Even years after graduating from university, I haven’t outgrown the college student diet. I love instant ramen noodles. Perhaps wanting to feel more ‘adult’ after starting my career, I found the perfect monthly subscription box to add some sophistication to my pantry of junk food: Umai Crate, a curated sampling of authentic, Japan-exclusive instant ramen noodles. My annual subscription was worth every penny.
While Umai Crate is perhaps a little ‘out there’ for many American shoppers, subscription boxes are an increasingly popular facet of ecommerce. Imagine you're at home, eagerly anticipating the monthly arrival of your favorite subscription box. Today's the day it finally lands on your doorstep. Excitement builds as you tear into the package, revealing a perfectly organized assortment of goods—whether they be instant ramen bricks, cosmetics, etc. This seamless unboxing experience, where every item fits together just right, isn't just about good fortune; it's the result of meticulous planning and execution known as warehouse kitting.
Warehouse kitting, the process of assembling individual items into ready-to-ship packages based on specific orders, transforms how businesses handle their inventory and fulfill orders. It's an essential strategy in the modern supply chain, especially for third-party logistics (3PL) providers and ecommerce companies—particularly effective in industries where products and components must be grouped precisely for assembly or direct customer delivery. By pre-assembling items into kits, businesses can dramatically enhance your fulfillment and shipping solutions, reduce costs, and improve customer satisfaction by ensuring orders are accurate and well-organized.
The magic behind your subscription box's perfect arrival is orchestrated in the bustling world of warehouse operations. This guide delves deep into the nuts and bolts of warehouse kitting, exploring its benefits, the practical steps for its implementation, and how leveraging technologies like Extensiv’s solutions can streamline and enhance these processes. Whether you’re a warehouse manager looking to refine operations or an ecommerce business owner seeking to understand the impact of kitting on your supply chain, we’ve got you covered in this article.
What is Warehouse Kitting?
Warehouse kitting is the process of combining individual items into ready-to-ship packages based on a specific order. Often used in assembly line environments, kitting helps streamline the packing and shipping processes by pre-assembling individual components into kits that are ready to go as soon as an order is processed. This method is prevalent across various industries—including electronics, automotive, cosmetics, subscription services, and more—both for retailers and ecommerce brands selling on their own websites as well as on online marketplaces.
The Benefits of Kitting
Warehouse kitting offers a multitude of advantages for various stakeholders in the supply chain, from the warehouse floor to the end consumer. Here are the key benefits:
- Cost Savings on Each Order: By assembling components into kits ahead of time, businesses can reduce labor costs associated with individual item picking and packing. Kitting minimizes the overhead costs per order, making the entire process more cost-effective and improving your bottom line.
- Faster Shipping Times: Kits prepared in advance streamline the order fulfillment process, enabling quicker turnaround times from order receipt to shipment. This efficiency not only improves customer satisfaction but also enhances the company’s ability to handle high volumes, especially during peak seasons, while reducing packing costs.
- Increased Sales Opportunities: Retailers and ecommerce brands can boost sales by offering pre-assembled product bundles at a discounted rate compared to purchasing items separately. This strategy appeals to consumers looking for value and convenience, driving higher order volumes.
- Optimized Warehousing Efficiency: Kitting organizes inventory in a way that simplifies the picking and packing process. By storing all components of a kit near each other, it reduces the time and effort required to gather products, thereby enhancing operational efficiency and warehouse productivity.
- Improved Inventory Management: With components of kits stored together, inventory audits become less cumbersome. This organization elevates your inventory management techniques, facilitating quicker inventory checks and accurate stock levels while reducing the likelihood of errors and improving inventory accuracy.
- Enhanced Customer Experience: Receiving a well-organized kit, especially in consumer-centric models like subscription boxes or assembled products, significantly enhances the customer's unboxing experience. This attention to detail can lead to higher customer retention rates and positive reviews.
- Reduced Shipping Errors: Since pre-assembled kits have unique stock keeping units (SKUs), there is a lower risk of shipping incorrect or incomplete customer orders. This accuracy helps maintain trust and reduces the shipping costs associated with returns and reshipments, leading to simplified order management workflows.
Common Warehouse Kitting Challenges
Implementing a kitting process can streamline warehouse operations but also introduces its own set of challenges. Here are the top challenges businesses often encounter:
- Inventory Mismatch and Shortages: One of the most common issues is running into inventory shortages—and/or misaligned stock counts for the different components, reducing the number of completed kits you can create—which can delay the assembly of kits and lead to order fulfillment disruptions.
- Labor Intensiveness: The kitting process can be labor-intensive, especially during initial setup or for complex kits, requiring significant time investment. Additionally, some kits may require precise assembly instructions, especially if they include fragile or numerous components, which can complicate the kitting process.
- Inefficient Space Utilization: Assembling and storing kits can consume more space than expected, particularly if not planned correctly, potentially leading to overcrowding and disorganized warehouse management.
- SKU Proliferation: Managing an increased number of SKUs can become challenging as each kit requires its own SKU, complicating how well you can track and manage your inventory levels.
- Quality Control Issues: Ensuring that each kit is assembled correctly and consistently can be challenging, leading to potential errors in the kitting process.
- Demand Forecasting Difficulties: Predicting demand for kitted products can be difficult, particularly for new or seasonal items, leading to overstocking or stockouts.
How to Solve Warehouse Kitting Challenges
No matter the challenges that may arise with warehouse kitting, strategic solutions can mitigate their impact on fulfillment operations:
Optimize Inventory Management
Implement advanced software for inventory management—like an order management system (OMS) and/or warehouse management system (WMS)—that provides real-time data on stock levels and usage patterns. This technology helps in accurately forecasting needs and scheduling reorders, preventing inventory mismatches and shortages.
Streamline Assembly Processes
Create detailed assembly guidelines and invest in training for staff to handle complex kitting requirements efficiently. Create assembly aids for pickers—like pick and pack checklists—or use automation where possible to speed up the process and maintain consistency.
Practice Efficient Space Planning
Designate specific areas for kitting operations within the warehouse to optimize space utilization. Consider vertical storage solutions and modular assembly stations that can be expanded or reduced based on current kitting needs.
Simplify SKU Management
Use inventory management software that can handle large numbers of SKUs without complicating the tracking process. Group related kits under master SKUs to reduce the complexity of inventory counts and management.
Automate Kitting Operations
Invest in automation technologies that can assist in the kitting process—such as robotic systems for picking and assembling kits, barcode scanning technologies to verify accuracy, and software that optimizes the pick path for kit components. Establish a quality control checkpoint at the end of the kitting process to double check the work you've automated and ensure each kit meets the set standards before it is shipped.
Future-Proof Demand Forecasting
Use historical sales data, market trends, predictive analytics, and emerging artificial intelligence (AI) tools to forecast demand more accurately for kitted items. Adjust production schedules based on seasonal variations and marketing promotions to align with expected demand.
Top 5 Kitting Experts in Extensiv’s Network
Explore our top picks from our Fulfillment Marketplace for 3PLs that specialize in kitting services, each known for their efficiency and reliability:
1. Fulfillmate
Fulfillmate is a leading logistics provider, specializing in ecommerce fulfillment services, distribution and international freight. Leveraging global experience across multiple industries—with locations in California, South Carolina, Canada, and Australia—they provide clients with solutions to help improve and grow their business. Regarding bundling orders, Fulfillmate offers co-packing, labeling, lot coding, quality inspections, and other related services for top notch kitting expertise.
2. Bulu
Founded in 2012, Bulu made its debut with the launch of Bulu Box, becoming the sixth consumer packaged goods (CPG) subscription box in the market. This venture quickly expanded, reaching over 60,000 kits, bundles, gifts, and pick-pack shipments on a monthly basis from their warehouse in Nebraska. Their expertise in fulfilling millions of kits annually equips them to handle the distinctive requirements of each kitting project. Whether it involves combining products, light assembly, un-kitting, or optimizing kit-to-store or kit-to-ship strategies, they are poised to address the specific needs of your project with precision and with options to fit your budget.
3. Quality Distribution
Quality Distribution has nearly 30 years of warehousing and logistics expertise, known for their unwavering dedication, operational efficiency, and industry-leading practices. Operating five warehouse facilities in Utah, they offer a collective storage capacity exceeding 1.6 million square feet to accommodate their clients' evolving needs. They have many years of experience offering kitting, pallet, and end-cap assembly for all major retailers, including big box retailers.
4. PSI Fulfillment
Based near one of the busiest shipping hubs in the United States in Norcross, Georgia, PSI Fulfillment specializes in B2C ecommerce—handling the complexities of picking, packing, shipping, and storing products for their clients so they can focus on growing their businesses. They have a packaging team that handles kitting and order bundling every day as well as in-house shrink-wrap and labeling machines to set their value-added services above the competition.
5. 3G Warehouse
3G Warehouse operates several modern, fully equipped locations throughout New York, New Jersey, and South Carolina. With over 1.3 million square feet of modern high-bay warehouse space, 3G Warehouse has become an integral part of the supply chain for companies both large and small. To meet their goal to provide clients with a “one stop shopping” service, they have a Value-Added Services team in each facility who is equipped with a full staff to meet clients’ kitting and bundling needs.
How Extensiv Can Support Your Warehouse Kitting Workflows
Extensiv’s robust suite of tools and features is designed to facilitate seamless kitting operations. Our Warehouse Management and 3PL Warehouse Manager systems offer advanced inventory management capabilities, ensuring you have the visibility and control needed to manage kitting effectively.
Or, if you are a brand considering outsourcing your fulfillment operations, we’ve got solutions for you too. Use our Fulfillment Marketplace to research potential logistics partners and find the best fit for your unique business needs—and control your sales channels, inventory, and orders across all storage locations with our Order Management platform.
Request a demo today to learn more about how our solutions can take your warehousing operations to the next level!
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