Kitting Companies can improve your e-commerce fulfillment strategy and streamline operations. It allows you to combine multiple items into a single package, which simplifies assembly and inventory tracking.
For example, a podcast recording mic might come with a teleprompter and ring light in a kit that customers can easily order. This enhances customer experience while boosting sales for the merchant.
Cost
A kitting company can increase warehouse space efficiency by relocating items to be shipped together and consolidating the space required for storage. This streamlined approach to inventory management reduces the number of products that are required for a particular order and frees up room to stock additional items, which can make handling peaks in orders more manageable. Additionally, it’s often less expensive to ship a complete package than to ship individual items individually.
This efficient approach to product assembly helps to lower fulfillment costs by reducing the amount of time it takes workers to complete each order. Kitting can be especially useful for companies that sell a combination of products such as subscription boxes or home office setups. Kitting is also commonly used by retailers like Zappos to provide a fast shipping experience for their customers.
One of the biggest benefits of kitting is that it can help a business increase average order value. For example, a clothing retailer might bundle matching outfits into one package, which can increase the total sales of each garment while offering customers a better value.
Kitting can also be an effective way to move slow-selling items in a company’s warehouse. Bundling these products with more popular products can improve their sell-through rates and help to balance the inventory and avoid dead stock.
A kitting company can also help a business streamline its financial management by providing a more streamlined approach to cost allocation. When a kit is assembled, the associated costs are recorded as one unit rather than multiple units, which can save on tracking and reporting procedures. Additionally, it can be easier to calculate profit margins when the associated costs are grouped together instead of being broken down into separate line items.
Time
With kitting, the picking and packing process is faster because you’re pre-assembling products into a single, ready-to-ship package. This significantly cuts down on the number of touches per order, which is a critical factor in speeding up fulfillment times, especially during peak seasons when every second counts. Kitting also improves order accuracy by eliminating mistakes that occur when workers try to juggle multiple items per shipment. The kitting process also reduces inventory management costs by grouping slower-moving inventory into value-packed kits with bestsellers to increase sell-through rates and avoid dead stock.
Kitting also makes warehousing more efficient by reducing storage space requirements. For example, a skincare company may assemble a kit of four different products in decorative packaging before introducing them on their website. This allows them to store the kit as a single item with its own stock keeping unit (SKU), which simplifies inventory management and reduces warehouse space needed for individual items. Kitting is especially useful for businesses with seasonal sales cycles and promotional campaigns that require them to scale up or down operations quickly.
As a result of the time and cost savings, companies that employ kitting can reduce shipping costs and boost profitability. However, it’s important to note that not all manufacturing or fulfillment processes are suitable for kitting. In general, it’s best for fast-moving, highly profitable products that can be assembled and shipped relatively quickly. It’s less effective for slow-moving, low-profit or high-risk products that require a more careful handling process or special packaging and shipping conditions. However, even when these factors are taken into account, companies can still benefit from the efficiency and accuracy of the kitting process.
Efficiency
Kitting and assembly are efficient processes that can reduce fulfillment costs and improve efficiency. They also help companies avoid costly shipping inefficiencies and meet customer delivery expectations. By reducing manual touchpoints and avoiding wasteful labor, companies can minimize errors and ensure accurate product packaging. Additionally, using a kitting company can help businesses reduce inventory on-hand and save valuable storage space in the warehouse.
Traditional order fulfillment involves picking and packing each individual item, which requires significant labor and time. In contrast, kitting allows a single employee to quickly pick and package multiple items in a pre-assembled unit. This significantly cuts fulfillment and shipping times, and can greatly reduce the number of mistakes made during shipment preparation.
Many eCommerce retailers use kitting to streamline the process of fulfilling orders containing multiple products. For example, a podcast recording mic may often be purchased together with accessories like a teleprompter and ring light. By providing a convenient package, these businesses can increase sales, and deliver a better customer experience.
Similarly, many B2B companies rely on kitting to provide customers with ready-to-ship solutions for their business needs. For example, a manufacturer of machine parts might create kits of components and tools to reduce assembly time for each order.
In addition to reducing inventory on-hand, kitting can also save on shipping costs by minimizing the weight of each shipment. By grouping slow-moving inventory into value-packed kits, manufacturers can increase sell-through rates and avoid dead stock. Kitting can also help companies reduce dimensional weight pricing by optimizing box sizes and eliminating wasted space.
Flexibility
Kitting is a great way to streamline order fulfillment for products that are often ordered together. By assembling all of the components of a product in advance, companies can avoid the hassle and expense of packaging separate individual items and shipping them to each customer. Kitting can also help reduce postal costs by optimizing the size and weight of a package.
Assembling kits in advance is especially useful for companies that offer subscription boxes, as well as seasonal or promotional product sets. However, kitting can be beneficial for many types of businesses. The key to choosing the right kitting solution for your company is to find a 3PL or fulfillment provider that can meet your specific needs and provide the warehousing space to support your assembly work.
Traditional inventory methods can be more complicated to manage, and can cause delays when orders come in for items that aren’t in stock. For example, if one of your customers requests a bundle that isn’t available, you may have to wait for the supplier to produce more or “rob Peter to pay Paul” by using existing inventory to fulfill that customer’s request. Kitting can simplify your supply chain and give you greater flexibility for custom orders.
When you choose to use kitting, your warehouse staff will assemble the kits as needed, and then store them in designated packing stations. When an order comes in for a specific bundle, the workers will simply pull the kit from storage and assemble it at their packing station. This helps to reduce the amount of manual labor required for order fulfillment, and can increase efficiency while decreasing labor costs. For a more detailed look at the benefits of pick and pack vs. kitting, check out our blog on pick and pack fulfillment.
Customization
For companies selling a mix of standardized and customized products, kitting can offer the best of both worlds. While traditional item-by-item inventory management systems can simplify tracking by identifying individual items with a unique SKU, kitting merges multiple items into a single unit or “kit” identified by one collective SKU, allowing for quicker processing times and greater space utilization.
Kitting also allows businesses to create standardized bundles or customizable kits based on specific customer needs. In addition, combining components in bulk drives economies of scale and reduces key cost-per-unit metrics. These cost savings, combined with fast and accurate fulfillment speeds, can help businesses meet customer demands without sacrificing quality or reliability.
In e-commerce fulfillment, kits can provide customers with a value proposition that is more appealing than the price of purchasing individual products individually. This can increase customer satisfaction, which ultimately leads to more repeat purchases and brand loyalty.
Another benefit of kitting is its ability to streamline and expedite the overall shipping process by reducing order processing time and shipping costs. The kit’s unified pricing and SKU can be easily tracked and processed by warehouse employees, minimizing the likelihood of errors or mispicks that could slow down shipping or cause expensive product returns.
Companies looking to implement kitting into their supply chain should work with a logistics expert to understand the options and advantages. A 3PL like Productiv that combines lean principles, the latest technology, and a deep talent bench can help businesses implement a cost-effective kitting strategy to improve productivity and meet customer demand. Contact us today to discuss your business’s unique needs and how a kitting strategy can support future growth and success.
