How Component Kitting Services Can Uncover Hidden Profit
Chances are that you are familiar with the concept of kitting; you may have even had experience with it at some stage of your career. We believe there is no single approach to a successful kitting program, as every opportunity has its own unique challenges, but the benefits are typically fairly consistent.
One of the arguments against kitting that we hear quite regularly goes something like this: “Kitting will not work here because every project we work on is different.”
Our answer? Because every project is different, is exactly where we feel kitting services can help the most. In this article, we discuss four ways component kitting services can uncover hidden profit.
Reduction in Transactions
This is the single largest area of potential benefit as the phrase “Less is more” has never rung truer. Consider this:
- Quicker quoting process
- Fewer purchase orders to execute
- Less time to receive and inspect
- Product ready to go right to the project on the shop floor – No wasted time gathering parts
- Streamlined communication – Fewer phone calls to suppliers for changes and expedites
- Organized documentation packet with cover page
- More time to spend on the higher value activities
There is a good chance that your kitting provider has a team of engineers that review each BOM against the required specifications to ensure the components you receive are exactly what your engineering and purchasing teams intended. During this review, it is not uncommon for questions to arise that help us avert errors before they even happen.
Many companies are familiar with the concept of vendor consolidation and have begun to reduce the number of vendors they partner with to maximize profitability and mitigate unnecessary time spent managing redundant partnerships.
With this strategy, instead of choosing to spread their resources across a wide array of vendors, they focus their resources on a small group of well-trusted vendors, or in a perfect world, a single trusted partner wherever it makes sense. Vendor consolidation is a natural by-product of a successful kitting initiative.
The cost savings appear in many areas here, including: Fewer shipments means less freight charges and less time at receipt/inspection; more spending power equates to greater leverage with key suppliers; greater accuracy in providing exactly what is needed results in fewer occurrences of discrepant material (and less excess inventory). The list goes on and on.
At Peerless, our team of trained application engineers and product specialists have the expertise to help with any and all kit requests. We’ve also worked with a local manufacturing consultant to develop a brief presentation to support how and where these savings can occur.
If you have any questions, or would like to see this presentation in person, feel free to send us an inquiry online or call us at 1-800-234-3033 to talk to one of our specialists.