As an online merchant, you are most likely already aware that order fulfillment can be challenging. Managing inventory often turns into a complicated process, with excess stock piling up in your warehouse.
Every business owner seeks a solution to streamline inventory management, and that’s where kitting comes in. Kitting is an inventory approach in which multiple products or components are integrated and dispatched under a single stock-keeping unit (SKU).
It includes combining similar products or pieces to create a full package or kit. These kits are pre-assembled and ready for delivery or usage, saving customers both effort and time in the order fulfillment process.
How to Manage Inventory Effectively?
The number of global ecommerce fulfillment companies using third-party logistics or 3PL services in Detroit and other places surged by nearly 30% in 2022. As the demand for order fulfillment support grows, so does the range of services provided, which includes kitting.
Kitting, in logistics, involves bundling individual items or product SKUs into a single package, or “kit,” ready to ship to one customer. Once bundled, these products form a new SKU, simplifying the whole shipment process.
For instance, if you’ve ever ordered several items from different sellers on Amazon, you’ve probably experienced logistics kitting firsthand. The shipping team gathers and consolidates all your products into as few packages as possible before sending them out.
The primary goal of kitting is to consolidate items into fewer packages, making it an effective inventory management strategy for ecommerce businesses. By pre-assembling kits, you can streamline order fulfillment and prepare products in advance of customer orders or as part of a marketing strategy to boost sales.
Kitting vs. Bundling
Kitting is a broad term used in order fulfillment to describe the process of picking, packaging, and supplying inventory together under one part number. It can be applied to various needs, including packaged sets, subscription boxes, pre-assembled kits, spare parts bundles, machine maintenance kits, marketing materials, and training or sales materials across different industries.
As already mentioned above, in kitting, multiple SKUs are combined to create a single finished product or set, like a repair kit. This process involves organizing and assembling items so they are ready for delivery as a complete package.
On the other hand, a bundled SKU isn’t a single product but a group of items sold together. It can include items like clothing, food, or accessories that are shipped as one package.
Each bundle is stored as one unit, which holds all the items in one container. For example, a McDonald’s Happy Meal is a bundle that makes it easy for customers to get everything they want in one package and helps the company sell more items together than if sold separately.
Are You Using Product Bundling to Clear Inventory?
Product bundling is a tried-and-tested sales method for increasing average order value (AOV) and driving sales. It is a cross-selling tactic that encourages clients to buy similar products all at once and provides them with ease and the opportunity for savings. And it works: cross-selling and upselling increase revenue by up to 30%.
This is why even industry giants like Microsoft use these bundling techniques as they consistently deliver strong results. They provide an effective way to clear out slower-moving inventory by pairing less popular items with best-sellers, helping to sell stock that might otherwise remain unsold.
What’s the Most Important Thing in Warehouse Management?
Inventory tracking is one of the most important operations when it comes to warehouse management. It refers to the process of monitoring stock levels to determine which SKUs exist in your warehouse, where they are stored, and whether they are in transit from a manufacturer or on their way to a retailer.
Inventory management informs you of how many goods are available to ship if a client orders an item today, and when you should purchase more based on predicted sales.
As your business grows, you will increase inventory turnover, expand into additional locations, and broaden your product offerings. This makes inventory accuracy and tracking even more important.
Is there a General Name for an Inventory Management System?
A general name for an inventory management system is an “Inventory Management System” (IMS) or “Inventory Control System.” These terms broadly describe software solutions designed to help businesses track and manage their inventory, including stock levels, order processing, sales, and deliveries.
An IMS plays a significant role in maintaining an organized and efficient supply chain network. It allows businesses to have real-time visibility over their inventory and streamline processes such as restocking and order fulfillment.
The primary function of an IMS is to optimize inventory levels and thus prevent both overstock and stockouts. It ensures that businesses can meet customer demand while minimizing excess storage costs. It can also be integrated with other business tools, such as point-of-sale (POS) systems, accounting software, and ecommerce platforms, to create a seamless workflow across different operational areas.
Some common features of inventory management systems include barcode scanning, real-time tracking, automatic reorder alerts, and reporting tools for data analysis. While the specific name of an inventory management system can vary based on the provider (e.g., Fishbowl, NetSuite, or Zoho Inventory), the overarching term remains inventory management system, which serves as a general reference across industries.
What is the Best Way to Explain ‘Inventory Management’?
Inventory management involves the organized process of ordering, storing, and selling goods or services, and at the same time, also overseeing the flow of supplies and materials. It plays an important role in ensuring that a company’s operations run smoothly, specifically in managing raw materials from procurement to the final product stage. The objective is to minimize excess stock and improve efficiency to keep projects on track and within budget.
The best way to explain it is by emphasizing how it varies across industries. For example, companies that sell perishable items, such as food services or quick fashion, must closely control inventory to minimize deterioration or obsolescence. In contrast, an oil depot might store inventory for longer durations.
Inventory can also be handled using a variety of techniques, including kitting, product bundling, Just-In-Time (JIT), material need planning, and FIFO or LIFO accounting, depending on the needs of the organization. Proper inventory management optimizes stock levels and controls costs while efficiently meeting consumer demand.
Final Words
Kitting provides a practical approach to streamlining inventory management and order fulfillment. By grouping items under a single SKU, businesses can reduce the complexity of their operations while improving handling and shipping efficiency. It offers a way to organize products that benefits both the business and its customers, making it easier to manage stock and meet demand.
