What is WIP inventory? Work in progress, explained for shops
WIP (work in progress) inventory is material that's started but not finished — no longer raw stock, not yet sellable. Why it matters and how shops keep it honest.
WIP — work in progress — is inventory that’s been started but not finished: no longer raw material, not yet a sellable product. The plate that’s been cut but not welded, the bracket that’s welded but not coated, the batch that’s fermenting. It’s the middle state, and it’s where inventory goes to become invisible.
Why WIP matters
Three reasons shops that ignore WIP get surprised:
- It’s money standing on the floor. Material cost plus the labor already in it — a shop with twelve half-done jobs has real cash parked in totes, whether or not any ledger says so.
- It breaks stock math silently. The classic failure: raw stock says 12 plates, but 8 are already cut for WO-0341. A system that doesn’t move stock into WIP at job release will cheerfully promise those plates to the next job. (This is exactly what “reserved at release” means in a work order system — the WIP state is what makes “available” honest.)
- Too much of it is a symptom. Piles of WIP usually mean jobs start before they can finish — missing parts, missing decisions, or a floor paced by whichever job shouts loudest. Lean people treat WIP as the primary thing to minimize; a shop doesn’t need the vocabulary to apply the instinct.
How shops keep WIP honest
- Release moves it. When a job releases, its materials leave raw stock — into the job, not into limbo. Consumption logs as the job runs.
- WIP has locations. “Staged — Bay 2” is a location like any other. If a tote of half-done brackets can’t be found by search, it’s shrinkage with extra steps.
- Finished means moved. Completion converts WIP into finished goods (or a shipped order) in the same motion. The count sheet should almost never discover WIP by surprise.
Accounting counts WIP as an asset class for the balance sheet; the floor counts it as promises in flight. Both are right — and both are downstream of the same ledger discipline: material states that update when reality does.
The one-sentence version: WIP is inventory mid-transformation — track it like a place, cost it like an asset, and treat growing piles of it as a question.