Work in Progress (WIP) Control – An essential step towards a LEAN business.
WIP control is key to driving reduced lead times and is essential to be able cope with the increase in quick response/demand, pull-type replenishment programs that are requested by brands and retailers. Even if your buyers are not pushing for short lead time business, there are significant financial and operational benefits to be gained from controlling and reducing your WIP. The financial benefits We have seen factories typically carry at least 2 weeks WIP i.e. 14 days. Our customers and own experience show that with the simple controls facilitated through Fast React, WIP can quickly be reduced by at least 20%. Consider a typical factory producing 15,000 pieces per day, with an average FOB (Free on Board) value of $5 per garment. One day of WIP costs $56,250 (assuming 75% of FOB Value). 14 days WIP ties up $787,500. A 20% reduction in WIP i.e. reduce by 2.8 days would reduce the working capital invested by $157,500. Such a reduction in working capital can provide a return on investment for Fast React in just a few months...or put it another way this sum could finance your Fast React system and purchase machines for another sewing line!