What does "work in progress" (WIP) refer to in the manufacturing process?

"Work in progress" (WIP) refers specifically to items that are in various stages of the production process. This term encompasses all materials and products that have been started but are not yet completed. WIP includes raw materials that are currently being transformed, components that are undergoing assembly, and any partially finished goods that are pending additional processing or finishing touches.

Understanding WIP is crucial in manufacturing since it allows businesses to assess their production efficiency, manage inventory levels, and understand the flow of materials and products through the manufacturing system. This insight helps in identifying bottlenecks, optimizing processes, and ultimately improving production output.

In contrast, items that are completed and ready for sale represent finished goods, while items that have been ordered but not yet produced do not yet exist in any production phase. Items deemed damaged would not contribute to production flow and would instead require disposal or rework. This distinction highlights the importance of WIP in understanding the active elements of the production cycle.