inventory management

Understanding Work-in-Progress Inventory

Unlock the secrets to optimal Work-in-Progress (WIP) inventory management for small manufacturers.

In today’s fast-paced manufacturing and production landscapes, the role of work-in-progress (WIP) inventory has become increasingly critical.

It represents the bridge between raw materials and finished products, encapsulating materials that have begun their transformation through the production process but are not yet complete.

Understanding and managing WIP inventory is essential for optimizing production flow, improving your operational efficiencies, controlling your inventory, and enhancing financial health.

Join us as we unpack the concept of WIP inventory, and why it’s vitally important for small manufacturing operations to not only track, but also optimize it.

Need to get your raw material and product inventory in control?

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What is Work-In-Progress Inventory?

Let’s start with the basics. Work-in-Progress inventory, also known as in-process inventory, refers to any materials or goods that are still undergoing production and have not yet been completed.

This can include:

  • raw materials waiting to be processed
  • partially assembled products, and/or
  • items that are being tested before finalization.

Why is tracking your WIP Important?

WIP inventory plays a crucial role in any manufacturing business because it effectively represents the potential for profits not yet realized.

Here’s a couple of reasons for starters that should hopefully convince you of the benefits of keeping track of your WIP:

  • Optimizes Production Flow: Keeping a close eye on WIP inventory helps small manufacturers identify bottlenecks and inefficiencies in the production process, enabling timely adjustments to improve workflow and productivity.
  • Enhances Cost Management: Accurate monitoring of WIP inventory allows for better cost control by providing insights into the cost implications of production delays, excess inventory, and waste.
  • Improves Cash Flow: Efficient management of WIP inventory helps in reducing unnecessary capital tied up in production, thereby improving the cash flow which is vital for the sustainability of small businesses.
  • Supports Accurate Forecasting: By understanding the status and volume of WIP inventory, small manufacturers can make more accurate predictions about product completion dates, enabling better resource allocation and planning.
  • Increases Customer Satisfaction: Effective management of WIP inventory ensures products are produced and delivered in a timely manner, which is crucial for maintaining high levels of customer satisfaction and loyalty.

Convinced? Good! Let’s start looking now at how you can implement a tracking and optimization system into your operations to get a better handle on your WIP.

Tracking your WIP Inventory

Tracking your WIP inventory is essential to ensure that production processes are running smoothly and that you have the necessary materials on hand. It’s not the easiest task, but as we have discussed earlier it’s vitally necessary for the success of your business.

At the minimum, the core data you’ll need to be looking at for your WIP is:

  • the amount of WIP inventory you have at any given time
  • the value of your WIP and its components
  • the length of time materials have been in production and at what stages.

Ways to track your WIP

While pen and paper may work initially, it is not a scalable or efficient method for larger businesses as it can lead to errors and delays. Excel solutions too can quickly become unwieldy and time-consuming, making it difficult to keep track of changes and updates.

It’s thus a good option to invest in comprehensive inventory management software to ensure that you are fully tracking your WIP. Software that allows for tracking of in progress manufactures is usually found in MRP or ERP solutions, which are often costly and time consuming to implement.

For smaller operations, it can be difficult to justify the expense and time spent on implementing an MRP or ERP system. This is where Craftybase comes in - our manufacturing inventory software provides a streamlined and cost-effective solution specifically designed for DTC brands.

Craftybase MRP provides a comprehensive solution for tracking your WIP inventory, with customizable features that cater specifically to the needs of DTC brands. With real-time updates and easy-to-use interfaces, you can stay on top of your production processes and make informed decisions. Try us for 14 days completely free.

Strategies for Optimizing Your Work-in-Progress Inventory

Optimizing your Work-in-Progress (WIP) inventory is crucial for enhancing the efficiency and profitability of your manufacturing operations.

To achieve this, a multifaceted approach focusing on the identification of bottlenecks, implementation of lean manufacturing principles, and continuous process improvement is essential.

  • Identify and Address Production Bottlenecks: Conduct regular reviews of your production processes to identify any stages that cause delays or inefficiencies. Once identified, take targeted actions to alleviate these bottlenecks, such as upgrading equipment, retraining staff, or modifying production schedules.
  • Implement Lean Manufacturing Principles: Adopting lean manufacturing techniques can significantly reduce waste and inefficiency in your production process. Focus on principles such as ‘Just-In-Time’ (JIT) production to minimize excessive WIP inventory by manufacturing only what is needed, when it is needed.
  • Continuous Process Improvement: Establish a culture of continuous improvement within your organization. Encourage feedback from employees at all levels and regularly review production data to identify areas for improvement. Utilizing methodologies such as Six Sigma can systematically reduce defects and improve quality.
  • Utilize Technology for Better Forecasting and Planning: Advanced forecasting and planning tools can significantly enhance your ability to predict demand and plan production accordingly. This can help in ensuring that WIP levels are optimized to meet demand without leading to overproduction.
  • Regular Inventory Audits: Conduct regular audits of your WIP inventory to ensure accuracy in reporting and to prevent the accumulation of obsolete or excess inventory. These audits can also provide insights into production trends, helping you to further refine your optimization strategies.

Implementing these strategies requires commitment and regular review, but the payoff in improved efficiency, reduced costs, and increased customer satisfaction can be substantial for manufacturing businesses looking to stay competitive in their respective markets.

WIP Top Tips

Here are some tips for effective WIP tracking:

  • Use a centralized system to monitor all aspects of your WIP, including raw material levels, production schedules, and product completion rates.
  • Implement barcode or RFID technology to help accurately track physical goods as they move through the production process.
  • Regularly review and update your WIP inventory data to ensure accuracy and identify any potential issues early on.
  • Establish clear communication channels between different departments to ensure that information about WIP inventory is shared efficiently and accurately, facilitating smoother operations and decision-making processes.

Need to get your raw material and product inventory in control?

Try Craftybase - the inventory and manufacturing solution for DTC sellers. Track raw materials and product stock levels (in real time!), COGS, shop floor assignment and much more.
It's your new production central.

Start your 14 day free trial


In conclusion, effective Work-in-Progress (WIP) inventory management is essential for the smooth operation and success of any manufacturing business.

By understanding what WIP inventory is and its significance, businesses can make informed decisions to optimize their production processes. Implementing robust tracking mechanisms, such as comprehensive inventory management software like Craftybase MRP, can significantly enhance efficiency and reduce waste.

Remember, the goal is not just to manage WIP inventory but to do so in a way that supports the overall health and profitability of your business. With the right tools and strategies in place, you can transform your WIP inventory management into a competitive advantage.

Nicole Pascoe Nicole Pascoe - Profile

Written by Nicole Pascoe

Nicole is the co-founder of Craftybase, inventory and manufacturing software designed for small manufacturers. She has been working with, and writing articles for, small manufacturing businesses for the last 12 years. Her passion is to help makers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.