From Raw Materials to Finished Products: The Importance of Semi-Finished Goods

Semi-finished goods are essential parts of many manufacturing processes, help save time and money, reduce waste, and ensure consistency and quality in their finished products. Standardized sizes and quantities of semi-finished products offer a reliable starting point for the mass production of finished products. In this article,  Viindoo Enterprise Management Software will bring the best understanding and practices for Manufacturers to leverage the benefits of semi-finished goods to optimize their production processes and meet the customers' demands.

What are semi-finished goods?

Semi-finished goods, also known as intermediate goods, are products that have been processed in some steps of the manufacturing procedure but are not yet ready for final consumption or resale. These items are included in the bill of materials for finished goods, are typically used in the production of finished goods, and they require another step of processing or assembly to become finished products.

What is semi-finished goods

What is semi-finished goods? 

To best understand about semi-finished goods definition, let's check various examples of semi finished goods, such as: sub-assemblies, components, and work-in-progress (WIP). Sub-assemblies are products awaiting to be assembled into larger assemblies. Components are individual parts that are manufactured separately and assembled into the final product. Work-in-progress refers to products that are still in the production process  and require further manufacturing before they become finished goods.

What are the benefits of using semi-finished goods in manufacturing?

Semi-finished goods play an important role in the manufacturing industry. One of its key advantages is that they bring unlimited room for improvement, variation, and mass production. This can result in greater speed, efficiency, and reduced manufacturing overhead, as it can eliminate the need for manufacturers to continuously start and stop production for each finished product.


Semi-finished goods can help reduce manufacturing costs. These goods are already partially processed and require less time and resources for further processing. As a result, the production process can be completed faster, leading to cost savings.

Improved Efficiency

Using semi-finished goods in the manufacturing process can help improve efficiency because of its streamlined manufacturing process. Companies can focus on finishing the product rather than starting from scratch, and this can lead to faster production times.

Better Quality

Semi-finished goods are usually manufactured under more controlled conditions than finished goods. It brings faster results, faster improvement, then better quality control in manufacturing.

semi-finished goods management is important part in manufacturing

semi-finished goods management is important part in manufacturing

Reduced Inventory Costs

They have been born in smaller batches, which can be assembled into finished products as required. This reduces the demand for large inventory storage space and other associated costs. Also, manufacturers can respond quickly to changes in demand, reducing the risk of excess inventory.

Greater Flexibility

Bring greater flexibility in the production process, these products can be used for a variety of end products. Therefore, you can adapt to changes in the market and customer demand more easily.

>>>> See more: ERP software for Manufacturing to optimize production processes

Best practices for semi-finished goods storage and management

As a manufacturing business owner, your quantities of semi-finished goods may need proper manufacturing inventory management to fulfill demand driven material requirements planning and ensure their quality and safety stock. Please check the following tips:

Identify the storage requirements: Before storing, it is important to determine the specific storage requirements such as temperature, humidity, ventilation, and light. Also, you should check the order of good export for better pick and pack, move, and delivery on time. This will help you choose the appropriate storage location and equipment to prevent any damage, delay, and difficulties in inventory activities.

Label and categorize: Proper labeling and categorization of semi-finished products help in easy identification and retrieval. Use clear and concise labels that include information such as product name, batch number, and date of manufacture.

Adopt a first-in, first-out (FIFO) approach: Implement a FIFO approach to ensure that the oldest inventory is used first. This helps to prevent inventory spoilage or obsolescence and ensures its fresh and of high quality.

Maintain inventory records: Keep track of inventory records such as the quantity, location, and movement of semi-finished goods. This helps to manage inventory levels, minimize waste, and improve inventory accuracy.

Use suitable storage equipment: Choose suitable storage equipment such as pallet racks, shelving, or bins that can accommodate the size and weight of your semi-finished products. Ensure that the equipment is properly maintained and inspected regularly to prevent any accidents or damage.

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Regularly monitor inventory: Costs associated with inventory can be minimized by utilizing semi finished goods. This allows for smaller, just-in-time orders which reduce the need for large storage spaces and the associated expenses. It also allows manufacturers to quickly adapt to changes in demand, avoiding excess inventory.

Leveraging technology: to improve manufacturing management and efficiency, you should consider popular tools, such as manufacturing software systems or production tracking software, which can greatly assist. Production tracking software enables real-time manufacturing report, inventory report, allowing product managers to accurately track the quantity and location of semi-finished goods in the production process. This information can help identify bottlenecks and optimize production schedules, reducing lead times and minimizing downtime.

>>> See more: Viindoo Inventory: Inventory management software for SMEs

Semi-finished goods are an important component in the manufacturing process, as they serve as the building blocks for finished products. Efficient management of these goods ensures that production runs smoothly, resources are optimized, and the final product is of high quality. By utilizing manufacturing software systems  or production tracking software, and implementing effective inventory management and production planning techniques , manufacturers can achieve greater success in the competitive market.


How are semi-finished goods managed in inventory?

Semi-finished goods are typically managed as part of the inventory control process. They are tracked and monitored to ensure accurate inventory levels and to schedule further processing or assembly.

Semi-finished goods play a crucial role in supply chain management by facilitating smoother production processes and enabling more efficient coordination between suppliers, manufacturers, and distributors.

Semi-finished goods are typically valued based on the costs incurred up to the semi-finished stage, including direct labor, direct materials, and allocated overhead costs. They are recorded as assets on the balance sheet.

Yes, semi-finished goods can be further customized or tailored to meet specific customer requirements. This flexibility allows companies to offer more personalized products without starting from scratch.

Using semi-finished goods can help mitigate production risks by reducing dependency on single suppliers, allowing for easier identification and correction of defects or quality issues, and providing backup options in case of supply chain disruptions.

From Raw Materials to Finished Products: The Importance of Semi-Finished Goods
Jun Nguyen March 30, 2023