Work In Process (WIP)

Work In Process (WIP) commonly refers to all partially completed products within a manufacturing or industrial process that have started production operations but are not yet finished goods. WIP includes materials, subassemblies, and units currently being processed, queued between steps, or undergoing inspection or testing.

Scope and what WIP includes

In regulated and industrial environments, WIP typically includes:

• Raw materials that have been issued to a work order or batch and had at least one value-adding operation performed
• Parts or subassemblies located at workstations, in test cells, or between routing steps
• Batches or lots in intermediate states, such as curing, cleaning, or environmental conditioning
• Units on hold or under review that have not yet been scrapped or reclassified

WIP usually excludes:

• Unissued raw materials in warehouse or stockroom
• Completed products that are in finished goods inventory or shipping
• Tools, fixtures, and consumables that are not part of the bill of materials for the product

WIP in systems and operations

In manufacturing execution systems (MES), ERP, and other production IT/OT systems, WIP is represented as open work orders, batches, or units that have not yet reached a defined completion state. Typical operational representations include:

• Open operations or routing steps on a work order or batch record
• Units or lots with in-process status codes (for example: running, waiting, on-hold, under inspection)
• Quantities physically located in production areas, test labs, cleanrooms, or outside processing

WIP levels are often monitored for planning, capacity management, and compliance with internal procedures or industry standards. In regulated environments, WIP may require documented traceability, genealogy, and evidence of each processing step, including operator, equipment, materials, and test results.

Financial and planning perspective

From an accounting and planning viewpoint, Work In Process is a category of inventory that has accumulated direct materials, labor, and a portion of overhead but is not yet recorded as finished goods. It is used to:

• Calculate inventory value and cost of goods manufactured
• Support material requirements planning (MRP) and capacity planning
• Analyze flow, lead time, and bottlenecks on the shop floor

Common confusion and variants

Work In Process vs. Work In Progress: In many manufacturing and industrial contexts, these terms are used interchangeably and both abbreviated as WIP. Some accounting practices use “Work In Process” for manufacturing and “Work In Progress” more broadly for long-term projects, but the distinction is not universal.

WIP vs. finished goods: WIP covers items still in production, while finished goods are completed products ready for sale, shipment, or distribution.

WIP vs. raw material inventory: Raw material inventory refers to materials not yet issued or processed. Once materials are issued to a job and processing begins, they typically become WIP.

WIP in regulated and quality-focused environments

In regulated manufacturing, managing WIP often involves:

• Maintaining batch records or electronic device history records for in-process units
• Tracking hold, rework, and deviation status at the unit, lot, or batch level
• Ensuring traceability of materials, equipment, and process parameters during all in-process stages

Operational controls on WIP, such as limits on in-process quantity or formal release steps between stages, are sometimes used to support consistent quality and audit readiness.