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How can you manage inventory for work-in-progress more effectively?

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Inventory management is a crucial aspect of any business that produces goods or services. It involves tracking and controlling the flow of materials, parts, and products from the suppliers to the customers. However, one of the most challenging and often overlooked parts of inventory management is managing the work-in-progress (WIP) inventory. WIP inventory refers to the items that are partially completed or in the process of being transformed into finished goods. WIP inventory can have a significant impact on your cash flow, production efficiency, quality, and customer satisfaction. In this article, you will learn how to manage your WIP inventory more effectively and avoid common pitfalls.

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TARIQ ZAMAN

Logistics & Warehouse Strategies For Max Efficiency
Suharto Chatterjee

I am Supply Chain guy with expertise in heading businesses and driving profitability
Narayana Swamy C.

Technical Lead at Sagility specializing in Data Analytics

1 Define your WIP inventory

The first step to manage your WIP inventory more effectively is to define what constitutes WIP inventory in your business. Depending on the nature of your production process, your WIP inventory may include raw materials, components, subassemblies, or semi-finished products. You need to identify and classify your WIP inventory according to the stages of production, the value added, the lead time, and the demand. This will help you to measure and monitor your WIP inventory levels, costs, and turnover.

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Peggy McIntosh

RETIRED Inventory Control Manager
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One enhancement added was to have a separate IP column for stock that was on the floor but not put in location. This would let me know that there was availability on the floor but not showing on hand. Many parts were retrieved for customers and a back order prevented. With daily stock arriving it may take a few hours to get put up. One simple function of restocking solved the issue.

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Sikandar Ansari

Sr. Manager eCommerce | Brands | Marketplace | D2C | Women Western Fashion Retail, Clothing, Footwear, Bags and Accessories | eSales and Operations | Myntra , Nykaa, Ajio, Amazon, Flipkart etc.
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As per last month's sales analysis and forecasting, it also depends upon the upcoming event and other planning. Implement a system that allows for real-time monitoring of WIP inventory. This could involve using inventory management software that provides instant updates on the status of each work order and the location of materials in the production process.

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Sushil Verma, Life Coach Career Growth Expert

Life Coach | Guide | Career Growth Expert | Mindfulness Coach | Personal Growth Enabler | Trainer - Employability Skills | Change Maker | Lecturer -OSCM | Poet |
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?? Managing work-in-progress inventory effectively is crucial! A few tips: 1?? Prioritize: Identify high-priority tasks to allocate resources efficiently. 2?? Track & Update: Use inventory management tools to monitor stock levels and update regularly. 3?? Streamline Processes: Optimize workflows to minimize delays and avoid overstocking. 4?? Communication: Ensure clear communication among team members to prevent bottlenecks. 5?? Analyze & Adjust: Regularly analyze data to spot trends and make necessary adjustments.

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2 Optimize your production planning

The second step to manage your WIP inventory more effectively is to optimize your production planning. Production planning is the process of determining how much and when to produce to meet customer orders and expectations. You need to balance the supply and demand of your WIP inventory to avoid overproduction or underproduction. You can use various methods and tools to optimize your production planning, such as forecasting, scheduling, capacity planning, batch sizing, or lean manufacturing. The goal is to minimize the amount of WIP inventory while maximizing the throughput and quality of your finished goods.

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3 Implement WIP inventory control

The third step to manage your WIP inventory more effectively is to implement WIP inventory control. WIP inventory control is the process of tracking and regulating the movement and storage of your WIP inventory within your production system. You need to establish and enforce rules and procedures for handling, labeling, locating, and transferring your WIP inventory. You also need to implement a system for recording and reporting your WIP inventory transactions, such as barcode scanning, RFID tagging, or ERP software. This will help you to maintain the accuracy and visibility of your WIP inventory data and prevent errors, losses, or damages.

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Andrew Hanks

Business Transformation Leader | Omni Demand Forecasting | Global Inventory Management | Retail Systems Implementation Authority | Allocation | Replenishment | Supply Chain Planning | Basset Hound Rescuer
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Clarity of data flow is critical to account for sales orders, shipping etc, without double dipping or missing demand. If I sell 10 pieces on Sunday , but Ship on Wednesday, and ship 9 pieces, the data needs to be accounted for correctly.

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4 Reduce WIP inventory waste

The fourth step to manage your WIP inventory more effectively is to reduce WIP inventory waste. WIP inventory waste is any activity or resource that does not add value to your WIP inventory or your finished goods. WIP inventory waste can result from poor quality, defects, rework, scrap, overproduction, excess inventory, waiting, transportation, motion, or over-processing. You need to identify and eliminate the sources and causes of WIP inventory waste by applying the principles and practices of continuous improvement, such as the 5S method, the PDCA cycle, or the Six Sigma methodology. This will help you to improve the productivity, efficiency, and profitability of your production process.

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Suharto Chatterjee

I am Supply Chain guy with expertise in heading businesses and driving profitability
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Inventory which goes for waste has its roots in forecasting. For forecasting of items less than 20, the error margins are bound to be huge and it can be concluded that long tail contributes to maximum dead inventory For example apparels have a very difficult job of forecast at different sizes hence one should forecast say at the style level or style and design level for example - green oversized style. This helps in demand aggregation and better forecasting leading to lower inventory Pushing modifications right at the end is another great way of reducing inventory. HP printers used to print the numbers and alphabets based the country in which it will be sold just before the dispatch

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Narayana Swamy C.

Technical Lead at Sagility specializing in Data Analytics
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If we are talking about Apperal forecast, it should be around 3 points actually: size, price and less so on colour/design. It's because apperals have skewed sales towards few sizes and price is a big factor on quantity sold in most situations (excluding premium segment). I say less so for colour because we now have alternative sources of sales and any stock can be sold off as long as brand image holds. Most mismanagement in WIP for Apperal ceters around productivity of workers. This is due to 1. Most stock requirement is concentrated in festival and marrige seasons and large orders means production can't keep up during peak 2. For rest of the time there is dead stock or slow moving stock which stays in warehouses.

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5 Align your WIP inventory with your customer needs

The fifth step to manage your WIP inventory more effectively is to align your WIP inventory with your customer needs. Customer needs are the expectations and requirements of your customers regarding the quality, quantity, variety, price, and delivery of your finished goods. You need to understand and anticipate your customer needs and tailor your WIP inventory accordingly. You can use various strategies and techniques to align your WIP inventory with your customer needs, such as customer segmentation, market research, feedback, customization, or agile manufacturing. The aim is to increase the value and satisfaction of your finished goods and enhance your competitive advantage and customer loyalty.

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6 Review and improve your WIP inventory management

The sixth and final step to manage your WIP inventory more effectively is to review and improve your WIP inventory management. WIP inventory management is not a one-time activity, but a dynamic and ongoing process that requires constant evaluation and adjustment. You need to measure and analyze your WIP inventory performance, such as the WIP inventory turnover ratio, the WIP inventory days, or the WIP inventory carrying cost. You also need to compare your WIP inventory performance with your goals, benchmarks, and best practices. This will help you to identify and implement opportunities for improvement and innovation in your WIP inventory management.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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TARIQ ZAMAN

Logistics & Warehouse Strategies For Max Efficiency
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Real-time Tracking: Implement a robust inventory management system that provides real-time tracking of work in progress. This ensures accurate visibility into the status and location of each item, minimizing delays and optimizing workflow. Demand Forecasting: Utilize data analytics and historical patterns to forecast demand for work in progress. This helps in maintaining optimal inventory levels, preventing overstock or shortages, and streamlining production schedules. Standardized Processes: Establish standardized processes for handling work in progress, from receiving raw materials to final assembly. This reduces errors, enhances efficiency, and allows for consistent monitoring and control over the entire production cycle.

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How can you manage inventory for work-in-progress more effectively?

1

2

3

4

5

6

7

1 Define your WIP inventory

2 Optimize your production planning

3 Implement WIP inventory control

4 Reduce WIP inventory waste

5 Align your WIP inventory with your customer needs

6 Review and improve your WIP inventory management

7 Here’s what else to consider

Inventory Management

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How can you manage inventory for work-in-progress more effectively?

1

2

3

4

5

6

7

1 Define your WIP inventory

2 Optimize your production planning

3 Implement WIP inventory control

4 Reduce WIP inventory waste

5 Align your WIP inventory with your customer needs

6 Review and improve your WIP inventory management

7 Here’s what else to consider

Inventory Management

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