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Work-in-process, or WIP, is nothing more than a strategic buffer within the manufacturing process. For example, let’s assume that your manufacturing process is made up of two steps which require a total lead time of 45 days in order to produce the final product. Step No. 1 has a process lead time (PLT) of 25 days, and Step No. 2 needs 20 days.
Additionally, your shipping department has established a five-day lead time for all customers within North America. Overall, the total lead time for a single order within this example is 50 days. Now, if your customer expects your organization to deliver within five days of placing their order, you must establish buffers, or on-hand inventories, prior to the shipping step to ensure on-time and in-full delivery of products despite the 45-day lead-time for manufacturing.
So, what must be in place in order to remove the WIP?
A partnership agreement between sales and operations that clarifies the actual process lead time to the customer without the WIP buffer.
Visual process controls that enable plant personnel to quickly and easily identify variation in the manufacturing process so that the source may be eliminated.
Narrow specifications for raw materials and a vendor/supplier management process that effectively measures conformance to agreed-upon standards.
A stabile, reliable manufacturing process that consistently produces a quality product within the agreed-upon lead time.
Removing WIP, although very appealing by the numbers, is a luxury that comes with a reliable manufacturing process. In order to capitalize on the reduction of WIP, your organization must focus first on minimizing variation that’s caused by equipment failures, raw material defects and poor process control.
For more information on managing assets by criticality, contact Life Cycle Engineering at www.LCE.com.