Sarah Chen
Manufacturing Operations Consultant | 8 Years
Sarah specializes in production workflow optimization and inventory systems for electronics and contract manufacturers. She has helped 30+ manufacturing teams transition off spreadsheets and into modern inventory systems.
The moment a raw material is issued to a production batch, it stops counting as raw material inventory. It also isn't finished goods yet — the batch isn't done. For that window, the value doesn't disappear; it just doesn't show up in either of the two numbers most people default to checking. Nstock's WIP Valuation report is where it actually lives.
How It's Calculated
Nstock looks at every production batch currently in progress — meaning any batch whose status isn't Completed or Cancelled — as of today. For each in-progress batch, WIP value is the sum of quantity used multiplied by unit cost at the time of consumption, across every component that's been issued into that batch. Add up every in-progress batch and you get a grand total: the value of materials currently consumed into active production, sitting in that in-between state, right now.
Why a Finance or Ops Person Would Check It
Without a WIP number, the value of materials mid-production either gets left out of inventory reporting entirely or gets left sitting in raw materials by mistake — both of which distort the picture. Finance cares because WIP is real asset value that needs to be accounted for somewhere on the books, not invisible money. Ops cares because a WIP total that's unexpectedly large is a fast way to notice that batches are opening and sitting half-finished longer than they should — material and cash tied up in production that isn't converting to sellable product on any predictable schedule.
Watch for This
A WIP total that keeps climbing while your finished goods completion rate doesn't keep pace usually means batches are being opened faster than they're being closed out — components get issued to a batch, then the batch stalls on the floor for reasons that have nothing to do with material availability: a bottleneck station, a quality hold, a missing final component that wasn't on the original bill of materials. Every stalled batch is capital sitting in limbo — not sellable, not returnable to raw stock without a manual reversal, and invisible to anyone only checking the Monthly Inventory Report, since that report only covers raw materials and finished goods, not WIP. If your WIP total looks high, the fix usually isn't a purchasing decision — it's finding out which batches have been open the longest and why they haven't closed.
Frequently Asked Questions
Does WIP value include labor or overhead?
No — it's materials-cost only, calculated from the actual unit cost of each component at the moment it was consumed into the batch. It doesn't absorb labor or manufacturing overhead into the figure.
What happens to WIP value when a batch completes?
Once a batch's status changes to Completed, it drops out of the WIP calculation and the components consumed into it are reflected in the resulting finished goods' cost instead — the value moves from WIP into finished goods inventory, it doesn't disappear.
What if a batch is cancelled?
Cancelled batches are excluded from WIP entirely, along with completed ones — WIP valuation only reflects batches actively in progress right now.
Does this report show which specific batches are driving the total?
Yes — the report lists every in-progress batch individually, with its batch number, product, current status, and WIP value, alongside the grand total, so you can see exactly which batches are holding the most value before they close out.
Next Steps
WIP is the piece the Monthly Inventory Report doesn't cover — that report only reflects raw materials and finished goods on hand. If you need the full accounting calculation — beginning WIP, materials, labor, applied overhead, and COGM worked through with real dollars — see how to calculate WIP inventory. If you're tracing where a material's cost ends up after it's issued to a batch, see Multi-Level BOMs: How to Cost Secondary Products Correctly for how cost carries through production. And if you're wondering what's arriving next to feed the batches that are still open, see Open Purchase Commitments.
Start your free trial → — already have an account? Log in and find WIP Valuation under Reports → Finance.
— Sarah Chen, Manufacturing Operations Consultant