Work in Progress (WIP)

WIP is an important concept in Lean and Agile.

By definition, WIP is: a form of inventory, usually unfinished goods which still require further work, processing, assembly and or inspection. This type of inventory is usually found within steps or sub-processes of a production process. Only raw materials which have commenced to move through their value adding processes can be classified as WIP.  Raw materials which have still not been worked with are still classified as raw materials. Work in progress is usually the major type of inventory in a one bin or two bin system.

Why #WIP is Important
Work in progress is considered a type of waste just like inventory, as it ties up cash for a certain period of time which could be generating higher returns elsewhere in the organization. In a large manufacturing facility even small amounts of #WIP can add up to a large sums of capital locked up in this type of inventory.

In the #agile world this means simply, #WIP limits delivery of Value, something critical to successful agile teams.

The presence of unnecessary work in progress can also be an indicator of an unreliable supply chain, lack of proper production planning, excessive manual labor required in the production process, production line balancing or supply chain which are causing unnecessary delays and build-up of work in progress inventory. This may warrant further analysis. An efficient productive system should only pull materials through when needed , without the need for much #WIP. This is the concept of Just in Time and is what ultimately led to the utilization of #KANBAN Systems (Kanban Boards)

In the #agile world, this is realized in a number of ways, but essentially it comes down to Spent Costs, which further dissuades teams from focusing on value and instead has them focus on non-economic drivers. This is also an inhibitor to moving quickly to MORE valuable work because people and resources are over utilized on non-value realized work.

In the agile world this is critically important to ensuring teams complete their work within a time box (Sprint, Iteration, Increment, Release).  In order to ensure that the team consistently delivers value and has good Flow, the teams Focus on a few stories at a time, they limit #WIP

Work in progress also presents a business risk to the company because #WIP will usually be stored on the factory floor, close to machinery, plant and equipment and also mobile equipment traffic areas.

The video below provides a good understanding of optimizing a system for flow, rather than applying traditional management thinking since often the system has a number of sub optimal processes or work units. We want adjustments and value to be understood in terms of the entire system used to deliver the value. This type of thinking is commonly referred to as #Systems Thinking and there are a number of management models and books on the topic.

In my next post I will talk about a corollary to #WIP called #batch size.

Until then, enjoy this video!