Kitting is a process that can easily be described as the process of grouping, packaging, and shipping items together as one unit. Think of subscription boxes, packed-to-order sets, assembled products, and most custom or personalized items. Though incredibly convenient for the consumer, kitting is also very beneficial to us in the ecommerce world offering benefits in the areas of inventory, financial, and operations.
Inventory/Stock Benefits of Kitting: As retailers, we are always trying to find ways to reduce the amount of inventory space in our warehouse per unit. By utilizing kitting solutions, we are given the option to group items together (SKUs) into a bundled inventory set; meaning we are able to utilize less space to hold the same amount of product. Kitting also allows retailers to reduce low-usage components and group them into high volume increases. Another space saver is to bundle components based on usage and group them together (consider an Xbox or PlayStation bundle). It is also important to note that bundling or kitting items in your inventory directly impacts the productivity of stock room personnel due to the highly optimized solution offered through the process.
Financial Benefits of Kitting: Saving space is awesome, but what we’re all really looking to do is save money throughout our business and continue to keep productivity up. So, let’s break this into four parts: labor, space, fulfillment, and postal.
- Labor costs benefit from kitting solutions as previously mentioned through the increase in productivity in smaller amounts of time. This in turn requires less pick-and-pack time and keeps all items available at the assembly point. Due to this, you are able to get much more accomplished without adding to the cost of labor.
- Tying back into the inventory benefits, you will not only be able to reduce the amount of inventory space, but the costs of that space. By storing items together, you open up room for new clientele and the ability to move much more quickly through the pick-and-pack process.
- Fulfillment is probably where you have the ability to save the most amount of money through kitting solutions. The economy of scale will be extraordinary. Through kitting, you are given the ability to build the “kits” prior to the order being received (if it is a kit you sell a vast amount of). The more prep work you can achieve, the more money you will save across the board in the fulfillment side of things.
- It is also important to find little tricks to save on postal costs. By utilizing kitting solutions, you can save money through weight reduction and overall box reduction. This means by kitting, you are sending 3 or 4 items as one giving you the ability to spend less per unit.
Operational Benefits of Kitting: Finally, implementing kitting into your warehouse has many benefits on the operational side. Productivity is very likely to increase as everything is bundled together in smaller areas. Employees will spend less time processing and handling parts. From an organizational standpoint, your items being more readily available can keep operations running smoothly as your employees know exactly where to pick each item from without spending too much time looking around. The risk of operational error also significantly decreased. Through the implementation of kitting solutions, the possibility of miss-picking or sending the wrong item and having to deal with the returns process decreases as they are already packaged and stored together.
Other Benefits of Kitting: There is one group we have yet to discuss, and they are probably the most important – the consumer. Though convenience is probably the most mentionable quality of kitting solutions, it is important to recognize that this gives the customer an opportunity to try products they may never consider. Due to the bundled nature of kits, retailers supply their clientele with more than one item (generally). Introducing customers to an item they may never buy could spark a rise in sale of a product that you have had difficulty selling for one reason or another. As always, the more you are able to sell and market your product, the more profitable they will be down the line. This can also help drive the cost of the order up and provide more justification for free or reduced shipping.
IDS have spent more than 50 years optimizing the fulfillment process. High quality, custom kitting solutions are something we have a lot of experience with and are able to readily assist you through whatever part of the transition you need.