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Innovation, Future, Automotive industry

Work in Process and Work in Progress for effective supply chain management

12 July 2022

Managing the work of a company in the automotive industry requires quite a flexible approach. Work in Progress, or WIP, is certainly among the topics worth exploring. Conversely, you may also come across the term "Work in Process" which in fact is a different approach. What are the characteristics of these management strategies?

Work in Progress vs. Work in Process – what are the differences?

In the context of WIP, we can encounter the phrase "Work in Process" as well as "Work in Progress". What are the differences between these terms – and are there actually any? Opinions on this subject may vary. Some people consider Work in Process as an extension of the Work in Progress assumptions, while others use these phrases interchangeably. 

The most important – and probably the only difference that can be discerned – is the period to which each approach applies. This can be discerned by comparing the words "process" and "progress," which are used in completely different contexts. "Process" refers to the short-term execution of a given task, describing the step-by-step of some activities that must be done or have already been done in order to complete the process. The word "progress", on the other hand, is used when we want to refer to a broader time horizon, particularly when we are describing the effects of our actions rather than the implementation itself.

In conclusion, it seems that "Work in Progress" is a phrase that primarily describes the cost of unfinished goods remaining in the production process. "Work in Process," on the other hand, refers to materials that are converted into goods in a short period of time.

See also: Logistics in the automotive industry – efficient solutions and innovations

Work in Progress – time optimization is fundamental

The assumptions of Work in Progress mainly relate to the optimization of time in manufacturing operations. Among other things, an accurate analysis of the impact of unfinished products on overall production is important here. With such information, it will be possible to manage the supply chain more efficiently. Wasting time or money on storing unfinished, not yet saleable products is a disadvantage for any company. On the other hand, Work in Process is an approach that solves this problem by enabling the development of an efficient production system. The primary goal here is to ensure that the amount of material used to make a product is exactly what it should be for the production to run smoothly – no more and no less than actual demand.

See also: How to implement key lean manufacturing methods?

There is no room for multitasking in the world of WIP

Flexible management often focuses on multitasking, among other things. It might seem that this is a feature desired by manufacturers, but nothing could be further from the truth. As research shows, with as few as four tasks performed simultaneously, more time is used to "jump" between the context of each task than to actually complete the goal.

Let us illustrate this problem with an example. Suppose a company commits all its resources to five projects, and it would take about a month to complete each of them. Focusing on all of them at the same time is unlikely to get them completed in the first month. In accordance with the research results cited above, we can expect a deadline of more than 5 months. Only then will it be possible to see any benefits and gains. Also relevant here is the risk to the quality – a direct result of the need to divide attention between different tasks. If, on the other hand, the projects were implemented on a one-by-one basis, the gains – albeit smaller, as they involve a single project – would be available after the first month of work.

See also: Circular economy and linear value chain – what is better for manufacturing sector?

How to avoid multitasking in a company? Limits to the Work in Process approach

In order to avoid unwanted multitasking during production, so-called Work in Process limits have been introduced. These are simply restrictions on the tasks performed. For example, in automotive companies such a limit may be the number of cars that enter the production line. If realistically only two cars can leave it, there is no point in letting 10 units onto it. Importantly, there should be one task for each person or each stage of the project – only after that task is completed, can the next activities proceed. In practice, however, this is often not the case, which translates into a significant decrease in the productivity of the entire organization.

See also: Packaging in logistics and packaging management. What do you need to know about optimization of the logistics in a production company?

Work in Progress and Work in Process in practice

Work in Progress is the term most often encountered in the context of supply chain management. It describes the cost of unfinished goods in the production process, which includes raw materials, labor and general expenses, among other things. Work in Progress is one of the most important elements featured on a company's balance sheet. It reflects the value of products that are not finished at some intermediate stage of production, not including the value of raw materials that have not yet been used, but are necessary to complete the product. Work in Process describes products that go from raw materials to finished products in a short period of time. The term is sometimes used to refer to assets that require a significant amount of time to complete. These can include, for example, consulting or construction projects.

See also: What is meant by lean supply chain management? Lean SCM benefits in the automotive industry

Knauf Industries – packaging systems compliant with the WIP approach in the automotive industry

One of the elements supporting the implementation of the WIP concept is the use of reusable packaging for materials needed in the production process. In this regard, the offer of Knauf Industries might be an interesting solution. The company specializes, among other things, in the production of returnable transport packaging for the automotive industry. This is an environmentally friendly solution, products are reusable for up to 10 years, as well as fully recyclable. One of the biggest advantages of this type of product is its adaptability to the needs of a particular company. Moreover, Knauf products are designed to be compatible with a closed-loop economy.

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