Work in Progress (WIP), also known as Work in Process, refers to partially completed products at various stages of the manufacturing process that have consumed some materials and labour but are not yet finished and ready for sale. WIP represents the inventory that exists between raw materials and finished goods, including items being machined, assembled, inspected, or waiting between operations. From an accounting perspective, WIP is a current asset on the balance sheet, but from an operational perspective, it represents capital tied up in production that isn’t yet generating revenue.
Understanding and managing WIP is crucial for manufacturing efficiency and financial health. Excessive WIP creates multiple problems. It ties up working capital that could be used elsewhere, occupies valuable floor space, increases the risk of damage or obsolescence, makes it difficult to find specific jobs when priorities change, and obscures quality problems because defects may not be discovered until much later in the process. High WIP levels also increase lead times because products spend more time waiting in queues than being actively worked on, following Little’s Law which states that lead time equals WIP divided by throughput.
WIP accumulates for several reasons. Unbalanced production lines where some operations are faster than others create bottlenecks with work piling up beforehand. Large batch sizes mean starting many units into production before any complete, increasing average WIP. Long setup times encourage running larger batches to amortise changeover time, again increasing WIP. Quality problems that aren’t caught immediately send defective work downstream, adding to WIP until rework or scrapping occurs. Poor scheduling that releases work to the shop floor before it’s needed or releases too much work at once also inflates WIP levels.
Lean manufacturing principles focus heavily on WIP reduction through strategies like pull systems (only producing what the next operation needs, when they need it), single-piece flow (moving one item through all operations before starting the next), cellular manufacturing (arranging equipment to minimise material movement), and quick changeover techniques that enable smaller batch sizes. Just-in-Time (JIT) manufacturing aims to minimise WIP by synchronising production with demand, though this requires reliable processes and suppliers.
Monitoring WIP levels provides valuable insights into production health. A WIP inventory report shows how much value is tied up in each production stage, highlighting where bottlenecks exist. Calculating WIP turns (cost of goods sold divided by average WIP value) indicates how efficiently you’re converting materials into finished products. Comparing actual WIP to planned or standard WIP reveals whether production is running smoothly or experiencing problems.
Modern MES and ERP systems track WIP in real-time as materials are issued to production, labour is charged to jobs, and goods move between operations. This visibility allows managers to identify WIP buildups quickly, prioritise jobs to meet customer commitments, and make informed decisions about production flow. Some manufacturers even establish WIP caps for certain work centres, refusing to release new work until WIP falls below the threshold, thereby forcing attention to clearing backlogs before creating new ones. The goal is finding the minimum WIP necessary to keep production flowing smoothly without starving downstream operations, balancing efficiency with capital utilisation.
