When popular products fly off the shelves and others sit untouched, there’s a natural concern you’ll wind up with dead stock. So how can you put these lingering items in the spotlight? Bundle them with fast-moving products.
This process, known as kitting, pairs slower-moving items with similar bestsellers, saving time, increasing visibility and sales, and ensuring nothing is overshadowed. But kitting is also a great way to encourage sales for products that already sell well.
Here’s everything you need to know about the kitting process, including its benefits and how the fulfillment process works.
What’s kitting?
Kitting is an inventory management technique involving packaging and shipping related products together. Each item has an individual SKU for inventory tracking purposes, but each kit configuration has its own SKU because it sells as a single unit.
Kitting has two main purposes: to help businesses and customers save time and money and to encourage people to buy low-demand products.
Let’s say a business sells electronics. It notices most people who buy computer monitors also buy HDMI cords, so the business bundles those items together. Customers pay a slightly lower cost and the business can store and ship the products together for a more efficient fulfillment process.
The same business might notice its monitors are selling much better than its keyboards. To increase keyboard sales, it could bundle them with the monitors at a discounted cost. People might choose the bundle over the individual items for convenience and a better deal.
Subscription boxes are another great example of kitting. They let consumers try several products in a category they’re interested in, like beauty products, supplements, and personal hygiene. Customers purchase a box every month regardless of the items inside, encouraging them to buy things they otherwise wouldn’t because they’re getting a good deal.
5 benefits of product kitting
Here are more kitting benefits:
1. Faster shipping
By pre-combining items into one SKU, employees won’t have to waste time picking and packing individual items. Instead, they can grab the kit and send it out. This facilitates faster shipping and fulfillment.
2. Lower shipping costs
Shipping items together costs less than shipping them separately, especially if you normally ship products individually or from different distribution centers. When these products are bundled, you save money on shipping and labor.
3. Fewer errors
When warehouse personnel packs kits instead of individual items, there’s a lower chance of mistakes. They spend less time walking through aisles and locating products, which means those tasks don’t become monotonous over time. Workers avoid burnout and save brainpower for other tasks, like processing orders and organizing stock.
4. Higher product sales
When you combine slow-moving goods with more popular products, creating new SKUs, you sell more overall. This is especially helpful if shelves are full of items you want to offload fast. You avoid dead stock and generate revenue at the same time.
5. More efficient use of warehouse space
Combining small or difficult-to-store products into kits reduces warehouse space consumption, freeing up square footage for other stock. Additionally, if you lease warehouse space, kitting lowers the amount of space needed, saving money.
Kitting use cases
Nearly all steps in the product cycle can benefit from kitting. Here’s what it looks like in several key areas:
Manufacturing
In manufacturing, kitting is less about selling items and more about grouping important tools together to improve efficiency. This is also known as material kitting, and it gives workers the parts and tools they need to complete their assigned responsibilities. This way, people focus on the task at hand instead of wasting time gathering tools and materials.
eCommerce fulfillment
eCommerce brands use warehouse kitting to combine goods into pre-constructed packages, speeding up the fulfillment process. Also, companies that pack fragile items use kitting to ensure every parcel is packed with enough infill to safeguard its contents during shipping.
Promotional fulfillment
Kitting can combine popular products with marketing materials to encourage repeat business and strengthen bonds with consumers. For example, you might include a discount coupon in kits so pickers don’t have to remember to add promotional items to individual orders.
Private label kitting
Private label kitting combines goods from different manufacturers into one bundle under one brand name and label. This is most common in SKUs like subscription boxes or project kits. If you sell build-your-own birdhouse kits, you might include the parts along with glue from a different manufacturer.
The kitting process in 4 steps
Implementing kitting involves four simple, customizable steps:
1. Identify which products to kit
Decide which products are worth combining into a bundle. Consult your marketing and sales teams, gather historical data, and make a list of SKUs that might work.
In most cases, combining fast-moving products with less popular ones is a good place to start. The goal is to increase the sales volume of the less popular items by pairing them with products consumers already use and love.
Remember, the kit must offer consumers some added value to be appealing. There should be a reason why someone might choose the kit over an individual product.
2. Establish a workflow
Establish manufacturing processes or inventory workflows to scale kit assembly. Since the process may vary from one kit to the next, you might need a unique set of steps for each bundle.
Don’t leave anything open to interpretation. Spell out the items to include in each kit and how to bundle them.
3. Create new SKUs
One of the most important aspects of kitting involves creating new SKUs. With these updated identifiers, you consolidate the separate products in your inventory, avoiding confusion.
4. Store and ship
After creating kits, store them in an organized way for fast picking and shipping. Choose stackable bundle packaging that optimizes vertical space to reduce storage costs. This streamlined approach boosts customer satisfaction by delivering a faster, more reliable service.
How to manage kitting: 4 tips
Implementing changes to your inventory management and fulfillment workflows requires a focused approach to minimize confusion and maximize efficiency. Here are four tips:
1. Do a test run
After deciding which items to bundle, perform a test run. Call the fulfillment team together, provide them with a list of the products, and ask them to prepare 50 bundles.
During the trial run, note what goes well and identify potential pain points when scaling up. This helps you optimize inventory tracking, picking, and packing workflows. You might find the products don’t fit in the original box or that one damages the other without padding to separate them.
2. Implement a WMS system
A warehouse management system (WMS) includes inventory management software and workflow optimization tools that help manage and control operations. Consolidating inventory with kitting requires a modern WMS platform with barcodes, RFID tags, or other scannable information. This prevents human error and streamlines fulfillment.
If you don’t already have a WMS, carefully research prospective solutions and identify the platforms that best align with your organization’s needs. Consider factors like integrations, user-friendliness, and scalability. For example, Fishbowl integrates with QuickBooks for easy syncing.
3. Track quality
Next, identify key performance indicators (KPIs) to gauge the quality and accuracy of your kitting processes. Some KPIs to consider include:
- Internal order cycle time
- Perfect order percentage
- Rate of return
- Fulfillment accuracy rate
- On-time ready to ship
- Orders picked per hour
- Inventory days of supply
- Average cost per order
- Percentage of orders received damage-free
Tracking these and other KPIs lets you spot issues in the kitting process to improve workflows. Just make sure there’s an effective system for gathering and consolidating performance data in place.
4. Empower the team
The success of your kitting process hinges on the fulfillment team’s efficiency. They’re responsible for putting strategies into practice, which means they need modern tools and clear policies to get the job done right.
Make sure everyone understands the kitting procedures and knows how to use the required tools, such as barcode scanners, inventory management software, and order processing applications.
Streamline kitting and optimize inventory management with Fishbowl
From automation manufacturing to kitting, Fishbowl helps you handle it all. Fishbowl, a comprehensive inventory management solution, seamlessly integrates with QuickBooks, combining stock and financial data for a holistic picture of business performance. You can efficiently supervise kitting operations, enhance order fulfillment, and optimize inventory levels.
To learn more about how Fishbowl can support your inventory needs, schedule a demo today.