Whether you’re a manufacturer who produces a finished product, an e-commerce direct-to-consumer seller or a third-party fulfillment center, kitting can have tremendous advantages for your business. But what is kitting, why is it important, and how do you go about implementing it? Don’t worry, in this article we’ll answer all of these questions and talk about the basics of kitting.
So, to start off, what exactly is kitting? Essentially kitting is the process within inventory management of bundling products or components of an end product that in general could be, or are, sold separately. When that product kit is sold the items that make up the kit are registered as part of the order, assembled or gathered, and shipped together.
Chances are we’ve all come across some sort of kit in our lives. Let’s give an example. Think of the last time you bought a home computer. You may have purchased it as a ready-made bundle. So, it might have included a screen, mouse, drive, cables, and maybe even a webcam. Now each of those items could in fact be sold individually, but to make your purchasing life easier the vendor decided to bundle them together into a one purchase bundle, or kit, that they sell as part of their product offering.
Now beyond making the customer purchasing journey a whole lot easier there is also the benefit of increased revenue for the vendor. As well if those same components were bought separately, and at different times those extra shipments cost more money, thus margins and costs are improved. Kitting has similar benefits whether for e-commerce or traditional operations such as manufacturers.
Manufacturers use kitting to their benefit in a variety of ways. Space, inventory turn around, and productivity are all positively impacted by kitting. Using WMS software, the company can manage the logistics of the raw materials that make up a kit that go into the creation of a final product. For example, the production facility may have low capacity for storage of raw materials and so only have those specific materials needed for a particular production period or to fulfill on current orders. So, they may store the bulk of their raw materials in another warehouse. Once a new order comes through for a particular product the WMS software can automatically alert the warehouse of what product kit is required to fulfill the order. The raw materials that make up the kit (even the exact measures required for a production run) are then picked and then shipped to the production facility to be turned into the final product and then on to final distribution.
As you can see efficiency is improved and the assurance that you always have enough material on hand for the kit are tracked accordingly to align with future production. Manufacturers thus have great control of overhead, simplified storage, and can move inventory quicker.
This equally applies to e-commerce and direct-to-customer sales. For example, you may sell clothing and other fashion-wear through an online store. Yet to increase revenue you decide to put together a monthly subscription box. You offer a choice of 3 different boxes from which the customer chooses 1 each month. The individual items that make up the boxes are part of your kit. Here again WMS software like Akatia’s WAM is invaluable. The kits can be created in the system prior to orders coming in. Once an order does come through the system tells staff exactly which items need to be picked for that specific box, or kit. Again, the benefits are clear. The business gains efficiency, sells more product, increases revenue, lowers costs, gains insights into how much inventory they need on hand to fulfill said orders, and ups customer satisfaction.
As demonstrated while businesses are unique the basic benefits of kitting are similar in that it promotes efficiency, controls costs, and generates revenue.
The basic concept of kitting is straightforward but how does a business effectively incorporate it into their processes? This is where a warehouse management system (WMS) comes into the picture. Akatia’s WAM solution for example allows a business to set up each product type within their inventory. Once this is done the business creates the various kits and identify which products make up a kit. Depending on the type of business the kits could contain raw materials that when combined are used in the business’ manufacturing of a product or are individual finished products that when combined to create a sellable product type (like our computer example from before). When orders come into the WAM system for those products (or kits) the warehouse staff know exactly what items need to be picked, packed, and shipped. The solution then tracks how many products of the kit are left on hand, can indicate how many more kits can be created with the remaining stocked inventory, and suggest if inventory should be replenished.
Kitting is a terrific way to enhance warehouse and inventory management. Having software like Akatia’s WAM WMS that supports kitting can have a significant positive impact on your business whether you’re a manufacturer, retailer, or online e-commerce seller. It allows you to maximize the products you have in inventory, manage them better, allow for wider product offering, satisfy customer demand, reduce overhead costs, and of course increase revenues.