Counting work in progress on the shop floor

Raw materials sit on racks and finished goods sit in cartons. Work in progress sits everywhere else: in carts beside the machines, in trays between operations, in bins waiting for inspection, on pallets half way to the next process. It changes shape, loses some pieces to scrap, gains others from rework, and is often measured in a different unit at each stage. No wonder it is the stock that accountants and plant managers argue about most. A count of work in progress needs a few agreements that a count of finished goods does not.

Why it is hard to count

• The same material changes form. Kilograms of resin become pieces after moulding, pieces become assemblies after fitting, and each stage has its own unit and its own code.
• Parts move constantly. A quantity counted on a cart may be gone ten minutes later.
• Scrap and rework are recorded late, or on paper at the line, so the book may not yet reflect them.
• Storage is informal: next to the machine, on the floor, in whichever box was free.
• Production wants to keep running, and a stopped line costs more than a few minutes of delay.

Define the stages first

Before counting anything, write down the stages that the plant recognises. For each stage, fix three things: what exactly is counted, in which unit, and where the stage begins and ends.

For illustration, a moulded part may have these stages: after the press and before trimming; after trimming and before painting; after painting and before assembly. The count at each stage is in pieces, never in kilograms, and each stage has a code so that a counter and the book mean the same thing. Anything that does not fit a stage, such as parts waiting for a decision, gets a separate "held" stage instead of being added somewhere by guesswork.

Keep the list short. Five or six stages that everyone understands are better than fifteen that only the planning department can recite.

Tag the lots

The most reliable way to count work in progress is to make it countable. A lot card travels with each batch and shows the lot number, the stage, the quantity and the time and person of the last update. The card carries a barcode, so that the counter scans the lot card, checks the quantity against what is physically there and records the difference.

Three rules make the cards work: one card per lot, a new card or an updated entry whenever the lot moves to the next stage, and a separate coloured card for rework and scrap, so that these never mix with good parts. Where cards are not yet in use, the counting team can attach temporary ones on the day, but then the quantities must be counted by hand and the cards only identify them.

Agree the cut-off with production

Choose a moment, for instance the end of a shift, and agree it with the production manager. At the cut-off, each line either finishes the lot it is working on or marks it as unfinished with the quantity. Parts that are moving between stages belong to the stage they have left until the next stage records them. Rework and scrap are placed in marked bins before the count, not during it.

Compare with the book

The book value of work in progress is usually calculated from what was issued to the order, less what was reported as finished and what was reported as scrap. For illustration: 1,000 pieces issued, 820 finished and 40 reported as scrap leave 140 pieces that should be in progress. If the count finds 120, the difference of 20 is a question: unreported scrap, a lot that was moved but not recorded, or a counting error. A recount of the lots involved usually answers it.

Value is a separate question. The book may carry work in progress at material cost only, or at an accumulated cost that includes labour and overhead. Agree with finance which basis the result will be shown in, so that the quantities can be converted later without a new count.

Summary

Work in progress becomes countable when its stages are defined, its lots carry cards and the cut-off is agreed with the people who run the line. Smart Inventory counts work in progress with handheld barcode scanners, scans lot cards where they exist or attaches temporary ones, and reconciles the result with your book so that differences are sorted into timing, entry errors and probable scrap.