Which Inventory WIP Are You Talking About in Dynamics NAV

Overview
When people talk about WIP account, it’s what it is. An intermediary account where the raw material is being worked on, but it’s not yet a finished good for sale. This is important for companies to audit in a manufacturing process where the inventory is being produced or in the middle of being produced.

WIP it Good
But there’s a Dynamics NAV WIP and WIP for companies.

When people account for WIP in their company, it’s usually an output of a product that still need to go to some finished good.

For Dynamics NAV, it’s the components that has been posted as consumed, but not outputted. So all NAV WIP reports are not what companies wants for WIP.

To identify WIP, we typically setup 3 inventory accounts. RW, WIP, and FG. For example, assume you’re in food manufacturing and you make frozen pizzas (because I’m hungry right now).

The flour, tomato, cheese, raw meat can all be considered RW
The marinara sauce, pizza dough, sausage can be considered WIP
the finished pizza (the holy grail) the FG

For a typical manufacturing company, they would have the following accounts:

  • Raw material
  • WIP
  • FG

The Actual Setup You Should Have in NAV
For Dynamics NAV, we typically utilize the following accounts:

  • Raw material
  • WIP
  • WIP (NAV)
  • Finished Goods

What NAV is Doing
When you post a consumption in a Released Production order for your WIP items, it will hit the following accounts:
– Raw Material
+ WIP (NAV)

Then when you output the production order and finish the production order, it will hit the following accounts:
– WIP (NAV)
+ WIP

Similarly, when you are producing the frozen pizza, the accounts that will be affected will be:
When you consume:
– WIP
+ WIP (NAV)

When you Output:
– WIP (NAV)
+ Finished Goods

Why Not Combine Them?
You could, but I would not recommend it. When you look at the WIP (NAV), you can easily tell if there are any production orders that has been consumed but not outputted and finished. If you lump it all into your regular WIP account, while you can still get the information by running reports, will be an extra step you need to take.

On the financial statements, you can easily lump the WIP adn the WIP (NAV) accounts together as a total WIP in the inventory.

Conclusion
I’m hungry.

  1. If I have understood this correctly, this is applicable if you make your dough on a seperate order. If you pick flour, water, tomatoes, and everything else into one Production order and make the whole pizza from scratch, is there any value in having more than one WIP account ?

    I ask this as we run make to order, with a single WIP stage, but reporting on WIP is a nightmare. Anything that can point me down new avenues is most welcome.

    Richard

  2. Having a different WIP account will allow you to know what is NAV WIP and regular WIP. In this case, if the production order has consumption and no outputs, it will get posted into NAV WIP.

    So if there is a long time between picking and consuming flour, water, etc and the output, it’s a good idea to have a NAV WIP account. This way, you will always know what NAV has consumed, but has no output.

  3. Hi,
    where should I indicate account for NAV WIP, and for regular WIP? It is the same filed in Inventory setup (WIP Account) but I should choose different account for my RAW MATERIALS/SEMI-PRODUCTS, and different for FINISHED??

    Paulina

  4. The NAV WIP is specified on the Inventory Posting Setup. The regular WIP, as described in this article, is defined in the Inventory Account on the Inventory Posting Setup.

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