Work in progress (WIP) refers to a product that has been created but is not yet ready for sale due to unfinished production, delayed release dates, or issues within the supply chain. Proper supply chain management helps companies avoid excess WIP and minimize costs.
Work in progress, also known as WIP, is a term generally used in supply chain management. It refers to a product that has been created from raw material, but is not ready for sale for one of many reasons. Examples of work in progress might be a chair that has been formed but hasn’t been finished, or a pile of dolls in storage that have not been properly packed for sale. This term differs slightly from another term, work in progress, which refers to any work that has been started and has not been completed. When something is defined as a work in progress, it is meant in that general sense, outside the realm of supply chain management.
Reasons a product might be a work in progress include unfinished production, delayed release dates, or issues within the supply chain. For example, a product may be a work in progress because the packaging company has become backlog, delaying the completion of the manufacturing process that allows a product to be shipped to the seller. A motorcycle that has been partially assembled but waiting for parts to work is also a work in progress, as is a brand new automobile that hasn’t been painted yet. More often than not, a business should try to avoid ongoing work.
Work in progress can cost the company money in storage and handling, so it’s best to have as little product as possible in this state. Ensuring that WIP is kept to a minimum is part of supply chain management, which focuses on aspects of the communication and transactions between the many companies involved in creating a finished product. Coordinating deliveries between a raw material producer and a delivery service is part of supply chain management, as are distributors who sell the finished product to retailers.
Proper supply chain management helps companies avoid excess WIP. Supply chain management may seem like it only applies to large companies, but even the smallest companies manage their supply chain management to some level. For example, a balloon tornado who runs an operation with a woman practices supply chain management when researching and deciding on a supplier for her balloons. In this case, a work in progress might be a balloon that he has inflated for use but has not yet transformed into a shape because he has noticed that his previous attempts have resulted in broken balloons. If you call your supplier to complain about low-quality products, you are doing quality control, another important part of supply chain management.
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