Inventory reduction - WIP reduction
On the chart above you can see the WIP reduction result for one of our
mfg. lines. We have reduced 6x times within a few days and since that time we are keeping
very low WIP. Do you want to know how we achieved? Read this section
Maybe there is not manufacturing company without WIP reduction
activities or even WIP reduction projects. The reduction of work in process seems to be
very popular tool for improving company overall performance in order to cut the
manufacturing leadtimes, increase flexibility, reduce cost and improve quality. I know
there are many articles related to WIP inventory reduction. But almost all are written by
There are also well known tools to reduce inventory. The most popular are kanban and DBR
I am running WIP reduction activity in our company and I would like to summarize my
experience, trials and fails, and of course results, and to document the way how we
achieved the WIP reduction to reduce WIP to with help of many colleagues from several
I think it might be usefull for you to read about our way. Lets go through following
Setting of the limit stabilized the material flow alomost immediatelly.
What is received from warehouse is compensated by output of finish goods. And it is the
true reason why to set up the WIP limit - to stabilize to material flow. If we imagine
material flow as a river by setting Max WIP limit value we change stormy river to calm
one. We will just avoid floods and dry seasons anyway the water level will be still high,
like our WIP. We will discuss in the next steps how to reduce water level.
Some may ask: Which value to set as the first max. limit?
The actual one or the actual one plus x%. Or say actual one x 2, even actual one times 10
might be OK. It depends just on you and your experience.
I usually check a few days several times per day WIP value and then set up the limit to be
something like average WIP level + some allowance to cover any fluctuation in the WIP
inventory value. There is no complicated formula, no need. Common sense is enough.
If you are not sure which value to set, simply set up higher value. It
is just the starting point, do not worry. Based on the results you can anytime change the