V9 - Tracking work in progress (WIP)

---

 

For many companies, the process of turning raw materials into finished goods can take days, weeks, months—and in some cases, years. As the length of time involved in manufacturing increases, so does the importance of tracking work in progress (WIP). Tracking WIP allows you to remove raw materials from inventory that are no longer available because they have been used in manufacturing. However, the finished good might not yet be available.

 

SOS Inventory offers two methods for tracking WIP: (1) work centers; and (2) items created to represent WIP. These two methods are not mutually exclusive. You can use one or both, depending on your tracking needs.

 

• Method 1: Work centers. This method is available only to Pro Plan customers. Work centers allow you to organize your manufacturing into stages and indicate where in the manufacturing process the product is. You add work centers by going to the Work centers list (Tools & settings > Configuration > Lists > Work Centers). Work center tracking is most useful when used in conjunction with Jobs, as you can specify work centers for a given job and even run a profit/loss statement on each work center within a job.  See Work centers for more information on this feature.

   

  edit_noteNOTE: Only company administrators may set up work centers.
   
• Method 2: Items. It is often useful to set up special items to represent WIP items in SOS Inventory. This allows you to track exactly how many units of each “sub-product” that you have at any given time. For example, suppose that you start with a Widget which must first be welded and then painted to make the finished good. You might want to know how many items have been welded and are waiting to be painted. A simple approach is to create an item called Widget - Raw to represent the original raw material. Then create an item called Widget - Welded to represent the welded version, and then an item called Widget - Painted or Widget to represent the finished good that will eventually be sold to customers. This method also allows for WIP items to be acted upon by outside sources (such as a contract manufacturer) to complete a portion of the manufacturing of the final Widget. The next section will expand upon the use of this method.

 

Alternative methods for tracking work in progress (WIP) for Companion and Plus plan subscribers

SOS Inventory's work-in-progress and work center features are designed for Pro Plan subscribers. However, if you are not on the Pro plan, here are some possible alternatives:

 

• Companion plan option: create a WIP item. An interim assembly item can be produced for items that are converted into a finished item, but the process takes time. 

Example: A Widget is made from 1 gadget and 1 gear.

1. Create an assembly item called Work in progress - Widget that has a WIP asset account assigned to the item.
   1. Add the gadget and the gear to the Work in progress - Widget bill of materials (BOM).
       
2. Create the Widget assembly item. Its bill of materials (BOM) is the Work in progress - Widget assembly item.
    
3. When you get ready to build the Widget, add a build of Work in progress - Widget. This will remove the gadget and gear from inventory and place the Work in progress - Widget into inventory.
    
4. When the Widget is complete, add a build of the Widget.
   1. This will remove the Work in progress - Widget from inventory and place the Widget into inventory.
   2. This will also send a journal entry to QuickBooks Online to remove the value of the Work in progress - Widget from the WIP asset account and place it in the Widget’s asset account.

 

• Plus plan option: create another location called Work in progress.

1. Create a location and make it non-nettable so that the inventory at that location will not show in your available stock. 
2. Transfer the raw materials from the main location to the WIP location before the manufacturing is started.
3. When the manufacturing is complete, record the build at the WIP location.
4. Then transfer the finished good from the WIP location to the main location.