Companies shrinking production cycles

Companies are taking the least time in years to turn raw materials into finished goods, with the work-in-progress (WIP) cycle shrinking to 14.2 days in 2024-25 (FY25), provisional data from the Centre for Monitoring Indian Economy (CMIE) shows.

- SACHIN P MAMPATTA

The numbers cover 328 listed non-financial companies for FY25 and all available listed firms for earlier years. The WIP cycle has steadily shortened over the past decade, down from 23.4 days in FY15.

The changes have been less pronounced in raw material and finished goods cycles. The raw material cycle tracks the number of days the raw materials take to enter the production process after acquisition. The finished goods cycle shows the number of days taken for finished goods to be sold and dispatched. Both have seen more limited change compared to a decade ago. (chart 1) Improved logistics and infrastructure have helped create an environment for increased efficiencies even as companies adopt more digital technologies to improve productivity, said Deven Choksey, managing director at DRChoksey FinServ.