Where’s the Value in Kitting?

To benefit from the potential efficiency advantages and cost savings available through kitting, assemblers should demand a complete component management service. Paragon Electronic Components John Mayes show how

What use is an electronic components kitting service? Answer: very little if the kit does not deliver all the components required to fully assemble the intended batch of products, ready for production, at the right time. If the assembler has to source other components on the bill-of-materials independently, or must wait for others to be delivered before assembly can begin, the partial kit of parts adds negligible value.

Delivering this total component management service is what Paragon Electronic Components has focussed on for 16-years. To orchestrate a complete bill of materials, ready for assembly, on time, is a huge task requiring full-time management of processes, logistics and supply chain issues. When retained in-house, this cost can be difficult to account for. Many manufacturing businesses are surprised when encouraged to consider the full cost of components as they arrive.

In fact, the total cost of component acquisition is much greater than the components visible purchase price, when associated costs of buying, receiving, storage, retrieval, preparation and payment are included. The extra cost implications of potential barriers should also be factored in. These may include the costs of maintaining documentation and traceability, confirming RoHS-compliance or dealing with lead-time issues and obsolescence. Moreover, as the number of lines and kits increases, the magnitude of the task increases exponentially.

Reduce cost of acquisition

When building advanced, complex products, in low-to-medium volumes, under increasing cost pressures, modern manufacturing organisations are finding they are simply not set up to manage these activities efficiently. For example, managing a set of BoMs for one small manufacturer can involve co-ordinating more than 100 vendors and placing hundreds of purchase orders per month, to ensure delivery of several thousand component lines. A comprehensive kitting or component management service helps manufacturing businesses reduce component-acquisition costs and improve operating efficiency. As OEMs continue to slim-down to become more agile and lower their cost base, they must give serious consideration to outsourcing processes involved in pre-production kitting.

For outsourcing to work effectively, component management must encompass all individual parts and deliver these to the factory floor, with all pre-assembly preparation completed and no missing components. Critically, they must arrive, ready for assembly, at the same time, on time.

Four pillars of kitting

Four key elements must be in place: people, systems, procedures and partnerships. This discipline cannot be dabbled in as a non-core activity. Specialist component management businesses can source all components including electronic parts, PCBs, mechanical assemblies, housings, fixings and other sundries. Managing such a diverse set of components requires systems with capabilities beyond those typically offered by franchised distributors or independent component suppliers.

For example, at Paragon, experienced staff are supported by bespoke systems optimised over several generations of in-house software development to aid fast, error-free goods receiving, inspection, checking, storage and picking. Customer-specific requirements such as cropping, lead-forming, programming and re-reeling are integrated in the works order control sub-system. Re-reeling is frequently required, as customers often build complex products in low-to-medium volumes.
High-tech juggling

For companies choosing a kitting service, it is also important to evaluate the partnerships the service provider has established. Effective, functional partnerships with reliable suppliers are vital to deal with day-to-day issues as well as longer term challenges such as obsolescence and RoHS compliance. With these four elements in place, kitting can be a smooth and apparently effortless performance. Its rather like juggling: it looks easy when watching someone else do it.