Kitting – A Guide for Manufacturers and Distributors
Kitting is a valuable method to help manage raw material and finished goods inventories and optimize the manufacturing process. There are two main types of kitting and numerous instances in which either of them can prove useful.
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What is kitting?
Kitting or bundling is a method of combining finished goods or inventory items into a new separate SKU (stock keeping unit). These could be items that are often used together in a manufacturing process (material kitting) or finished goods that together make up a new product (product kitting). The process can involve bundling many similar items or many different ones.
Kitting is used in both manufacturing as well as distribution but often in different ways and for different purposes. Using this method can help streamline the production process, optimize production floor logistics and inventory management, and much more.
You have most probably bought a shaving kit before – a set of razors with shaving cream, a balm or cologne, and any other shaving product.
Maybe you have a kid with way too much energy – so you bought them a drum set with a couple of different drums and cymbals, a throne, and a pair of drumsticks to have a creative outlet for the energy.
Electronics usually come in bundles, too.
For example, when you buy a new phone, you also get a charger, and quite possibly an SD card and earphones.
All these are the result of product kitting – making a new product that consists of other individual products.
Kitting can increase revenue and be very profitable when done correctly.
Let’s take a fast-food restaurant as an example.
Let us say that a burger is $4, medium fries are $2, and a soda is $1, individually.
That is 7 dollars altogether.
But a meal that has the exact same items in it is $6.
Even if you only wanted a burger in the first place, it is quite likely that you’ll wind up taking the meal.
Because you get more for (seemingly) less.
Although you end up spending more than you would have, you still think you’re getting a bargain.
From the restaurant’s point of view, that means one thing – extra revenue.
And that is what product kitting essentially does, it encourages the customer to make extra purchases by offering a discount for a set of items.
Bed linens, kitchenware, sports gear, furniture, six-packs of beer – all those are kits we commonly see in stores.
Why and how to use product kitting?
Perhaps you produce some items that are often ordered together.
Then it would be reasonable to make them into kits so that when another similar order comes in, you can easily locate the bundle instead of piecing together the individual items.
Product kitting is a good way to reduce the number of SKUs and better organize your inventory.
It makes it easier to find items and could therefore boost the efficiency of your workers and reduce labor costs.
So, apart from being a feasible sales strategy that could increase revenue and inventory turnover, product kitting will make a lot of processes in your warehouse more efficient.
An MRP software can be used to create Bills of Materials (BOMs) for your kits so that they could be auto-assembled when needed.
In manufacturing, it is not just the final products where kitting could prove to be beneficial.
Of course, manufacturers can distribute their products in kits, as well.
But as a manufacturer, you could also use kitting to bundle up parts and materials before the production process in order to make production more efficient by eliminating the need to look for different parts on the shop floor level.
The components of a BOM, or parts of it, would arrive on the shop floor in a ready-to-assemble set, leaving the workers to only deal with the task of processing or assembling them.
Apart from reducing material handling time by simplifying line-side inventory and improving pick and reporting speed, kitting can also aid in quality control as each item could be inspected before going into the bundle.
When to use material kitting?
You should think about adopting a kitting practice whenever you find that too much time is wasted locating components and materials on the production floor.
That could happen in many cases, but some conditions are more susceptible than others.
These include situations where you are dealing with:
- a large variety of small components
- customized products with some components varying in color, shape, or other specifications
- shortage of space on the shop floor that prevents you from stocking necessary inventory there
In any of these cases, kitting could prove to be a lifesaver in terms of time consumption and overall production efficiency.
How to do material kitting?
Kitting requires sorting, organizing, and in some cases, pre-assembling parts that are to be used on the production floor.
You can use entry-level workers in the kitting process so that your skilled laborers can focus on tasks more suitable to their skillset.
Another option is to speak to your vendor about the possibility of them doing the kitting for you, provided that you get a large part of your components from a single supplier.
However, if you decide to do the kitting on your own premises, proper planning is needed for the successful implementation of the practice.
That includes putting together a kitting team with representatives from all the parties that will finally handle the kits, each having a different set of responsibilities, e.g. setting up the process, determining the BOM of the kit, creating the kit container and its delivery method, ensuring workplace safety, etc.
You can also utilize your MRP software to make material kitting better organized. First, create the SKU for the kit, and then its BOM.
Now when you have defined a kit, you can start creating manufacturing orders for them.
Kits could even be assembled immediately after the parts are received from the vendor, in such a case an auto-assembly functionality in the MRP system would be handy.
Your kitting cell should be located away from the assembly line, part bundling could even take place in the warehouse.
The kitting container solution could be very primitive, like putting all the parts or materials used in an assembly into a single box.
Or, if the nature of your production processes so requires, you could use more elaborate solutions like color-coding, multi-compartment organizers, trolleys, etc.
Kitting vs. assembly
Even though both kitting and assembly mean turning multiple SKUs into a new single SKU, the terms are not interchangeable.
While assembly is a manufacturing operation, a kit is just a collection of parts.
Assembling needs your production resources (labor, equipment, time), while kitting is virtually ready momentarily, without any manufacturing.
Kitting or bundling could help streamline the processes both in the warehouse and on the production floor.
Product kitting means bundling up finished goods in order to encourage extra purchases, free up inventory space, and minimize search time before shipping.
Material kitting is a similar concept, but applied to raw materials and components: different items and materials used in building a product are compiled into a set that could be easily consumed by the specific production cell.
Using material kitting would minimize search time as well as reporting time, thus making production quicker and more efficient.
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