Manufacturing inventory is harder than distribution inventory because material changes identity as it moves. Raw becomes WIP becomes finished goods, and each transition has to be recorded for planning and cost to make sense.
Work in process visibility
WIP is where most small manufacturers lose visibility. Material has left the stockroom but has not become a finished item, and if the operation-level transactions are missing, nobody knows where it is or what stage it reached.
Locations and control points
- Define stocking locations that match how material physically moves.
- Control the stockroom boundary — uncontrolled issue is the top cause of inaccuracy.
- Separate quarantine, inspection and MRB material from available stock.
- Handle consignment and customer-supplied material explicitly.
Valuation follows control
Standard, average or actual costing all depend on the same transactions. Cost variances that nobody can explain almost always trace back to missing or late floor transactions rather than to accounting method.