Creating product bundles allows businesses to boost average order value and spur sales of slow-moving items. This strategic kitting process also enhances warehouse efficiency and improves inventory management techniques.
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Cost-Effectiveness
Kitting saves money through streamlined inventory management, order fulfillment, and operational dynamics. It also reduces secondary costs like warehousing, storage, and handling, which add up over time. In manufacturing, effective kitting minimizes assembly delays and streamlines production. It also reduces the cost of rework due to mistakes in assembly.
By eliminating the need to assemble orders by hand, companies can avoid paying for labor. Additionally, reducing the number of individual items to ship reduces shipping costs. The use of standardized packaging and efficient labeling minimizes material costs. Kitting can also increase efficiency through centralized sourcing of components and consolidated shipping and tracking.
A 3PL kitting partner can provide a cost-effective solution for ecommerce brands offering product bundles, retailers fulfilling seasonal promotions, and subscription-based businesses shipping curated packages. A 3PL can procure, manage, and deliver kitted components for a fraction of the cost of assembling them in-house. This translates into savings through reduced overhead, a more accurate product mix, and fewer returns.
When you outsource your kitting, the logistics journey begins in a dedicated facility with organized storage space and clear visibility. When an order comes in, workers can quickly retrieve the kitted components and move them to their assembly stations. Because everything an assembler needs is already prepared, they can work faster, minimize delays, and boost productivity.
Once the kitted items reach the warehouse, they undergo rigorous quality checks to ensure each one is up to standards. If any component is found to be below expectations, the kitting company can replace it, ensuring that the final shipment contains all necessary items. This prevents customer disappointment and costly product returns.
By simplifying inventory management, kits improve the accuracy of demand forecasting and reduce stockouts and overstocking. Kitting also makes it easier to manage product variations and bundling, which can be challenging in traditional inventory systems. This enables more timely and accurate replenishment, which is important for customer satisfaction. Kitting can also reduce the need to stock additional warehouses, allowing you to downsize and relocate to less expensive facilities or repurpose the freed space to launch new products and scale operations.
Time-Saving
Kitting companies simplify fulfillment processes by assembling products into pre-packaged bundles that eliminate the need to manually pull and pack each item for every order. The resulting savings in inventory, labor, and shipping costs can greatly reduce overall fulfillment expenses. In addition, efficiency improvements, such as reduced order error rates and faster fulfillment times, can also contribute to lower shipping costs by minimizing the need for returns and restocking.
The time-saving advantages of kitting extend well beyond assembly efficiencies to other areas of the supply chain. 3PL kitting services often provide significant cost-savings in several operational aspects, including warehouse management and storage, ordering and procurement, shipping and handling, and inventory tracking and reporting.
For example, a 3PL can help a manufacturer of nondairy ice cream consolidate and streamline purchasing by bundling ingredients for each product variation into one convenient kit that workers can pull as needed for production. This streamlined approach improves workflow and productivity and minimizes the need to constantly retrieve components from various storage locations. Moreover, quality control systems can flag subpar items and replace them with superior alternatives to ensure high-quality, accurate kits.
Similarly, a healthcare distributor that uses kitting to distribute medications to doctors can streamline the order process by combining medications for specific treatments into pre-packaged bundles. This not only cuts fulfillment time but also minimizes stock-outs and ensures that medical professionals always have the right prescriptions at the right times.
In addition, a 3PL can help a company optimize warehouse space by reducing the number of individual product SKUs stored in the facility. Ultimately, this can significantly cut warehouse storage and management costs by minimizing space requirements. Additionally, 3PLs can help optimize shipping and handling costs by maximizing the volume of product shipped per container and reducing the number of shipments required.
In addition to achieving immediate cost-savings, kitting can have long-term financial benefits by boosting customer satisfaction and brand loyalty. The reduction in order errors and shortened fulfillment times associated with a well-executed kitting strategy can help limit costly returns and increase the average order value of each shipment.
Efficiency
Kitting is an efficient way to process orders, speeding fulfillment and saving labor costs. Preassembled kits reduce time spent on picking and packing, boosting productivity, lowering inventory levels and eliminating the cost of error-prone manual processes. Additionally, kitting allows businesses to streamline order management and fulfillment by consolidating SKUs into pre-planned sets that can be easily tracked and shipped.
Kitted components also facilitate faster assembly, reducing production line downtime and the risk of costly mistakes that can delay operations. Additionally, kitting can help manufacturers increase sales by pairing less popular products with more-popular items to generate higher revenue. To ensure the accuracy of assembled kits, companies can use technologies such as barcode scanning to verify each item in the kit. Having a clearly defined kitting strategy in place and implementing quality control measures helps to eliminate errors and optimize productivity, minimizing the need for returns and ensuring customer satisfaction.
The benefits of kitting are a major factor driving its popularity across the supply chain, particularly in areas like procurement, shipping and warehousing. As an example, precision agriculture manufacturer Tillet and Hague Technology (THT) streamlined its connector procurement by switching to custom kits supplied by PEI-Genesis. This reduced the number of individual SKUs purchased, cut inventory costs and lowered shipping expenses by avoiding dimensional weight charges imposed by carriers.
In addition to improving efficiency and reducing costs, kitting can also reduce lead times by optimizing warehouse space and simplifying the shipping process. Kitting services can be customized to meet specific needs and are often used in e-commerce, warehousing, manufacturing, aerospace, computer manufacturing and healthcare & pharmaceutical industries. For instance, e-commerce kitting options include subscription boxes and product bundles as well as influencer kits for social media promotion. Kitting is also used in manufacturing as a way to deliver all replacement parts needed for an overhaul of equipment, streamlining the installation process and minimizing downtime. Additionally, localized manufacturing and 3D printing are transforming kitting processes by enabling on-demand customization and rapid prototyping while improving traceability by providing an immutable ledger of each component’s journey from supplier to final assembly.
Accuracy
Efficient supply chain management is a key to success for businesses that seek to improve efficiency, accuracy and value to their customers. Kitting is a critical component of value-added logistics, allowing businesses to streamline operations by bundling related items into pre-assembled kits for easier handling and faster fulfillment.
To achieve optimal efficiency and accuracy, warehouses that offer kitting services use advanced tools and systems to optimize operations. From automated systems that streamline repetitive tasks to robotic arms that handle complex assembly, advanced solutions can play a pivotal role in expediting the kitting process and enhancing operational efficiency.
Businesses can customize kits based on their specific needs, including product customization for enhanced customer experience or enabling limited-time promotions. Kitting also helps streamline inventory management, with businesses keeping track of kits rather than individual components. This simplifies inventory management, reducing the risk of overstocking or stockouts and optimizing resource allocation.
Once the components of a kit are selected and assembled, they can be stored in a dedicated area or activated directly into a fulfillment workflow. This eliminates rehandling and saves time by allowing workers to quickly find the exact item needed for an order. It also ensures consistent kit assembly, avoiding errors that could disrupt the flow of orders and cause delays in shipping.
Whether the kit is a simple product set, like a full brake repair kit or a subscription box, it should be assigned a new SKU that can be tracked throughout the fulfillment cycle. This will allow companies to identify and analyze sales trends, better understand inventory and customer data, and improve customer satisfaction.
Kitting can be done in-house or outsourced to a 3PL partner that offers complete kitting services. Either way, it can unlock scalability, cost savings and productivity gains that can propel a business to the top of its industry. When paired with Lean processes, kitting is the ultimate supply chain optimization tool that improves inventory management, reduces rehandling and shipping costs and delivers a great customer experience. Contact Radial to learn more about how leveraging a kitting solution can boost efficiency and help your business thrive.
