Tags: Supply Chain
Kitting and 3PLs / Warehouses go Hand-in-Hand
Kitting is the process of assembling items that are typically purchased or used together into a single package. The kit is sold as one unit (with one SKU) and typically includes all of the necessary items needed to complete a specific task, project, or activity.
Many businesses outsource their kitting services to a third-party logistics (3PL) provider to benefit from their expertise and resources. Partnering with a 3PL can help businesses effectively manage their kitting needs, allowing them to focus on other critical areas of their operations.
In this article, we will dive into the concept of kitting as a value-added service and explore its advantages, best practices, and real-world success stories.
Types of Kitting Services
At Group O, we offer a variety of order fulfillment services to accommodate your business needs and goals. Listed below are our kitting and assembly services we offer:
- Pre-assembled or custom-built work order
- Grouped packaged
- Individual item packaging
- Shrink wrapping, banding, and custom protective packaging
- Item labeling
- Item barcoding and serialization
- Rework or refurbishing
The specific types of kitting services can vary depending on the industry, target market, and customer needs. With that being said, here are some examples of common types of kitting services:
Retail Product Kits: Retailers often offer product kits that combine complementary items. For example, a skincare kit may include cleanser, toner, and moisturizer as a bundled set.
Assembly Kits: Assembly kits are commonly used in industries where products require assembly by the end consumer. These kits include all the necessary components and instructions for the customer to assemble the final product. Examples include furniture assembly kits or DIY craft kits.
Subscription Box Kits: Subscription box services have gained popularity in recent years. These kits are curated and delivered to customers on a recurring basis, typically monthly, containing a selection of products based on a specific theme or customer preferences. Subscription box kits offer a surprise element and convenience to customers.
Promotional Kits: Promotional kits are designed to promote a specific product, brand, or event. These kits often contain branded merchandise, product samples, or promotional materials, creating a memorable and tangible representation of the promotion.
Spare Parts Kits: Spare parts kits are assembled to provide customers with commonly needed replacement parts for a specific product. These kits are often used in industries such as automotive, electronics, or machinery – because customers often require quick access to essential spare parts in order to efficiently do their jobs.
Benefits of Kitting as a Value-Added Service
Kitting offers numerous benefits for businesses and their customers. Here are some key advantages of kitting as a value-added resource:
Increased Sales: Kitting can help businesses increase sales by encouraging customers to purchase related products. This promotes cross-selling and upselling opportunities, leading to higher revenues and profits.
Marketing Opportunities: Businesses can showcase their brand through personalized packaging and customization options. Kitting can be utilized to promote brand awareness, introduce new products, or highlight limited-edition or seasonal kits. The customization options create a visually appealing appearance which increases customer engagement.
Reduced Costs: Businesses can optimize their inventory by assembling kits from existing stock – which reduces costs associated with handling, packaging, and shipping. Additionally, businesses can often offer their kits at discounted prices compared to purchasing each item individually.
Streamlined Operations: Kitting simplifies inventory management by allowing businesses to focus on managing kits as one SKU rather than individual SKUs. This leads to better inventory control, improved order accuracy, and faster turnaround times.
Easy Customer Experience: By bundling complementary products, businesses offer convenient and ready-to-use solutions that meet customer needs and preferences. This eliminates the need for customers to source individual components separately, saving them time and effort.
Implementing kitting services can be a challenge for businesses. Not only does kitting require a significant amount of time and resources, but it can also disrupt existing operations. Outsourcing kitting services to a 3PL provider offers numerous benefits for both businesses and customers. Here are some key advantages of partnering with a 3PL:
Efficiency: 3PL providers have the knowledge, experience, and resources necessary to efficiently manage kitting operations. They can optimize the assembly process, reduce waste, and improve quality control – resulting in faster turnaround times and higher accuracy rates. This can help businesses reduce lead times, improve order fulfillment, and enhance the overall customer experience.
Savings: Instead of investing in additional facilities, equipment, and labor for in-house kitting operations, businesses can utilize the existing infrastructure and resources of the 3PL. This helps reduce investment and ongoing operational costs.
Scalability: As business needs change, businesses will need the flexibility to accommodate fluctuations in demand. The 3PL provider can quickly adjust resources accordingly to meet increased or decreased kitting requirements, ensuring that kitting services are consistently high quality and delivered on time.
Safety: Kitting involves various operational and compliance risks – like inventory management, quality control, and regulatory requirements. 3PL providers have established procedures for managing kitting services, reducing the likelihood of errors and ensuring compliance with regulations. Additionally, outsourcing kitting services can reduce the risk of disruptions due to staffing issues or equipment failure.
Innovation: 3PL providers are focused on continuously improving their processes by staying updated with the latest industry trends. By partnering with a 3PL provider, businesses can benefit from ongoing innovation and access to new technologies (without investing in these improvements themselves).
Strategies for Offering Kitting as a Value-Added Service
Offering kitting as a value-added service can provide convenience to customers, streamline order fulfillment processes, and create opportunities for businesses to differentiate themselves from competitors. If you're considering kitting as a value-added service, here are a few strategies to get started:
Assess Customer Needs: Understand the specific needs and preferences of your target customers. Conduct market research to identify the types of products or components that are commonly purchased together or that would benefit from being bundled as a kit.
Invest in Inventory Management Software: Kitting involves managing multiple products or components, which can be challenging without the right tools. Investing in software, such as Warehouse Management System (WMS), can help businesses track inventory levels, automate reorder processes, and ensure that all components are available when needed.
Establish Procedures: Develop standardized processes for kitting operations to ensure organization, quality, and efficiency. This includes creating packing lists, setting up quality control checks, and clearly labeling products. Standardization helps minimize errors and increase accuracy.
Optimize Packaging: Choose appropriate packaging materials and designs that protect the contents of the kit and enhance the overall appearance. Consider using eco-friendly packaging options to align with sustainability goals.
Provide Customization Options: Offering customization enhances the value and personalization of the kitting service. This can include allowing customers to choose specific components, like color or size. Well-designed and visually appealing packaging can also make it more attractive to customers.
Train Your Staff: Providing high-quality kitting services requires knowledgeable and skilled staff. Training your staff on kitting processes, inventory management, and customer service will ensure that they are equipped to handle customer orders efficiently and effectively.
Keep Up with Demand: Assembling kits in advance will help you keep up with demand and ensure customer satisfaction. This could include implementing additional assembly stations and onboarding extra staff.
Case Studies of Successful Kitting as a Value-Added Service
Case studies serve as a powerful tool to showcase a company's expertise, reliability, and ability to deliver meaningful solutions. By providing real-world examples of successful projects, we hope to share a glimpse into our problem-solving approach, methodologies, and value we bring to our clients.
Kitting offers numerous benefits, from improved efficiency and cost savings to increased customer satisfaction. Keep reading to learn how Group O successfully implemented kitting as a strategic initiative – highlighting the challenges, solutions, and positive outcomes.
Franklin Energy, a Wisconsin-based energy consulting company, had a goal to significantly increase the distribution of kits to help support energy savings in 2020. In order to meet Franklin Energy’s goal, Group O worked diligently to contact eligible clients for the program. Additionally, Group O verified the arrival, accuracy and proper installation of the kits.
Franklin Energy exceeded their goal of kits distributed, customers served, and kilowatt-hours of energy saved. Our work with Franklin Energy helped clients save 6,249,200 KWH and thousands of dollars through successful energy assessments.
If you’re interested in reading more about this kitting as a value-added service case study. On our website, you can find a wide range of additional case studies that highlight the innovative solutions we deliver across various services.