WIP tracking software

WIP in manufacturing stands for Work-in-Process (or Work-in-Progress) and refers to inventory that has started the production cycle but is not yet completed. 

These are materials that have moved beyond the raw state and are currently being transformed into finished goods, sitting at various stages of production, such as: 

• Assembly 
• Machining 
• Testing 

WIP represents the middle stage of inventory, positioned between raw materials and finished products. From a cost perspective, it reflects the accumulated expenses applied to partially completed goods, including: 

• Raw materials consumed
• Labor involved
• Overhead, such as machinery usage and facility costs

Because these costs have already been incurred but the product is not yet sellable, WIP is often considered "capital tied up” in the production process.

Managing WIP effectively is a key part of running an efficient operation. 

High levels of work in progress can signal bottlenecks, inefficient workflows, or supply-and-demand imbalances. When items spend too long in a partially completed state, it leads to longer lead times, increased holding costs, and wasted resources. Maintaining the right level of WIP helps ensure production flows smoothly without interruptions or shortages.

WIP tracking software gives manufacturers a real-time, digital view of everything moving through production, replacing manual methods with a connected system that automatically updates as work progresses.

The software monitors the location, status, and flow of items as they move from one production stage to the next. Every movement (whether materials entering production, a subassembly being completed, or a job moving to the next workstation) is recorded automatically through barcode scanning, RFID tags, or other tracking inputs. This removes the need for manual data entry and keeps information accurate without extra effort from your team.

All of this data is displayed in a live dashboard, giving you a single, reliable source of truth for production activity. You can see which jobs are in progress, what materials are being used, and where each item sits in the production process. Because the system continuously tracks progress, it also surfaces bottlenecks. If items are consistently delayed at a specific stage, the software makes that visible so you can act quickly.

A WIP tracking system also connects to bills of materials, routing, and subassemblies, so you can see not just where an item is, but also which components are required and how it fits into the broader production process. This makes it much easier to manage complex manufacturing environments while keeping inventory, costs, and workflows aligned in one system.

WIP tracking software gives manufacturers complete visibility and control over what is being produced, how it is being built, and where it is within the production process.

• BOM management — Create and manage both single-level and multi-level bills of materials, defining every raw material, component, and subassembly required for production along with exact quantities and relationships. Being able to define the level of detail in your BOMs allows you to set up the WIP tracking system to accurately track how materials are consumed as work progresses.
• Component and cost tracking — Define each BOM item to include its unit of measure, quantity, and cost. The system automatically calculates total material and production costs, and as work moves through production, you can compare planned versus actual material usage, monitor yield, and identify variances per manufacturing order.
• Routing and workstation management — Define how production happens on the shop floor. You can create routes that specify each operation, the workstations involved, and the required resources, and connect this routing data directly to your BOM.
• Subassembly automation — Automatically generate subassembly manufacturing orders, show available quantities in real time, and help plan buffer stock, ensuring intermediate builds are available when needed and fully integrated into production flow.
• Version control — Track BOM changes over time while maintaining a full history. This ensures every item in production is tied to the correct specifications, improving consistency and traceability as designs and processes evolve.

Together, these features create a centralized, real-time view of production, linking materials, subassemblies, routing, and costs into one system so teams can make better decisions and keep operations running smoothly.

WIP inventory is calculated by tracking all costs invested into unfinished goods and determining how much remains tied up in items not yet complete at the end of an accounting period. The formula is:

Beginning WIP Inventory + Manufacturing Costs – Cost of Goods Manufactured (COGM) = Ending WIP Inventory

The process starts with the value of unfinished goods carried over from the previous period. To this, you add manufacturing costs incurred during the current period — covering raw materials consumed, direct labor, and manufacturing overhead such as equipment, utilities, and facility expenses. You then subtract COGM, which represents the total cost of items completed and moved into finished goods, isolating only the costs still tied up in partially completed items.

WIP inventory is recorded on the balance sheet as a current asset. Because items in WIP are at different stages of completion, manufacturers often use a percentage-of-completion approach — estimating how far each item is along and applying that percentage to the total expected production cost. WIP is typically valued at the lower of cost or net realizable value (NRV), ensuring the recorded value does not exceed what unfinished goods are expected to be worth once completed.

Accurate WIP calculation matters both financially and operationally. On the balance sheet, it ensures inventory values correctly reflect resources tied up in production. On the income statement, it directly affects the cost of goods sold and gross profit. Operationally, if too much value is sitting in WIP, it may indicate bottlenecks or inefficiencies worth addressing.