How Kitting and Assembly Services Fuel Business Growth?

In the increasingly complex world of supply chains today, the key for companies wanting to satisfy increasing customer expectations and cope with global disruptions is to be efficient and flexible. New, innovative practices such as kitting and assembly services are proving to be worth their weight in gold. For example, companies look to an experienced kitting provider for improved inventory management and to provide the business with adaptability to changing conditions in an increasingly disrupted world. 

Understanding Today’s Supply Chain 

Nowadays supply chain is a very complex network that covers all aspects of procurement to sourcing to manufacturing to warehousing to distribution and logistics to transportation. Each part is crucial to ensuring product flow from raw materials to the final consumer, whether that consumer is a business (B2B) or an individual (B2C). This complexity comes with challenges including providing global suppliers and manufacturers and distribution channels, and greater demands from consumers for ever more rapid, accurate and customized deliveries. To complicate matters, globalization adds the concern of international rules regarding trade and tariffs, and the ability for weather and geopolitical events to disrupt the entire supply chain, all of which force supply chain managers to wrestle with balancing cost management efforts with efficiency vs. service levels.

Common Supply Chain Issues

Overstocks or stock-outs are other challenges. Unwanted excess inventory equates to tied-up capital and ongoing storage costs, while stock-outs leads to lost sales and lost customers. Increased ongoing operational costs are also related to poor warehouse space utilization caused by poor warehouse organization. Many small to smaller companies still infrequently rely on error-prone processes that are time-consuming and cumbersome, slow operations down further causing organizations to drop order fill rates and lose sales. Being unable to customize or be flexible enough leads to agencies being unable to fulfill personalized requests or adjust to changes in market demand, thus stunting growth and competitive advantages.

Solving Common Supply Chain Challenges

• Inventory management is the primary advantage to avoid any challenge. By utilizing kits, items can be consolidated. This has the effect of reducing inventory and lowering storage, risking overstocking or stockout. 

• Second, improved operational efficiencies can be achieved through automation, which decreases reliance on manual labor as kitting and assembly overhead, reduced errors, and increased throughput and scalability all lead to quicker order fulfillment and lower labor. 

• Third, custom kits allow businesses to meet distinct customer needs, which is essential flexibility in today’s economic environment. 

• Finally, kitting and assembly can also provide value-add services like special packaging and labeling that differentiate products from competitors, which drives customer interest and enhances customer experience.

Furthermore, services like kitting and assembly can lower the production costs by reducing or eliminating import taxes. These services are impactful especially when components are sourced internationally and assembled domestically, though this depends on specific product and trade regulation. 

Domestic kitting and assembly also de-risk the supply chain by reducing dependence on single overseas suppliers, allowing for bulk ordering and optimized container space. However, this increases sourcing complexity, requiring expertise from a logistics provider or 3PL experienced in kitting and assembly to refine supply chain strategy.

Additional Advantages of Kitting and Assembly

Apart from resolving an immediate problem, kitting solutions also yield considerable cost savings by minimizing labor, waste, and rework. Production and assembly in bulk can more effectively drive economies of scale and reduce the cost per unit. Using standardized methods like Lean and Six Sigma also helps assure product consistency, a significant factor in earning customer trust and satisfaction. Timeliness and accuracy in the delivery of kitted and assembled products creates happy customers. High-quality products and dependable service positively influence a customer’s overall experience with a brand and can lead to increased loyalty and repeat business.

Success Factors for Implementation: Collaboration is Critical

Implementing a kitting solution requires organized planning and the right provider for you. It is essential to seek out a provider with the requisite experience, capabilities, and reputation for meeting your product's fulfillment needs specifically. 

By reviewing, and getting references of, prospective providers in person or virtually previous to doing business they could prove reliable in terms of meeting the product's required expectations in terms of fulfillment volumes. It is also essential that either the kitting provider's systems can readily interface into your own, or kitting provider's systems are integrated as completely as possible to enable seamless data exchanges and fast, efficient inventory and order management function. 

Long-term implementation success is aided when a continuous improvement (CI) program is created and regularly scheduled performance reviews are conducted between you and your kitting provider. However, open communication is pivotal to the protocol in sustaining kitting services efficiencies and fulfilling quality expectations. It also provides a means for resolving any identified issues quickly.

Kitting and Assembly: A Smart Solution to Supply Chain Issues 

By choosing the right supplier and committing to continuous improvement, savings, increased product quality, and customer satisfaction should improve. Most companies are looking for a capable partner to provide a process for kitting because of increased demand and supply chain costs. Productiv, one of the country's leading 3PLs with deep kitting experience, offers a unique combination of lean thinking, technology, and people experience to help kitting become a value-added efficient part of your supply chain.