A Concrete Practical Example of WIP
WIP Lifecycle in Electrical Switch Manufacturing
Consider an industrial rotary switch: once copper coil sheet is stamped into contact terminals and brass billets are turned into contact shafts, those loose components move into sub-assembly. They are no longer raw materials, nor are they sellable finished goods. Until final assembly, insulation testing, and packaging are completed, the parts represent WIP inventory holding invested labor and machine hours.
Why Tracking WIP Determines Profitability
Excessive WIP is the clearest symptom of unbalanced production routings and hidden machine bottlenecks. Tracking WIP allows plant management to:
- Locate Bottlenecks Instantly: Large WIP pileups before a machine center indicate a throughput restriction.
- Accurate Cost Valuation: Roll cumulative labor, power, and tooling wear into WIP inventory valuations for monthly financial balance sheets.
- Prevent In-Transit Damage: Minimize parts sitting exposed in metal tote boxes, preventing oxidation and scratch defects.
Production & Plant Control
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