What is Kitting? A Look at the Order Fulfillment Strategy
If you are not familiar with the term “kitting” it is the process of filling orders by pre-assembling individual items into ready-to-ship kits instead of picking and packing those individual items as orders are received. When one item is ordered or sold, the inventory management system registers the rest of the items as part of the order or sale. Kitting can reduce fulfillment costs while helping increase revenue, customer satisfaction, and the bottom line.
Kitting: A key component in an order fulfillment strategy
Manufacturers use kitting to expand current space, move inventory, and increase cash flow, all of which contribute to the overall productivity of the business. The result is a more optimized business model for enhanced logistics.
Typically, when fulfilling an order for individual products, the item is located through the unique identifying code in the warehouse management system. Then, a staff member retrieves the item before updating the inventory and completing the order fulfillment. This process is repeated for every product that’s ordered, as individual SKUs assigned to individual items are all picked, packed, and shipped separately.
For example, Acme Corporation is a B2B manufacturing company that manufactures and distributes electronic storage devices. The company recently experienced rapid growth in sales and needs to expand production. They opt to lease another warehouse to store several of the components needed to assemble their popular storage devices that typically call for a certain number of screws, nuts, rivets, spacers, and standoffs. When a customer order comes up in the computer system, the kitted components are automatically shipped to the central warehouse for production and distribution.
The benefits of kitting as part of an order fulfillment and sales strategy are many:
- Increases average order amounts. A business can offer its customers the option of increasing their orders at a predetermined discount.
- Helps eliminate dead stock. If a company has a product that has not moved, kitting can help reduce inventory.
- Reduces costs. Kitting helps keep overhead low, boosting available cash to invest in other areas.
- Increases customer satisfaction. Happy customers may become repeat customers.
- Streamlines labeling options. Labeling and tracking can be simplified through kitting because one label can be made for several items.
- Turn inventory faster and create new cross-sale opportunities. Introduce a new component combination by kitting new items with popular ones.
We can handle all of your kitting needs
At Electronic Fasteners, we offer complete kitting services to our customers. Whether you need five parts or fifty bagged or boxed, we can do it quickly and cost-efficiently, saving you the time and expense of ordering, receiving, handling and tracking the same multiple parts over and over again. Kitting is an ideal fulfillment strategy for industries and organizations that need a number of individual components in various packaging configurations, such as the defense industry and the military.
Some of our kitting services include:
- Custom labels with the information you want on the label, such as bar codes, your company logo, shelf locations, or parts list.
- Non-standard kit items
- Multi-level assemblies
- Multi-stage parts: need custom machining or plating
- Packaging in boxes, heat sealed or re-closable bags
- Invoicing by your kit/project number
To learn more, contact our kitting and fulfillment experts here at Electronic Fasteners.