What is Semi-finished Goods?
Semi-finished Goods
It is not a finished product, but an intermediate product made directly in a factory.
What it means
Semi-finished products are products that are made once in a factory using purchased materials and then used to make other products. It lies between the materials and the finished product.
If you buy the same product, it is a purchased product, and if you make it yourself, it is a semi-finished product. Once a semi-finished product becomes available, a bill of material (BOM) and work instructions are required.
At the pen factory
The ballpoint pen factory has been purchasing black refill for up to 14 days. From the 15th day, black refill becomes a semi-finished product as we make our own refill using ink, refill tube, and ball.
Why it matters
What to order and what to make will vary depending on what you buy and what you make yourself.
Related terms
- Multi-level BOMA multi-level BOM with parts underneath parts.
- BOM ExplosionExpanding the BOM to the bottom level to calculate what is needed and how much is needed.
- ItemEach and every item handled by the factory. Both products and parts are items.
- BOMA list of what and how many items go into making one product.