Sourced through Scoop.it from: holzex.ru
Translated from Russian: “Every production manager knows that the amount of work in process (WIP) — stacks of parts lying between machines waiting for processing — should be reduced. In contrast to the raw materials in the warehouse, work has already been done on it, and its cost increased by the amount of value added. This makes it an illiquid asset – in contrast to raw materials and finished goods, it cannot be sold. In addition, WIP costs extra space, heating, transportation and personnel. But, before reducing WIP, it is necessary to properly evaluate it…”
Michel Baudin‘s comments:
Even though it has a German name meaning “Wood Expert,” Holz Expert is a consulting group based in Moscow and specialized in the furniture industry.
I had not heard of them before, but Oleg Novikov pointed out this article to me on Facebook. It is well done. If you can’t read Russian, check it out with Google translate. They explain all the assumptions needed for the formula to be applicable, and give examples from furniture manufacturing. They even include a smiling picture of John D.C. Little.
Working with Russian clients, I was surprised that they insisted on mathematical formulas in consulting reports. To them, it was essential to the credibility of the recommendations, a feeling that I have never encountered among their counterparts anywhere else.