Kitting is a critical aspect of the supply chain for many industries and product sectors, particularly for subscription e-tailers, automotive manufacturing and consumer electronics. Yet this service often presents difficulty in improvement strategies due to inefficiencies and inaccuracy.
Kitting allows vendors to sell multiple items under a single SKU and this can save on packaging and shipping costs while increasing sales. In addition, kits can increase revenue and customer satisfaction. It’s no surprise kitting is ideal for many businesses.
There have been some innovative newer practices of kitting for order fulfillment, which helps to streamline this logistics service for more optimized fulfillment. Ultimately, accuracy and timeliness are the core of a productive and best-in-class kitting operation.
Benefits of an Efficient Kitting Strategy
Timeliness, efficiency, and cost management are all areas where kitting can help speed up or optimize logistics and order fulfillment. It requires the right implementation and strategy, but when executed properly, the benefits of kitting impact the entire supply chain. These include:
- Minimized work-in-progress (WIP)
- Reduced lead times since kits can be pre-packaged from multiple SKUs into one
- Eliminated excess handling reduces part damage
- Maximized utilization of equipment and robotics, since there’s no line stoppage to search or wait for parts or shortages
- Minimized waste produced from packaging and manufacturing
- Potential for increased revenue when an advantage of kitting is reduced cost and time
- Easier operator training reduces training costs
Why Accuracy is Vital for Successful Kitting Services
While cost management is certainly a priority for supply chain managers, customer satisfaction and loyalty are the drivers of a manufacturer-distributor’s success. These days, thanks to Amazon’s upheaval of customer expectations, distribution centers must ship more quickly than ever before, without sacrificing accuracy. And accuracy isn’t just important for the customer experience, although they do expect kits to arrive with all parts in order. It’s a key driver of overhead costs, since inaccurate kits must be sent back and re-kitted, adding unnecessary labor and time to fulfill orders.
Supply chain managers use systems such as Enterprise Resource Planning (ERP) and Material Requirements Planning (MRP) to help improve accuracy in kitting and other logistics services. However, these systems are inherently inaccurate with quantities of on-hand inventory, since they cannot keep up with materials as they move between assembly and warehouse during the process of kitting and/or re-stocking. ERP also fails supply chain planners in that this system typically only notes a total quantity of a particular part, vs. how it is packaged or delivered.
The lack of more specific inventory tracking in the kitting process – not to mention the supply chain as a whole – in combination with personnel mistakes in the stockroom causes costly inaccuracies that jeopardize operational success. Some of the kitting problems resulting from in accuracy include:
- Insufficient or excessive quantities of components and/or component packages
- Incorrect components
- Incomplete kits
All of the above increase machine downtime, necessary manpower, and perhaps most importantly, lead times. Therefore accuracy should be a pivotal focus when strategizing and planning kitting operations.
12 Tips to Improve Kitting & Assembly Processes
With accuracy at the forefront, processes for kitting and assembly can be better optimized and more cost-effective. A clearly defined strategy is key. The following are some recommended tips to improve kitting and assembly.
- Establish procedures that are thoughtfully planned to eliminate redundancies, while maintaining accuracy throughout.
- Operational areas should be organized with the flow of operations in mind to minimize bottlenecks and inefficiencies.
- Organize the warehouse and picking areas to eliminate confusion and optimize processing from picking, to assembly and kitting and then packaging and distribution (also have large, clear signage to make the picking process easier and quicker).
- Designate a dedicated space to receive, unpack, organize and label incoming components to minimize errors in stocking and picking.
- Manual kitting teams should be trained to work at consistent pacing to help prevent bottlenecks.
- Schedule breaks for teams after they’ve repeated the same kitting actions for long spurts, allowing them to regroup.
- Always include a spot-checkpoint at applicable moments in the kitting process to confirm accuracy and quality. Mistakes cost more than taking the time for quality and accuracy checks.
- Implement a warehouse management system (WMS) to track inventory, optimize component management, and increase accuracy.
- Establish a plan for replacement components to improve the customer experience in the case of shipping an incomplete kit or kit with damaged item(s).
- Determine if it makes sense to do pre-packaged kitting or on-demand kitting for your business. This should be part of your demand forecasting and business planning strategy.
- Reduce assembly time by assembling a large number of kits at one time vs. on-demand. It also helps consolidate SKUs for easier inventory management and trackability.
- When sourcing multiple kitted items from the same supplier, ask if they can ship bundled kits vs. individual components.
Speak with your 3PL to learn about how kitting can streamline and grow your business. With our background in assembly for automotive and various other industries, Hollingsworth can use our technology and expertise to support your business and increase customer satisfaction.
Contact us to discuss your needs for outsourcing your kitting and/or assembly operations, and learn about how Hollingsworth can help increase your profitability and grow your business.