What is the kitting process and why does it matter?

Kent Gigger
October 10 2023

Kitting is bundling or packaging products or components together that are typically sold separately. When one item is ordered or sold, the inventory management system registers the rest of the items as part of the order or sale. Kitting can help increase revenue, customer satisfaction, and the bottom line. This works well for eCommerce and traditional operations, including manufacturing.

The benefits of kitting for manufacturing

Manufacturers use kitting to expand current space, move inventory, and increase cash flow, contributing overall to productivity for the business. The result is a more optimized business model for enhanced logistics. To help manage the logistics of kitting, there are software solutions that account for kitted items. The software can help any company, large or small, manage their inventory, manufacturing batches, product tracking, and purchase orders.

For example, ABC Business is a B2B manufacturing company that manufactures and distributes different flavors of beverages. The company has been in business for under five years, but has recently experienced rapid growth in sales and needs to expand production. They opt to lease another warehouse to store several ingredients that contribute to the different flavors of beverages they produce and sell.

When a customer order comes up in the computer system, the kitted ingredients are automatically shipped to the central warehouse for production and distribution.

The benefits of kitting for eCommerce

If you’re engaged in direct-to-consumer sales, kitting allows you to escalate your business by streamlining special offers and subscription boxes. This saves space by allowing components to be stored in a warehouse, from which they can easily be retrieved when an order is placed.

For example, if your small company sells an array of beauty items to women, one way to increase the price-point of an entire package is to offer two or three other items of lesser value with an order for a popular product. This way, the company sells more units and the customer gets a better value.

Kitting gives customers more options — such as different colors, sizes of items, and quantities, depending on the products sold. An eCommerce company can set up its website for kitting to cross-sell additional items or offer quantity discounts for more products purchased and bonus items.

Why is kitting important?

Although one business differs from another, the core value and benefits of kitting are the same, translating into an efficient business model that creates revenue. Kitting increases product value and encourages repeat business. Manufacturers can control overhead for labor, simplify storage, and move inventory quicker. Having the best kitting software program can help with all facets of your business, from production and sales to accounting and payroll.

Benefits of kitting

  • Kitting increases average order amounts. A business can offer its customers the option of increasing their orders at a predetermined discount.
  • Kitting helps eliminate dead stock. If a company has a product that has not moved, opting for bundling can help reduce inventory.
  • Bundling products or components reduces costs. Save both time and money; this keeps overhead low, and your business can reroute funds to invest in other areas.
  • Kitting increases customer satisfaction. Happy customers may become repeat customers, and kitting offers the opportunity to drive subscriptions.

Kitting functionality

  • Specify labeling options. Labeling and tracking can be simplified through kitting, because the software can make one label for several items in the package.
  • Enable inventory tracking. The software provides real-time updates for accounting.
  • Forecast your sales. Find out which products sell more and identify slower-selling items to consider bundling in a kit.
  • Create cross-sale categories. Introduce a new category to prospective customers or clients by kitting new items with popular ones.

If you want to focus on select items, such as t-shirts and bags, your business can offer a discount for specific amounts of items purchased. These discounts can be incorporated into your inventory software system. For example, buy two t-shirts, get the next one 50% off; or, buy a shirt and you get a complimentary product, like a bag, at a discount. The software system can process several items as one order, which saves time.

For manufacturers, you can offer your customers a higher quantity of items at discounted rates. A kitting software management system can keep track of stock on hand, orders, and barcodes, and even track employee hours, sales, and performance.

How to do kitting

To kit items for your business, you need inventory management software. Then, based on your product and customer, you need to create a strategy to select items for kitting. You can offer specific items, such as a best-seller, and pairing them with other popular items in a range of quantities, or you can let your customers choose from a list of items they would like as a part of a subscription.

Having kitting software for your business will enable you to offer your customers more options and the ability to accurately track your inventory. Simultaneously, you can use the same software to manage other daily operations, such as shipping, purchase orders, payments, payroll, and even taxes.

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