needed , without the need for much WIP.
Work in progress is considered a type of waste just like inventory as it ties up cash for a certain period of time which could be generating higher returns elsewhere in the organization. In a large manufacturing facility even small amounts of WIP can add up to a large sums of capital locked up in this type of inventory.
Work in progress also presents a business risk to the company because WIP will usually be stored on the factory floor, close to machinery, plant and equipment and also mobile equipment traffic areas.
Examples and uses of work in progress
Necessary work in progress
A cake shop may bake the bread bases required for different tarts and store them in the cool room until the cake shop is ready to use them. The tart bread bases are of better quality when they are made first and allowed to rest as part of the production process. They can also be used for different tarts so the risk of them going to waste is minimal.
This can be described as necessary work in progress, because in order to have better quality tarts the bread bases must be made first and then set to rest in the cool room. The bread bases may be used in different products thus minimizing the risk of inventory loses. Care must still be taken to estimate accurately the required finished tarts per day in order to optimize inventory holdings of both tart bases in the cool room and raw materials required to make them.
Unnecessary work in progress
In a motorbike engine plant the work station which manufactures the carburetor components feeds parts to the workstation that assembles the carburetor. At the assembly station the pin on which the butterfly pivots has been found in some instances to be the wrong dimension and cannot be assembled in the carburetor, this then stops production and a new pin needs to be manually installed. For this reason and the delays caused, the carburetor assembly line is forced to produce and stock more carburetor units than required to reduce or eliminate delays for the following production processes and the assembly time of each motorbike unit.
This forces the production plant to carry excess work in progress (carburetor units) stock to absorb any delays in the assembly of the motorbikes because of a manufacturing fault and is unnecessary work in progress used to compensate for other manufacturing issues.
More lean concepts and terms