Kitting is making a comeback so we asked YEG Locator general manager, Ian Shelford, to explain why.
Kitting was a fashionable term in the late 1980s with a number
of companies ‘trying their hand’ at providing a service but falling away due to the complexities required in this specialist field.
Each customer had their own ideas on what kitting meant so kitting suppliers had to approach each opportunity with the utmost flexibility.
YEG Locator has evolved its service over the years and embraced this flexible approach, adapting its services to meet changing customer requirements. What does kitting entail?
In its most basic form, it involves taking a bill of materials with specifications laid down for each part and supplying the complete list as a one time delivery, with individual components packed and labelled ready for production.
The customer can place one order for delivery in either a single drop or multiple drops with the knowledge that each kit will arrive on time with no problems. This allows customers to plan production efficiently and to maximise their own profits.
Does kitting cost?
More often than not, the cost of kitting is comparable to the customers in house costs. A kitting house will often have common components and this buying power to be passed to the end user. In some cases there may be an increased cost, but there are also some overall cost savings which should be taken into account.
These hidden savings start with the fact the customer only has one supplier, reducing administration costs such as progress chasing, delivery charges, in house warehousing and storage and staffing. Most importantly cash flow is kept to a minimum, maximising profits.
Why use a kitting house?
Buyers sometimes see kitting as a threat, but those who embrace the service use kitting as a tool to look after time consuming issues, while they concentrate on the core elements of their role.
The most important factor when considering using a kitting service is the financial benefits. Cash is king and hence the true benefit to the customer is that by using a kitting house, you actually free up the cash which would normally be tied up in stocks.
Are there long term benefits?
Most kitting companies will build relationships with their customers to plan for cost reductions in the future. Each business has its own pressures to be more cost efficient and this can be done either by simplifying the parts
lists to use more common components or to value engineer
the parts lists, working together to source more cost effective alternatives. This is a joint effort completed within agreed timescales to suit both parties.
In summary the key benefits of kitting can include:
Reduced stock management.
Reduced number of purchase orders and vendor reduction.
Reduced administration costs.
Cash flow benefits from reduced stock holding.
Reduced workload on stores/booking in.
Possible better utilization of space by reducing stores area.
Faster production cycles.
Faster response to customer orders.
Enhanced customer service from accurate BOM
management and control.
What’s in the future?
Kitting has been around for over 20 years now and with recessionary pressures at the forefront, customers demands
to cut costs are increasing. In these tough market conditions kitting is one simple solution that should be considered by companies wishing to cut costs in their business. The cost reductions are immediate and this in turn frees up resources, allowing companies to concentrate on building their business
in their own areas of expertise.