It’s a struggle for some companies to toy with the idea of outsourcing their kitting program. Smaller companies may worry about diluting their brand or losing flexibility. While larger companies only see outsourcing as a cause of inefficiencies within the supply chain. These are just a couple of the myths surrounding outsourcing kitting programs. Ready to debunk these myths? Let’s get started.
First, let’s define kitting. Kitting is the process picking related components and packaging them as one part number before distributing the product to the customer’s end user, distributor, or parts distribution center.
5 Myths: Outsourcing Kitting
#1: Outsourcing Kitting will Increase my Operational Costs
Outsourcing kitting will actually help in reducing your overall operational costs, if done correctly. Incorporating kitting into your current business requires a large amount of time, strategy and cash outside of your core business. Third party logistics providers (3PL), or even a third party packager (3PP), have already made the appropriate investments in labor and overhead, saving you time and money throughout implementation and execution of the kitting program.
#2: I will have to increase my warehouse footprint
Kitting can actually lead to a reduction in necessary warehouse space, positively impacting your bottom line. The warehousing market, currently valued at approximately $428 billion globally, saw a massive capacity issue in 2020 during the onset of the pandemic. With a rise in consumer spending and eCommerce purchases, the demand for warehouses around the globe will only increase. In fact, it is set to reach nearly $557 billion by 2026. This is why it is imperative to use warehousing space efficiently, a statement experienced 3PL and 3PP service providers know well. Kitting helps reduce your space by storing finished goods as one part number versus housing safety stock for individual items. Enlisting a 3PL for your kitting program allows for your facility to be utilized solely for the final product.
#3: Outsourcing Kitting will reduce my ability to flex to customer demand
If 2020 and the pandemic taught us anything it was that flexibility to demand and market conditions are imperative to a healthy supply chain. With operational costs and space already in place, a kitting service provider can easily adjust to meet your customer needs and unforeseen spikes in demand. Furthermore, the 3PL can perform value added services all while also ensuring no changes to quality or on-time delivery metrics.
#4: This will hinder our overall customer experience and loyalty
A positive customer experience is the cornerstone of a successful business and 3PL providers understand that fact. Customers want quality products which are easily able to be ordered and arrive on time. It is that simple. Kitting can help increase the customer experience by providing the end user with just one part number to order for a specific job, thus fueling customer loyalty for your products. Moreover, by entrusting a 3PL with your kitting needs you can be assured the customer will receive the correct product, on time, every time. Quality products and consolidated shipments improve your customer experience to ensure they keep coming back for more.
#5: Outsourcing Kitting will take my focus off our core business
Kitting through a 3PL can help you lower your costs, increase space utilization, infuse flexibility into your supply chain and increase the customer experience. Additionally, trusting a 3PL to run your kitting program will provide you the time and cash to invest back into your core competencies, which is why your customers are coming to you in the first place. Outsourcing kitting will allow you to focus energies on year-over-year sales growth while the 3PL builds customer loyalty, quality and reliability into your supply chain.
A 3PL provider such as NewStream Enterprises, LLC allows you to leverage our operational expertise while you stay focused on sales growth and profitability in your core markets. Let us leverage our shared resources to provide a cost-effective kitting solutions. We understand that quality, fill rates and on-time delivery are crucial in today’s economy and we deliver with exceptional performance.