When you buy a new smart phone and open up the box you will most likely find the phone, headphones, charger and instructions. Kitting is the process of putting all these items in the same box.
Kitting, usually performed by a third party company is the process of taking individual parts or SKU numbers, compiling them together into a kit to make one complete unit or SKU number. Kitting is seen being used at the beginning of the supply chain as a preassembly stage or is also seen at the end of the supply chain being used to compile all the completed parts into one kit ready for packaging and distribution.
The Benefits of outsourcing your kitting services:
- Optimize Operational Efficiency – Imagine your production parts were already preassembled in a kit and you just had to add your final touches or after you assembled all your parts they were already compiled into a kit and ready for shipping. Assembling kits in advance can help the pick and pack process move quicker.
- Shipping Errors – Utilizing a third party to kit your incoming or outgoing parts can reduce the chance of picking and packing the wrong parts or missing parts which costs money to ship replacement parts to your customer and costs your reputation.
“The average shipping error rate is 5% and is most likely occurs in pulling the order out of stock”
- Packaging –customize your packaging to fit your products into one kit instead of packaging individual parts into standard size boxes, this will reduce the size of the packages as well as the weight which will save you money.
- Overhead – Between building space and labor expenses, keep your overhead low by hiring a third party company to handle your kitting. Kitting can reduce the number of SKUs in the warehouse, this will free up warehouse space and free up labor time to allow you to better utilize your employees time. This will also allow you to focus on your core competency and trust the third party company to do what they are good at.
Types of products that require kitting:
- Subscription Boxes
- Ready to Assemble Products
- Promotional items
- Product samples
Reasons why companies are outsourcing their kitting services:
- New Product Launch – Your Company is launching a new product or subscription box, but you do not have the labor force to fulfill the orders. Hiring a third party company can help you fulfill those orders and bring your product to market without having to hire a team of people.
- Seasonal Business – It is best to hire a third party company to fulfill your kitting needs If your business is a seasonal business and you see order requests increase and decrease during certain times throughout the year. This will help you avoid having to invest the time and money in hiring seasonal or temp workers.
- Operational Capacity – If your operations are at capacity and can no longer handle any additional work. Utilizing a third party company to take care of your kitting is a great way to fulfill your orders and grow your business without increasing your overhead.
“Businesses on average can expect to save 15-35% by outsourcing their kitting services”
Warehouse Space – If your building space is at capacity and you have no space to handle these non-core competency services. Between working space and inventory, kitting can take up valuable space. By hiring a third party company to handle your kitting, you will regain this valuable space and be able to utilize it for other core business operations.