Whether you’re a retailer, manufacturer, or wholesaler, kitting is a process that can greatly benefit your inventory management and order fulfillment system.
Not only does it save you plenty of time, money, and frustration, but it also increases sales and boosts employee productivity at the same time.
But what is kitting exactly and how does it work?
Simply put, kitting refers to the technique of combining various different products in a bundle to be shipped together in a unified parcel.
In this guide, we’ll tell you everything there is to know about kitting, its process, and its benefits. Let’s get straight to it.
- Kitting Definition and Meaning
- In Advance
- As Orders Come In
- Example of Kitting
- What Is the Kitting Process?
- 1. Select Your Products
- 2. Assemble the Kit
- 3. Assign Your Kit a New SKU Number
- 4. Place Your Prepared Kits in a Designated Area
- 5. Ship the Kit
- What Are the Benefits of Kitting?
- Faster Shipping Process
- More Organized Inventory Management
- Less Packaging Material And Lower Shipping Costs
- Lower Labor Costs And Higher Productivity
- Offload Dead Stock
- Reduced Storage Space
- What Is Kitting in a Warehouse?
- What Is Kitting in Manufacturing?
- What Is Kitting: A Summary
Kitting Definition and Meaning
Kitting refers to the technique of combining different products in a bundle to be shipped together in a unified parcel. Merchants can create a ‘kit’ that their audience wants. It’s commonly used by companies to reduce business costs.
In most cases, items being kitted together fall under the same product category and are closely related to each other (think yoga mats and yoga blocks or candles and wick trimmers).
With kitting, you’ll be shipping out one single package containing several different items as opposed to packaging and shipping each item in its own box.
Because kitting forms part of the order fulfillment process, it is usually carried out by the seller or a third-party logistics (3PL) partner.
There are two main ways kitting is carried out: in advance or as orders come in.
When running a business, you may have access to data that shows you what products your customers enjoy buying together. In anticipation of these purchases, you can get a headstart on order fulfillment by kitting these items together even before orders come in.
This way, when you receive these orders, all you have to do is locate your pre-prepared kits and ship them off right away. This is a massive time-saver and beats the tedious process of having to search for, pick out, and package every single item every time you receive one of these anticipated orders.
Kitting in advance is perfect for situations where you’re expecting to receive purchases for a specific number and type of item. Even though how many and what products your customers group together in an order are their decisions, you can often pick up tell-tale patterns from your business data.
There are also circumstances where you, the seller, can guide their bundle purchases, which allows you to prepare your kits in advance. These include:
- Subscription boxes
- Bundle offers for special events
- Free gift promotions
- Partnership giveaways
As Orders Come In
Kitting doesn’t need to be done in advance. At its root, knitting is simply the process of packaging multiple different items into one box.
This means that you can also start kitting after an order for various different products comes in.
Example of Kitting
Here’s a detailed example to illustrate how kitting works.
Imagine you’re a small stationery business selling wholesale greeting cards. With Valentine’s Day around the corner, you decide to group some of your top-selling love-themed cards into a bundle.
This is how the kitting process would work.
You’d start by picking out one of each of the designs you want to include in the bundle and pack them together. Assuming you’re anticipating 50 purchases of this bundle, you’d repeat this process 50 times, which gives you 50 parcels, each containing the same cards.
Once these kits are prepared, you’d set them in a designated spot in your storage space. As soon as an order for this bundle comes in, you know exactly where to go to locate them. And since the kitting process is already done, all you need to do is stick a printing label on it (which you’d also be able to do in advance for all 50 of them since they all weigh the same) and ship it off.
What Is the Kitting Process?
So then, how do you go about starting to kit?
The kitting process can vary from business to business. This is because it’s largely dependent on the type of products you sell and how you decide to bundle them together. Nevertheless, here are some basic steps of kitting.
1. Select Your Products
The first step of the kitting process would be to decide on what products you’re bundling together and pick them out.
These items can be grouped by use (eg. candles and candle wicks), theme (eg. Christmas socks and Christmas decorations), color (eg. blue and red for Fourth of July celebrations), special promotions (eg. a free pack of dog treats for any purchase of pet products), and many other qualities.
2. Assemble the Kit
Once you’ve picked out your products, select a suitable packaging material and start assembling your kit.
Make sure the box you’re using is large enough to fit all of the products you’re kitting together, yet small enough so that they’re not moving around too much during transit. This is especially important if you’re shipping fragile items like glass. Consider stuffing bubble wrap (or sustainable alternatives like biodegradable packaging peanuts) to pad up your parcel.
3. Assign Your Kit a New SKU Number
The next step of the kitting process would be to assign your newly packaged kit a unique Stock Keeping Unit (SKU) number.
Even though your kit is made up of a combination of different individual items, as soon as they’re bundled together, they become a single product. Assigning a new SKU number to it will help to streamline and keep your inventory more organized.
4. Place Your Prepared Kits in a Designated Area
Ideally, you’d have a dedication section in your warehouse or storage space where you can set these kits aside.
Whether or not this area will also be where you assemble your kit isn’t vital. What’s important is for you to know where your prepared kits are located. That way, when an order comes in, you (or your staff) know exactly where to go to get them, saving you lots of time.
5. Ship the Kit
Once an order comes in, get your kit, stick on the shipping and tracking labels necessary (if you haven’t already done so beforehand), and ship them off.
Don’t forget to inform your buyer of its shipping status and send over a tracking number should there be one!
What Are the Benefits of Kitting?
From reduced costs to higher productivity, there are plenty of benefits kitting offers businesses. Here’s a look at some of them.
Faster Shipping Process
If you’re kitting in anticipation of specific purchases, you’ll already know what items need to be bundled together. Not only can you kit them ahead of time, but you also save time from having to weigh and label every single item in your kit.
This also means that tracking labels can also be printed out in advance, which contributes to a much more streamlined and efficient shipping process.
As you start doing these systematically, you also begin to get quicker at kitting and commit fewer errors along the way.
More Organized Inventory Management
Kitting also keeps your inventory management organized. Because each prepared kit is assigned an SKU number, this ultimately reduces the number of SKUs you have to manage in your inventory, helping you reduce clutter.
This, in turn, is a massive time-saver when the time comes to carry out an inventory audit.
Less Packaging Material And Lower Shipping Costs
Instead of using one box per item, kitting allows you to use less packaging as you’ll be bundling various items into one single parcel. This reduces your expenditure on packing material.
Now, boxes may not cost much if you acquire them in bulk. But their costs can really add up, especially if you’re shipping out high volumes of boxes.
Kitting helps you reduce your overall package size and weight. Since shipping costs are largely determined by parcel weight, kitting can help to reduce shipping (and business) costs pretty substantially.
Lower Labor Costs And Higher Productivity
The efficiency kitting offers can also lower labor costs. For starters, the time spent on packaging is significantly reduced. Plus, bundling your items together means your employees can also save time from having to search and locate individual items.
That’s not all – it also frees your workers up to attend to other issues, which is a plus for productivity!
Offload Dead Stock
As mentioned earlier, what items you kit together can depend on any business promotions or campaigns you may be running.
Not only does this give you a great opportunity to get rid of dead stock and/or low-demand products, but it’s also a great way to spur purchases and create a better shopping experience for your buyers.
Reduced Storage Space
Another benefit of kitting is its ability to optimize the physical space you need to store your inventory.
For small businesses, this may even mean not having to rent out storage spaces, which lowers operational costs.
For larger businesses, the space optimization benefit from kitting may even allow you to downsize to a smaller warehouse and pay less in rent as a result. Alternatively, you could also use the extra storage space for new product ideas and scaling your business.
What Is Kitting in a Warehouse?
If you’re running a large business and carrying out order fulfillment in-house, your kitting process is likely to take place in a warehouse where your inventory is stored.
Kitting in a warehouse involves workers going around and picking up the items that need to be packaged together individually. After locating these items, they would drop them off at a designated assembly area where other workers would package them together and ready them for shipping. In doing so, they would also create a new SKU number for the bundle.
What Is Kitting in Manufacturing?
Kitting in the manufacturing context refers to the packaging of products, components, or materials together, and is also commonly referred to as “material kitting.”
Because the production process can become complex in manufacturing, and the fact that there tend to be more logistical moving parts, many manufacturing businesses use kitting to streamline their production process and inventory management.
What Is Kitting: A Summary
In short, kitting refers to the process of packaging multiple different but related items together in a ready-to-ship parcel. In doing so, it lowers operational costs and improves worker efficiency and productivity at the same time.
The benefits of kitting make it one of the most popular inventory management and order fulfillment techniques among many businesses.
How a business selects products to add to a kit can depend on many different factors, including product type, whether bundles are related to ongoing promotions, and more.
Have you tried kitting? Are there any other benefits of kitting that we missed out on? Let us know in the comments below!