WIP in warehousing

The term work-in-progress (WIP) is a production and supply-chain management term describing partially finished goods awaiting completion. They are in an unfinished state and therefore unable to be sold. They may be on a conveyor belt in the act of fabrication or they may be waiting in a queue for further processing.

WIPs are one of the components of a company's balance sheet. The WIP figure reflects only the value of those products in some intermediate production stages. WIP accounting does not include costs for items that have not entered the production assembly line. For example, raw materials that are still placed in factory stores are not included in WIP costs.

The higher quantity of WIP inventory:
*The less storage space is available for most profitable items
*The more capital need to be tied up in unsaleable items
*The higher the risk of incomplete goods expiring or becoming obsolete

WIP inventory is an important line item on a merchant’s balance sheet and a key indicator of the health of their supply chain. WIP inventory is not applicable to merchants who purchase finished goods from a supplier for resale.
WIP in warehousing