Manufacturing counts: raw materials, work in progress, finished goods

In a warehouse, goods stand on a shelf and are easy to count. In a workshop it is different: part of the fabric is cut, part is being sewn, part is already packed, and it all goes by the name of "material". If on count day the question "under which heading do we count this?" arises, it is hard to answer. As a result one material is counted twice while another is not counted at all. So the counting boundaries are set before the count.

Map the workshop zones

Before the count, assign every place in production to a single zone and draw up a list:

• raw-material store: material not yet issued to the workshop;
• material issued to the workshop but not yet started (the workshop balance);
• material in process, i.e. work in progress, each stage separately;
• finished goods not yet accepted into the warehouse;
• finished goods accepted into the warehouse;
• rejects, waste and returned material, kept separate;
• material belonging to another organisation (if any is in the workshop), kept separate because it may not be on the company's books; how to treat it is settled with the accountant.

Each zone gets a responsible person. One item is counted in one zone only: if the boundary is vague, it is counted twice or lost altogether.

The cut-off time and halting movement

In production, material is always moving, so the cut-off time is fixed precisely, usually the end of a shift. Before counting starts, the last issue, receipt and transfer documents are closed. During the count, movement between zones is stopped, or every handover is entered in a movement log. Otherwise the same material may be counted both in the raw-material store and in the workshop.

Before the cut-off, three things usually have to be done:

• close the consumption and output report of the last shift;
• process the final issue from the raw-material store to the workshop;
• hand finished goods to the warehouse or mark them separately as "not accepted".

How to count material in process

The hardest part is work in progress. Count it by stage and in natural units (pieces, kilograms, metres, batches). If each batch carries a tag or a note with the stage and quantity, the job gets much easier. Where an exact count is impossible (a mixture, a liquid, bulk material), the way of measuring or weighing is agreed beforehand with the production manager and the accountant and written into the report. How work in progress is valued is the accountant's matter, while the counting team supplies an exact quantity.

The workshop foreman or the person in charge of the stage must take part in the count: he or she knows which stage a batch has reached. The counter only counts and records, and does not guess the stage.

A hypothetical example: a sewing workshop

Suppose that on count day the workshop shows the following:

• 8 rolls of fabric in the raw-material store, the remainder of each measured in metres;
• 3 rolls issued to the workshop but not cut, lying on the cutting table;
• 120 cut sets, one per garment;
• 85 garments being sewn;
• 60 sewn but unpressed garments;
• 30 packed garments not yet handed to the warehouse.

Each line is counted once in its own zone. If the 30 packed garments are on the "finished goods" list, they are not entered again among the sewn ones. The figures are made up, but the principle is the same: one item, one stage, one record. The report then shows separate totals for raw materials, work in progress and finished goods.

Rejects, remainders and common mistakes

Rejects must lie in a separate place and be listed separately. How remainders and waste (for example, cutting offcuts) appear in the books should be agreed with the accountant in advance: some have value, some do not. Common mistakes:

• the same material is recorded in both the store and the workshop;
• a batch has no tag and nobody knows its stage;
• material was issued to the workshop but the document does not show it;
• finished goods are not accepted yet are already set aside for dispatch;
• material issued and returned unused lies without a document.

Conclusion

A manufacturing count begins with order in zones, the cut-off time and the stages. When the boundaries are clear in advance, even material mixed up on the shop floor turns into a reliable figure. Inventory carries out inventories of goods and materials, and in manufacturing it counts raw materials, work in progress and finished goods.