Not every unit in your workspace is inventory you can sell today. Some products are curing, cooling, drying, aging, settling, waiting for labels, waiting for a QA decision, or sitting half-assembled because one component has not arrived.
That stock may look productive. Financially, it is work in progress: cash has left the bank, but the product cannot create revenue yet. This is an inventory cash flow problem, not simply a question of available shelf space.
A growing product business needs some work-in-progress inventory. The problem begins when more batches are started than the business can finish, release, and sell on a predictable schedule. The goal is not to keep every shelf empty. It is to set a practical limit on cash tied up in inventory before unfinished goods begin competing with payroll, supplier orders, and the next product that customers actually need.
Count what is not ready to sell
Start with a physical walk through the workspace. Identify every batch or unit that has consumed materials or labor but cannot be picked, packed, and sold today.
Include products that are:
- curing, drying, cooling, aging, or resting;
- waiting for testing, inspection, or final approval;
- missing a cap, label, carton, insert, or other packaging component;
- awaiting rework after a quality problem;
- assembled only partway;
- complete but blocked from sale by a missing record or release decision.
This is broader than finished goods, which have cleared every sale requirement. Work in progress still faces at least one production, packaging, quality, or administrative gate.
Record the quantity, stage, date started, next action, expected ready date, and owner. Without a clear next action or date, the item is stalled—not merely waiting.
Put a cash value on the unfinished shelf
Units do not show the full risk. A shelf holding 200 inexpensive parts may represent less cash than 30 premium products with custom packaging.
For each work-in-progress batch, total the direct costs already committed. Depending on the product, that can include ingredients or components consumed, packaging already used, direct production labor completed, inbound freight allocated to the materials, and testing or outside-processing fees already paid.
Use this simple measure:
**Cash committed to work in progress = materials used + packaging used + direct labor completed + outside costs already paid**
Do not include costs that have not happened yet. The purpose is to see how much cash is currently trapped, not to calculate the final unit cost.
Suppose a skincare business has three lotion batches waiting for pump bottles. The bulk product already consumed $1,800 in ingredients, $420 in production labor, and $180 in testing. That is $2,400 committed before the bottles, labels, filling labor, and cartons are added. The product may be perfectly good, but the business cannot collect a dollar from it until the packaging shortage is resolved.
Measure how long cash stays trapped
The amount matters, but time matters too. A planned four-week soap cure is different from a batch that was supposed to clear QA in two days and is still sitting three weeks later.
Record two dates for every unfinished batch:
1. the expected ready-to-sell date when production began; 2. the current realistic ready-to-sell date.
The gap between those dates exposes delays that a total inventory number can hide. Then estimate how long the sellable units usually take to turn into customer cash after release. A batch may need 30 days to cure and another 60 days to sell through. That is roughly 90 days between spending the first production dollar and recovering it through sales.
Long conversion time is not automatically bad. Aged foods, cured soap, fermented products, and made-to-order goods naturally have waiting periods. The business simply needs enough working capital to support the cycle without starting more than demand justifies.
Find the bottleneck before starting another batch
When work in progress grows, the first instinct is often to speed up production. The real constraint may be somewhere else.
Look for the stage with the largest value or oldest items waiting in front of it. Common bottlenecks include a single filling machine, limited curing space, slow label approval, one person who performs every QA check, a supplier with unreliable packaging lead times, or production records that are not completed when the work happens.
Starting another batch before clearing that bottleneck creates activity, not throughput. It increases production planning pressure, uses more raw materials, and adds more units to the same queue.
A useful question before every run is: **What must be true for this batch to become sellable on schedule?** Confirm the needed materials, packaging, labor, equipment time, quality checks, and release records before committing more cash.
Set a work-in-progress ceiling
A practical ceiling can be expressed in dollars, days, or both.
A dollar ceiling limits the total cash committed to unfinished goods. A time ceiling limits how long a batch can remain at one stage before someone must review it. For example, a business might decide that no more than $6,000 can sit in work in progress and that any batch seven days past its expected stage date requires a decision.
Choose limits based on available working capital, normal production lead time, supplier reliability, sales pace, and the cash needed for payroll and essential purchases. Do not copy another company’s number. A candle business with short cooling times and dependable jar supply should not use the same ceiling as a soap company with a planned cure period.
Review the ceiling weekly. If a new run would push unfinished inventory over the limit, finish or release existing work, fix the bottleneck, reduce the batch size, or delay the run.
Use smaller commitments when demand is uncertain
Large batches can lower labor or setup cost per unit, but efficiency disappears when products wait too long, need rework, or sell more slowly than expected.
When demand is uncertain, use smaller replenishment runs until actual sales provide a reason to increase them. Reserve large runs for products with dependable demand, stable inputs, known yields, and a clear path through packaging and QA.
Also separate demand risk from supply risk. If bottles have a long lead time, buying a sensible quantity of bottles may protect production. That does not mean the business should immediately turn all available ingredients into unfinished product. Keeping raw material inventory flexible can preserve more options than filling every shelf with one SKU.
Hold a weekly release review
A short weekly review keeps unfinished stock from disappearing into the background. For each open batch, ask:
- What stage is it in now?
- How much cash is already committed?
- What is the next action and who owns it?
- Is the expected ready date still realistic?
- Is any quality, supplier, or packaging issue unresolved?
- Should the batch be completed, reworked, reduced, written off, or stopped?
Kerno helps businesses that make physical products connect materials, production records, QA steps, and inventory status. That can make it easier to see what is truly ready, what is still work in progress, and where cash is waiting on the next operational decision.
Practical takeaway
Unfinished inventory is not automatically waste. It is a working-capital commitment that needs an owner, a next step, and a deadline.
This week, list every batch that cannot be sold today. Add the cash already committed and compare each expected ready date with reality. Then set one ceiling for total work in progress and one rule for overdue stages.
Good production planning is not measured by how much you can start. It is measured by how reliably you can turn materials into approved finished goods—and finished goods back into cash.
Explore more Kerno Resources or join the launch list if you want better control over inventory, production, costing, and quality as your product business grows.
