What is Warehouse Kitting? Techniques to Streamline your Process

Warehouse kitting is an essential strategy in modern logistics and inventory management that significantly enhances efficiency and accuracy. This process involves grouping individual but related items into ready-to-ship packages instead of picking and packing them separately. In this blog, we will learn the mechanics and benefits of kitting to help businesses optimise their operations and achieve better overall results.

What is Warehouse Kitting?

Warehouse kitting is the process of assembling individual items into a single package for shipment as a complete unit. By simplifying the pick and pack processes and reducing handling time, the kitting process optimises the overall warehouse operations.

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Kitting vs Bundling

Kitting differs significantly from bundling. While kitting involves creating a new single SKU for a set of products that are assembled and sold as one package, bundling involves offering multiple products together under their original SKUs - often at a discounted rate, without repackaging them into a single unit.

The kitting process involves several steps. To illustrate the kitting process, Consider a DIY furniture kit, a typical example from the home improvement sector:

1. Selection of Items

The initial step is identifying components that are commonly used together. For a flat-pack coffee table, this might include the tabletop, legs, screws, an assembly manual, and possibly tools like an Allen wrench.

2. Assembly

These components are collected from various storage locations within the warehouse. They are then arranged together so that all parts needed for assembly are included in the package.

3. Packaging

The complete kit is then securely packaged. This often involves placing each item in a protective wrapping and fitting them into a box designed to accommodate the shape and size of the table parts to reduce movement and potential damage during transit. The box is then sealed and labeled with a new SKU that identifies it as a distinct product – the coffee table kit.

3 Benefits of Kitting

Kitting significantly enhances logistics and inventory management. Here are three key benefits:

Increased Efficiency

Kitting reduces space requirements and labour costs by streamlining warehouse operations. It minimises individual item picks to save space and labour time.

Reduce Shipping Costs and Errors

Consolidating items into single packages can lower shipping costs and minimise errors. 

Faster Shipping

Kitting speeds up the order fulfilment process and leads to quicker dispatch times. This satisfies the customers’ preference for faster shipping. In a recent McKinsey report, almost half of the survey respondents abandoned their shopping carts if the delivery time was too long.

Kitting in Third-Party Logistics (3PL)

Businesses can streamline their operations by outsourcing the kitting process to private-label services. These services consolidate products from various suppliers into ready-to-sell packages, complete with branded marketing materials, custom packaging, and product manuals. For example, an e-commerce company specialising in pet care might compile a kit that includes items such as pet food samples, toys, grooming tools, and care guides. The kitting service sources these items, packages them, and ships under the company's brand.

This approach is gaining popularity here in Australia, where the 3PL market is booming. Estimated at AUD 16.13 billion in 2024, the market is expected to grow to AUD 20.60 billion by 2029, with a CAGR of 5.01% during the forecast period. This growth highlights the increasing importance of 3PL services in boosting logistical efficiency and cost-effectiveness across the country.

What Makes the Kitting Process Effective?

The effectiveness of the kitting process hinges on several factors outlined below:

Selecting the Right Items for Kits

Products that customers frequently buy together or that complement each other should be combined into kits. This simplifies the buying process and enhances the customer experience.

Assembly and Packaging Strategies

Efficient assembly and strategic packaging are vital. Assembly lines should be organised to minimise movement and maximise speed. Packaging must protect the products and be visually appealing, supporting branding efforts and customer satisfaction. Using eco-friendly materials can also attract environmentally conscious consumers.

Assignment of New SKU Numbers

New SKU numbers should be assigned for each kit to simplify inventory tracking and management. This makes kits easy to identify and separates them from individual inventory items.

Organisation and Storage of Kitted Items

Effective organisation and strategic storage of kitted items ensure quick access and efficient use of space. Store kits based on their demand and shipment frequency so that popular items are easily accessible.

Shipping Considerations

Efficient shipping is crucial. This includes selecting the best delivery routes and using packaging methods that prevent damage. Maintaining flexibility to adapt to shipping challenges, such as changing delivery methods to meet customer needs or address logistical issues, is also important.

FAQs About Kitting

How does kitting reduce shipping costs and errors?

Kitting reduces the number of packages sent out, which decreases shipping costs and minimises the chances of individual item shipping errors.

What is the difference between kitting and bundling in a warehouse? 

Kitting involves assembling items into a single SKU and package, whereas bundling involves selling items together without new packaging or a new SKU.

What are the key considerations when implementing a kitting process in a warehouse?

Key considerations include selecting suitable items, ensuring efficient packaging and assembly processes, maintaining effective inventory tracking, and choosing the right logistics partners.

Partner with Couriers & Freight for Kitting and Assembly

Couriers & Freight offers specialised kitting and assembly services that are tailored to meet your unique needs. Our expertise ensures your products are efficiently assembled, stored, and shipped, saving you time and money.

Choose Couriers & Freight 3PL for your kitting and assembly needs. Take advantage of our expert services to enhance your operational efficiency and customer satisfaction. With our strategic locations across Australia, including major centres like Sydney, Melbourne, Brisbane, and smaller hubs in Milperra and Laverton, we're well-positioned to support your business wherever you are.

Try Warehouse Kitting for Your Supply Chain Needs.

Explore 3PL solutions with Couriers & Freight Australia. Click below to get started!

Get a Quote Now