Content deleted Content added
m Reverted edits by 142.26.99.195 (talk) to last version by BobKilcoyne |
I have added in a section regarding the use of demand forecasting software to optimize the level of WIP goods |
||
Line 4:
== WIP inventory in supply chain management ==
WIP inventory calculations can help a company assess their supply chain health and guide in supply chain planning.<ref name=":0">{{Cite web |date=2021-08-25 |title=What is Work in Process (WIP) Inventory & How to Calculate It |url=https://ware2go.co/work-in-process-inventory/ |access-date=2022-07-13 |website=Ware2Go |language=en-US}}</ref> In most cases, it is ideal to have low WIP inventory levels,<ref name=":0" /> and companies that manage their inventory level efficiently tend to have lower costs.<ref name=":1">{{Cite web |date=2019-04-23 |title=What is Work in Process (WIP) in logistics? - SCM EDU |url=https://scmedu.org/workinprocess_wip_/ |access-date=2022-07-13 |language=en-US}}</ref> Managing WIP inventory requires coordination between several functions within a company, as well as with suppliers and customers.<ref name=":1" /> Higher WIP inventory levels are advantageous in that they can support a surge in demand, as well as improve cycle time since there is more material in production. However, this can also increase storage costs and obsolescence risk, as well as lead to waste if demand is lower than expected.<ref>{{Cite web |date=2020-10-26 |title=WIP Inventory {{!}} Advantages and Disadvantages of WIP Inventory |url=https://www.educba.com/wip-inventory/ |access-date=2022-07-13 |website=EDUCBA |language=en-US}}</ref> To mitigate these risks, companies are increasingly turning to demand forecasting software. These tools analyze historical data, market trends, and customer behavior to predict future demand with greater accuracy. This allows companies to optimize WIP levels, ensuring they have enough material to meet anticipated demand without carrying excessive inventory that could become obsolete.<ref name="Demand Forecasting Software">{{cite web |last1=Dekhne |first1=Ashutosh |last2=Lange |first2=Tim |last3=Magnus |first3=Karl-Hendrik |last4=Scheringer |first4=Isabell |last5=Vincken |first5=Simon |title=Retail and Consumer Packaged Goods:Better service with connected inventory |url=https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/Better%20service%20with%20connected%20inventory/Better-service-with-connected-inventory.pdf |website=McKinsey.com |publisher=McKinsey & Company}}</ref>
== WIP inventory in accounting ==
| |||