Kitting is an inventory management technique that combines similar products ordered, packaged, and shipped in a single group as a collection called a kit. This method of inventory management helps businesses to increase profits, reduce operations costs, and improve customer service.
This article will explain what is kitting and how it allows companies to increase average order value and sell slow-moving inventory quickly.
What Do You Mean by Kitting in Warehouses?
Kitting is a method that combines similar products into a kit. This kit acts as a unit, from ordering products to shipping them. Kitting includes dead stock items that can be sold as a new product. Companies use kitting to improve operations and maintenance of supply lines.
Companies use kitting as a technique to increase profits and sale of slow-moving products in the inventory. It saves money by reducing the picking and packing and reducing errors.
The Kitting Process
The kitting procedure is simple and helps assemble a range of similar products. The few steps in the kitting process are:
- Make a list of items to be arranged in a kit. Similar products can depend on usage, theme, color, or other similarity.
- Assign a new bundle number for a unique stock-keeping unitin the system. It's easier to track products with the help of assigned numbers and track them in inventory.
- Managers arrange all the items in the kit and move these to warehouses according to the group assigned. It increases profit margins and gross revenue by saving time and money.
- Sell and ship the products in kits.
What Is Inventory Kitting?
Inventory kitting is an inventory management method where companies can collect and pack the products in kits in advance with the help of inventory management software. This software contains a stock of products of a similar nature combined into a kit.
When a company receives the order, the manager picks each kit component and packages them together to deliver the finished order. It offers companies the flexibility for better customer satisfaction and meets their demands on time.
Industries, including computer manufacturing, pharmaceuticals, and online stores, use inventory kitting for better inventory management.
Importance of Kitting
Kitting techniques are important for businesses to increase gross revenue and reduce operations costs.
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Companies use kitting to highlight items that sell more when paired with less popular items, can quickly sell, and offer better prices for customers.
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Kitting helps companies to clear out inventory when filled with slow-moving or non-moving inventory.
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With kitting, companies can fulfill orders faster and reduce their shipping costs greatly. Some items sell more quickly if paired with other high-demand things, and when businesses understand what is kitting, they increase profits.
Benefits of Kitting
Kitting techniques have many advantages, some of which are:
1. Fewer Errors
Kitting helps businesses to reduce errors as most kits are pre-assembled. With tight order shipment, customer satisfaction is more using knitting methods.
2. More Use for Warehouse Space
Forming kits of products can help them reduce the warehouse required by them. Also, combining products into groups helps them in faster sales.
Hence the warehouse can eliminate slow-moving inventory and free up space.
3. Fewer Labor Costs
When businesses spend more time on a collection of items at a time, it helps them to save labor costs. It increases team productivity by handling each product individually.
4. Lower Shipping Costs
When companies ship products d in a single package, the shipping cost is less.
5. Higher Sales Revenue
Kitting helps companies increase their average order value and revenue. Customers can order a variety of products in a kit with the help of kitting, which increases the average value of an order.
6. Faster Shipping
Companies, when using kitting, can ship many products and fulfill many orders quickly at the same time.
Private Kitting
Businesses can use third-party services for kitting packages together and sell them as packages. Services also include packaging, marketing materials, and product manuals that help businesses understand what is kitting and how it benefits them.
For a manufacturingcompany, private label kitting services can deliver items collected together and ship them to customers with the company's brand name.
How to Manage Kitting
To manage kitting, companies use a variety of measures. Steps taken by companies to increase profits are:
1. Decide What Kit Will Contain
Companies define all the items using a variety of reasons. Some companies highlight new products along with most selling ones for advertisement purposes.
Some companies use kitting for products people want together or to clear out inventory by kitting slow-moving items.
2. Decide Who Will Assemble the Kit and How
It depends on companies to finalize who will assemble items in kitting. Companies might use their workforce or outsource third-party service providers for the same.
3. Assign the Stock Keeping Unit
A new SKU number will help companies track products after placing orders.
4. Organize Products
To increase productivity, companies assemble kits before orders are placed for time-saving purposes. Kitting items and pre-assembling them can also help save space in warehouses.
5. Shipping of Kits
Shipping the assembled kits is the final process. All items made are collected and sent as a single shipment.
Kitting Warehouse
Kitting helps warehouse workers with better inventory management. It reduces labor costs and allows businesses to increase revenue greatly.
Most warehouses have spaces filled with dead stocks or nonmoving stocks. Even slow-moving items reduce profit generation speed for businesses.
With the help of kits, when a slow-moving product is combined with best-selling ones, customers' average sale value increases and saves warehouse space.
Kitting in Manufacturing
Kitting is a valuable tool manufacturers use to increase supply chain speed and simplify operations. Kitting helps manufacturers increase warehouse space and reduce labor and shipping costs.
Third-party services in the manufacturing industry can fulfill the orders better and help businesses understand what is kitting. Companies that use third-party kitting services provide customers with products they need at a better value, increase product popularity, and increase the sale of dead stocks.
Kitting And Inventory Management Software
Inventory management software helps businesses to manage inventory products with better operations and warehouse spacing. With the right solutions, companies can combine items into kits better and improve order fulfillment more smoothly.
Companies can reduce inventory management costs with software and increase customer satisfaction throughout.
Increase Revenue with TranZact
TranZact can help businesses to generate higher revenues and streamline operations. It helps to improve customer satisfaction with a collection of products at a better value.
With TranZact, companies can reduce slow-moving inventory and convert the dead stocks into profits. Kitting increases revenue and reduces costs, allowing businesses to track inventory better and increase productivity.
FAQs for Kitting
1. What is kitting and assembly?
Kitting and assembly is a service offered by private label companies, including packaging items into groups before customers order them.
2. What is kitting in the logistics industry?
Kitting in logistics is a process that happens before customers place orders. That's why the collection of products is done before, and products are combined in a group.
3. What is kitting in manufacturing?
Kitting in manufacturing is a strategy in which companies use inventory management to make the process of picking, packing, and shipping orders faster.
The products are pre-assembled and arranged before customers order them, which helps warehouse managers to save space.
4. What is the kitting process?
The kitting process involves identifying a kit's products, assembling them, and shipping them when the customer orders.
5. Why is kitting in retail important?
Kitting in retail is done by companies as it helps online businesses increase production rates and save time. Online retail businesses need to fulfill orders quickly to stay in the competition.
6. What do you understand by kitting and bundling?
Kitting and bundling is the process of collecting and selling products as a unit. When combined as a bundle, the process of similar products is called bundling. A bundle includes multiple units of the same item, while a kit can include a different variety of products.
7. What is the purpose of kitting?
Kitting products is an inventory management technique that helps companies to increase profits by reducing operational costs.
8. What do you mean by SKU?
SKU stands for the stock-keeping unit. It is the unique code that helps businesses to track each product during processing in the warehouse.
