Most companies have items in their inventory that they need help selling. These items take up space and drive up storage costs, whether due to changing consumer tastes or technological innovations that have left them effectively antiquated.
Kitting can help. By bundling commonly used items, such as cell phones and chargers, companies can streamline inventory management and drive up revenue.
Before discussing the benefits of kitting solutions, defining how kitting works and why companies choose to do it is essential.
Packaging Makes Perfect
Warehouses contain thousands of items, each assigned a stock-keeping unit (SKU). For instance, a single bag of sugar would have its SKU. SKUs are critical to supply chain management because they ensure every item is accounted for.
With kitting solutions, however, several different but related items—also known as complementary items—are packaged together and assigned a single SKU. For example, a kit could include products typically used to clean a car, such as clearing fluid, tire cleaner, and spray for the vehicle’s interior.
Warehouse operators typically use one of two approaches to kitting. They either have warehouse employees assemble the kits before receiving orders to expedite the fulfillment process. Or they use one SKU for a collection of items. When an order is received, employees assemble the kitting solution by picking the complementary items from shelves and then packing them into a box.
Kitting Keeps the Supply Chain Moving
Kitting has become increasingly popular recently, as e-commerce companies have outsourced much of their inventory and supply chain management to third-party logistics (3PL) providers. In e-commerce, customer demand for certain products can rise or fall at a moment’s notice. Companies need to address the fickle nature of the market with creative solutions.
Kitting is a simple yet powerful way of highlighting items not currently selling well by pairing them with ones flying off the shelves. Kits are generally sold at a higher price than individual items, which can increase a company’s average order value. Kitting also improves operational efficiency by increasing the speed with which items move off the shelves. This allows companies to save on storage costs and free up warehouse space for newer items.
Kitting solutions are also making the lives of warehouse operators easier. Modern consumers expect to have their orders quickly fulfilled and delivered to their doorstep. Picking individual items off shelves and packing them into boxes is labor-intensive and time-consuming. Packaging several items together reduces warehouse employees’ time to move between shelves to pick items. That means items can be shipped to customers faster and cheaper.
While the role of kitting solutions in increasing operational efficiency is clear, a range of other benefits may take time to become apparent.
The Hidden Benefits of Assembly Services
As companies have come to embrace kitting, they have quickly discovered the benefits of pairing complementary items go well beyond what they initially expected. Here are a few of them.
1. Kitting Reduces Errors
The picking and packing process needs to be corrected. Warehouse employees can misread an order and accidentally pick the incorrect item. They might also need to pack all the items included in an order consisting of multiple individual items.
Kitting solutions can reduce errors associated with the pick-and-pack process. Since kits are typically preassembled, warehouse employees do not need to pick individual items from shelves and pack them together.
Every company wants to reduce its order error rate. Reducing errors increases customer satisfaction and significantly cuts costs since it reduces the number of returns companies are forced to process.
2. Kitting Solutions Improve Packaging
Packaging items is easier than it sounds. The shape or size of one item in an order can make it challenging to fit other items included in the order into one box. Third-party logistics providers are left with two options to mitigate this issue: ship the items separately, which drives up shipping costs, or ship them in large, heavy boxes.
Kitting solutions make the packing process more straightforward. Each kit has the exact dimensions and the same weight. This consistency in size and weight enables companies to create custom packaging for their kits. By designing packaging for the kits it will eventually hold, companies can increase their operational efficiency by assembling and packaging them before they receive customer orders.
3. Kitting Can Cut Down on Warehousing Costs
The business model of warehousing vendors is relatively simple. Companies pay to store raw materials before they are used in production and finished goods before they are shipped to customers. The amount the companies spend is partly based on how much space their items occupy in the facility.
Generally, pre-assembled kits take up less space in a warehouse than individual items stored separately. Kitting solutions also make it easier to predict storage costs, as they introduce some standardization to inventory management. Items don’t need to be picked, packed, and shipped individually. Cutting down on warehousing costs is an easy way for companies to boost their bottom line while running a more lean and efficient operation.
Explore CONRI’s Kitting and Assembly Services
Whether your company is looking to launch a new product or introduce a holiday gift set, CONRI’s kitting solutions can help your company increase its operational efficiency, cut costs, and satisfy customers. Our customers have consistently noted the flexibility and scalability of our kitting and assembly services. Get started by submitting a contact form today!
