Whether you’re an ecommerce business or a company running traditional operations like manufacturing, kitting is a strategic inventory management practice you can leverage to streamline your processes, increase your profits, improve customer satisfaction, and boost your sales.
To help you understand and utilize this technique, we’ll cover the following topics in the sections below:
- Kitting Meaning
- Kitting in Different Contexts
- Key Advantages of Product Kitting
Read on to learn more about product kitting, and how an experienced contract packaging company can help you implement the best packaging solution for your needs.
Kitting Meaning: What Is Kitting
In the simplest terms, kitting refers to the practice of putting individual yet related products together into a single kit. This kit bears a new stock-keeping unit (SKU) number and is sold as a single item. Retailers and manufacturers utilize this technique to save time, minimize costs, and increase profit margins.
Difference Between Kitting and Bundling
Before moving on to the applications and advantages of using product kitting, let’s distinguish between the two terms which are often used interchangeably: kitting and bundling. While they seem to refer to the same thing, they possess a crucial difference.
Bundling is a general term referring to the practice of compiling multiple SKUs and sending them to customers as a single package. It is often used in special projects, such as holiday season promos or short-run promotional deals.
On the other hand, kitting is a more specific term referring to grouping related products (items often bought together) and assigning a new SKU number to them. This is often done with built-to-order items, assembled products, and subscription boxes.
Kitting in Different Contexts
As mentioned in our blog on kitting in manufacturing, companies can utilize this inventory management technique in different contexts.
Kitting in Logistics
Kitting in logistics entails compiling different yet related products into a single kit for shipping. Through this practice, businesses and logistics companies can streamline their shipment process and tracking efforts, reduce shipping costs, and speed up their order fulfillment.
Warehouse kitting refers to the physical act of finding multiple products, bringing them to an assembly area, and packing them together to create a new SKU before shipping.
Kitting in Manufacturing
When used in manufacturing, kitting refers to putting the components to be used in the assembly process in a single kit to be delivered to the point of use. This lets manufacturers reduce their warehouse costs, control manufacturing inventory, and effortlessly perform inventory tracking.
Moreover, it saves operators the extra work of manually gathering product parts, allowing them to concentrate on accomplishing the actual assembly work.
Kitting and Packaging
Packaging is a crucial aspect of kitting as it helps highlight the brand identity of the company where the items came from. Aesthetic matters aside, it also ensures that the products inside the package will remain safe while in transit.
Key Advantages of Kitting
Fulfilling an order the traditional way often involves two main tasks: finding the product’s SKU code in the warehouse management system and physically locating it within the facility. While this setup works, it can be labor-intensive and time-consuming. It can even slow down the process and lead to shipment delays.
On the other hand, pre-assembling product bundles through kitting can offer several advantages, like the following:
A More Organized and Efficient Fulfillment Process
Since kitting lets you combine products frequently bought together into a single SKU, you’ll have fewer yet high-selling SKUs readily available in your inventory.
Tracking bundles instead of individual items makes it easier for you to organize your goods in your distribution center. Moreover, the technique lets you quickly find the products your customers usually purchase together, speeding up your fulfillment process and reducing the risk of shipping delays.
Maximized Packaging Resources
Packing individual products or components into standard-size boxes often entails using packaging that might be too large for the items. This often leads to overspending on packaging materials and shipping fees.
On the other hand, packing related items together lets you use custom-sized boxes and helps you reduce your parcels’ dimensional weights. Naturally, this reduces your shipping costs and your overall expenses for package fillers and packing tape.
The savings you gain from maximizing your packaging resources can help boost your profit margin.
Streamlined Shipping Process
Product kitting not only speeds up your shipping process, but also makes it more efficient. Having the products assembled beforehand — and not when the order comes in — reduces the risks of human error while lowering your average fulfillment time, bringing considerable time and cost savings.
Enhanced Customer Experience
Product kits are pre-assembled, so you can utilize this practice to be a step ahead of the order fulfillment process. Fulfilling a customer’s order quickly and correctly naturally enhances their experience with your company.
When you give your customers the option to buy a kit of the products they want — and at a discounted price — this can encourage them to make a larger purchase.
Kitting can also help in eliminating dead stock. For example, when you have inventory sitting in your storage for a long period, kitting them and offering them at a discount can help you move items out than if you tried to sell them individually.
How Hughes Enterprises Can Help
Kitting is a practical inventory management technique that can benefit your business in many ways. As we mentioned earlier, it can help keep your overhead costs low, speed up your order fulfillment, create a positive customer experience, and make your packaging more cost-effective.
If you need to revamp your packaging systems through kitting or other innovative solutions, Hughes Enterprises is here for you. As one of the leading experts in the contract packaging industry, we offer an array of packaging products and strategic services to help you meet the specific demands of your customers.
We can automate labor-intensive processes, develop custom-engineered packaging solutions, and adjust to your sizing and sealing requirements in real-time. But more importantly, we offer ongoing packaging consulting to help keep your business agile.
Contact us today to learn how Hughes Enterprises can help your business find the right packaging solution for your needs.