What Is WIP (Work in Process)?
Also known as: work in progress, WIP inventory
Definition
WIP (Work in Process) is inventory that has been released to production and has begun conversion but is not yet a finished good. It includes partially machined parts, subassemblies, and material sitting in queue between operations.
WIP (Work in Process) Explained
Physically, WIP is everything on the floor between raw stores and finished goods: parts in a machine, parts in a queue rack, kitted material waiting for an operation, and product held for inspection. Financially, WIP is a balance-sheet asset that accumulates material, labor, and applied overhead as it moves through the routing. In Infor SyteLine and LN, job or production order transactions move value into WIP at issue and relieve it at receipt to stock, with variances posted when actual consumption differs from standard.
WIP is the strongest lever on lead time in most plants. Little's Law states that flow time equals WIP divided by throughput, so a cell producing 40 units per day with 200 units of WIP has a five-day flow time regardless of how fast any individual machine runs. Halving WIP halves lead time without touching a single cycle time. This is why constant-WIP and kanban systems produce dramatic delivery improvements that plants had assumed would require capital equipment.
High WIP is also a concealment mechanism. Queues in front of every operation mean a machine breakdown, a quality escape, or a missing tool does not stop the line for hours or days, so the underlying problem is never urgent enough to fix. Lowering WIP deliberately raises the frequency with which real problems surface, which is the intent, but it requires that the organization is prepared to respond rather than simply reflood the floor with inventory.
WIP accuracy is a chronic ERP pain point. Backflushing at the wrong operation, late labor reporting, unreported scrap, and jobs left open after the parts have shipped all produce a WIP balance that no longer matches the floor. Symptoms include negative on-hand quantities, month-end WIP reconciliation adjustments, and job costs that only settle correctly after manual intervention. Cycle counting WIP locations and enforcing timely operation reporting are usually more effective remedies than accounting corrections.
Why It Matters
- WIP divided by throughput is manufacturing lead time, so WIP reduction shortens delivery times without capital investment.
- WIP ties up working capital in material and applied labor that cannot be invoiced until the product ships.
- Excess WIP hides breakdowns, quality escapes, and supply problems by cushioning their impact until they become chronic.
- Inaccurate WIP balances distort job costing, month-end close, and inventory valuation, eroding confidence in every downstream financial report.
In Practice
A machining department completes 60 housings per day and typically carries 480 pieces spread across nine operations, giving an eight-day flow time. A CONWIP cap of 240 pieces is imposed by releasing a new job only when one completes. Throughput holds at 60 per day because the constraint was never starved, and flow time drops to four days. The visible side effect is that operators now idle when the constraint stops, which is precisely the signal management wanted and had previously been buried under queue.
Frequently Asked Questions
Is work in process the same as work in progress?
In practice the terms are used interchangeably, and both abbreviate to WIP. Accounting standards and manufacturing systems generally prefer work in process for goods being converted on a production floor, while work in progress is more common in construction and project accounting for partially completed contracts. Infor SyteLine and LN both use work in process.
How much WIP should a plant carry?
Enough to keep the constraint from ever starving, and no more. A practical starting rule is to size a protective buffer of a few hours of work in front of the constraint, keep minimal queue elsewhere, and cap total released work. Most discrete plants find they can cut WIP 40 to 60 percent before throughput is affected at all.
Related Terms
Throughput
Throughput is the rate at which a process, line, or plant produces good, sellable units over a defined period, expressed as units per hour, shift, or week. Only conforming output that can be sold counts toward throughput.
Cycle Time
Cycle time is the actual elapsed time a process takes to complete one unit, measured from the start of work on that unit to the start of work on the next. It describes what the process does, not what the customer requires.
Kanban
Kanban is a visual pull system in which a card, bin, or electronic signal authorizes production or replenishment of a specific part only after downstream consumption, capping inventory at the number of signals in circulation.
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