STUDENTS' CORNER - 151
Work-in-process refers to an incomplete
work; that is, the product the company is marketing is in the making;
production has begun but not completed and therefore the incomplete product is
waiting for completion for marketing. The production process has commenced but
not been completed; the work of production is in process.
As a driver of the supply chain, the
inventory of the work-in-process must be mindful of the cost involved in the
work-in-process. The cost of the raw materials in use for the production
process, the cost of the labor to the extent the product is in process, the
factory overhead, the inevitable expenditure—all these costs must be taken into
consideration while reporting for some specific period; it is advisable that a
monthly review must be undertaken so that the finance already involved in the
work-in-process must be known to monitor further process towards the completion
of the production.
Every stage of the work-in-process must be closely
monitored so as to avoid wasteful expenditure; incomplete products must not be
allowed to pile up; the process must be always on; the incomplete units must be
moved to the next phase of production. This has another great advantage; in
case, some fault, some flaw has crept in the manufacturing process at this
phase, not piling up leads to instant discovery of the fault making room for
immediate correction, thus saving a lot of money.
The incomplete unit must quickly move on to
its next phase of production process; this is a
must because any delay in the process might result in grave consequences
like delay in manufacturing the product; this delay will end up short supply of
the product which will end up dissatisfied customer. An unsatisfied customer is
a potential threat to business and profit. Therefore, constant alertness to all
minor and major details of production must be exercised lest neglect burns the
fingers.
We will look into the next type of
inventory: Finished Goods in our next session.
