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.

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