WIP Management

Copyright © Wondershare Software
Management of
Work In Progress
Detail + Logic » Flexibility
天下難事，必作于易
天下大事，必作於細
Dick Lam
Aug 2015

I am always a junior manager
 I only focus on figures which is related to daily operation
 I don’t have any strategic thinking; rather, just deal with
reporting of expenses, staff turnover, absenteeism,
canteen, dorm, daily sales, daily scrap & all trivial stuffs;
above all, asking people do what they should do
 To certain extent, my work is rather lame to senior
management; I don’t say anything presentable!
 I am just summarizing/restating something you have ever
heard before
知人者智，自知者明

This is me…
 BBA in Accountancy (HKBU)
 Master of Arts in E-Business (CityU)
 Fellow of ACCA
 Worked in various MNC and industries, mainly
manufacturing in mainland China, focus on
management accounting, business strategy, tax
planning, supply chain management and new business
setup in PRC
 2010~2011, Consultant in a US consulting company for
a countrywide supply chain project
 Now, Director of Business Process of a US mfg co.
勝人者力，自勝者強

Contact Details
Mr. Dick Lam Chor Ki
dicklam128@hotmail.com
http://dicklam128 .wordpress.com
http://www.box.net/dicklam128

Company Logo
Disclaimer
1. We only serve SME
2. We are not big enough to do JIT
3. We are small enough to use Excel for
all reports and planning modules
4. We are diligent to work on every single
detail of materials related stuff
5. We need more Excel/VBA talents

Company Logo
What is the Optimum WIP level?
1. Average of Max/Min of the historical
amount
 But why?
2. X% of the Raw Materials Warehouse
 Again why?
3. Annual Cost of Goods Sold / 360 * Average
Production Lead Time +/- x%

Copyright © Wondershare SoftwareDetail + Logic » Flexibility
Why bother with WIP?
 Holding of money
 Distortion of production effectiveness
 Hiding of scrap
 Correctness of BOM
 Incorrect evaluation of operators performance and
improper performance bonus to them
 Finally, incorrect costing for proper product pricing
 Incorrect inventory availability will impact production
of other job orders
 Leading to production inefficiency

Other issues with WIP?
 So many items in WIP while records not match with
physical inventory
 Job orders can be finished without issuance of
sufficient materials, why?
 It is claimed that WIP is a must and it is almost
impossible to clear up everything until year end while
there is stock take of the whole factory
 Shocked! So many write off!!
 Line stopped because of materials lost while PMC
claims that the ERP shows that the missing items does
exist

Above all,
What products to produce and
how many can be produced?

Learning Path
1
Excel Basics
Selective functions and command to form the fundamentals of problem
solving techniques (algorithm)
4 With materials receipt plan, it is still necessary to update the production plan by
actual/latest materials receipt schedule for each shift of schedule within the week
PMP by Shift
2 Master Production Schedule – schedule of finished goods production, central
to materials planning
MPS Basics
3 Production Materials Plan – what and how many to produce subject to
materials availability for coming weeks based on existing materials receipt plan
PMP by Weeks

Excel Basics

Simplify the complication
Range Name
Operator: &
min, max
vlookup(key, range, column,
true/false)
Index(range, row, column)
sumif, sumproduct
Indirect(cell.address)
Offset
Excel Basics

Workshop

Master Production Schedule -
MPS

What critical?

Capacity Constraint
Materials Availability
Safety Stock Requirement
1
2
3
The demand is real only after production4
There is always Why

PMP by Weeks

Mechanism - TOC
 The less inventory of the BOM items determine the
maximum quantity to produce for the particular
product
 “What ought to produce then what can produce”
release unusable materials for production of other
products
 “What can produce then what minimum to produce”
help balance the order fulfillment
 As a result, low hang fruit to maximize
production/order fulfillment – any single materials
which the availability can help improve production
volume

Output of PMP by Weeks
 Besides possible output of products:
 What products short and no short?
 Materials Shortage – how many and when?
 Flexibility to determine the pull-in effort
 Inventory excessiveness – if unable to produce, why
incoming so much?
 Probable inventory holding
 If not able to produce, then when to produce

PMP by Shifts

Production Materials Plan by Shift
7 x 2 = 14 shifts of immediate
production materials plan

Issues with PMP by Shift
 Partial materials being fed to Shop Floor while some
materials are over-issued due to SPQ
 Over-issued RM to be available to other work orders

Materials Scrap
X = Issued – Used – Transfer - Returned – Scrap
What is X?
What is missing?
What is needed?

Materials Handling
Enquiry the Materials Status by Job Order
What have been
 Issued
 Returned
 Scrapped
 Transfer (which job orders can use this RM?)
What & how many left to issue?
Program to transfer RM between orders
Users: Line Leaders

If your photographs aren’t good enough,
you are not close enough!

Thank you !

WIP Management

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