Manage Your Kits and Their Components Accurately—with Automatic Inventory Adjustments
When your accounting system can automate kitting processes and keep your inventory data accurate for all kitted items, you can cut costs, eliminate errors, and easily offer innovative product options to your customers.
What is kitting?
Kitting is the process of bundling or packaging multiple items into a single item for your customers to purchase. For example, one of our clients manufactures dining room furniture. They sell items individually (like chairs, tables and hutches) and they also sell “kits” of common configurations (like dining-room-suite as an item). Kitted items can have their own fixed price defined, either more or less than the sum of the individual component prices, or be defined to sum up the then-current component prices. And in all cases the cost is rolled up from the then-current cost of the components. Importantly, creation or shipment of a kitted item seamlessly relieves the components from inventory.
What are the signs that it might be time to automate your kitting process?
- Your item tracking is falling through the cracks. You’re no longer able to spend the time that’s required to stay on top of inventory levels manually. So now you’re running out of kit components, which delays the shipment of all the kit orders which use that component.
- Your profitability is getting murky. You’re not tracking your costs accurately for kits. You need to make sure you’re actually getting good margins on kits even with their discounted bundled prices—and that you’re paying the correct sales commissions on kits.
- Your manual hoop-jumping is officially out of control. When you break up a kit to sell one of its components separately, your inventory counts get messed up. And you’re sick of having conversations about kits that got built wrong or priced wrong. And only one person in your company knows how to decipher the spreadsheet that tracks kit costs and margins.
AccountMate gives you full flexibility for kitting
AccountMate’s built-in Kitting functionality can be configured several different ways: Either on-the-fly or prebuilt; either stock or customizable; either with or without kit numbers (akin to serial or lot numbers); and with either fixed pricing or the price rolled up from the components.
For all of the options, AccountMate makes sure your inventory adds up accurately at every step of the way. You don’t have to remember to do an inventory adjustment later when you pull an item out of inventory for a kit, or when you unbundle a kit back into its original components. You’ll always have accurate real-time inventory counts, locations and costs.
Here’s info on some of the configuration options:
➤Build your kits on the fly
In the dining room suite example above, the manufacturer doesn’t shrink-wrap six chairs, a table and a hutch together and store them as one item in the warehouse. They pull those items individually at the time of the order, so AccountMate creates the kit only for the nanosecond during the shipment of the sales order:
- The sales order shows 1 Dining Room Suite
- The pick list and the packing slip automatically show the parent item (Dining Room Suite)—and also list all component item numbers and quantities
- Cost is a roll-up of the cost of the components
- Price is either the sum of the price of the components or is the defined price for Dining Room Suite—you get to pick!
Build-on-the-fly (or build-to-order) kitting is a great solution when:
- You want to sell stock kits of items that are commonly purchased together, offering customers exactly what they’re looking for without having to prebundle the components.
- You have too many possible kit configurations to keep all the combinations in stock as prebuilt kits. (Perhaps your customer chooses from a list of custom attributes like color and size for the items in their kits.)
- You don’t need to package them (e.g. there’s no reason to shrink-wrap dining room suites).
- You want to run a quick and easy short-term promotion, such as an inventory clearance sale, “buy ten of these and get one of those free.”
- You want to make it bulletproof for your sales team to automatically include the correct individual components every time. (PS. If you also need to ensure that the correct compatible accessory parts are specified and sold with certain items, check out Stop shipping the wrong add-on items. AccountMate is great at automating sales rules; another popular feature is Upsell Management to help sales people suggest add-on items on the fly.)
➤Prebuild your kits in advance
Perhaps you have some items that you sell as components and as assembled constructs too—such as skis, bindings, and skis with bindings attached when you might want to have pre-assembled “kits” of the most popular configurations which are ordered and which can be priced at MORE than the price of the components so you’re charging for the installation effort.
- You post “production” when the kit is assembled, so you always have visibility into how many complete assemblies and “loose components” you have on hand.
- Yes, you can unassemble a kit to return it to its components.
- The pick list and the packing slip automatically show the parent item (skis with mounted bindings)—and don’t list the components.
- Cost is a roll-up of the cost of the components—but you can include a non-stock “labor” item if you’d like.
- Price is either the sum of the price of the components or is a defined price for the item—you get to pick!
Building kits in advance is a great solution when:
- Your customers value fast delivery and they are comparing your delivery time with your competitors’. You want to have the kits on hand and ready to ship immediately.
- You sell a high volume of kits, or a kit has many components. So it’s more efficient to gather the component items and package many kits at once instead of doing it on the fly for each order.
- You have a quality process to ensure accuracy to a high standard, so that each kit contains the correct components and packaging details. A formal kitting and quality assurance process up front ensures that all the right components of a kit are included in every order.
- You do kitting and fulfillment for monthly subscription boxes, such as meals or snacks, beauty products, pet food, craft supplies, or collectible items.
- By combining individual items into a single package, you can reduce the amount of packaging materials, number of shipping boxes, amount of shelf space, and weight of boxes.
Sometimes a kit is always the same (the Colonial Dining Room Suite always has exactly the same components), while other times you may allow options in your kits (the Modern Dining Room Suite has options on the chair styles). Designating a kit as customizable lets you change the components when the sales quote, sales order or customer invoice is directly created—but it’s not changeable during sales order shipping, which is typically done by warehouse personnel who don’t interact directly with the customer.
➤Use kits for light manufacturing
Perhaps you’re a distributor who does simple component assembly and you’re not interested in all the effort of an MRP system—defining bills of material, generating work orders, tracking labor, calculating fixed and variable overhead, machine setup and tear-down times, defining routing, posting of work-in-process, etc. You just want quick, easy and accurate inventory counts. Well, then kitting is your answer!
Kitting examples of light “manufacturing”
- Do simple bolting together, inserting, or construction of items
- Assemble kits in just a few steps or pick components directly from inventory shelves (e.g. get 18 chairs, 3 tables and 3 hutches from inventory)
- Shrink wrap, poly bag or box the components together
- Print and apply custom labels to the packaging
- Include a unit of labor cost to assemble the kit, such as .1 hour
➤Now mix and match all of the above!
All the options above, including adding true MRP, can be configured on a per-item basis. So, some items are simple build-on-the-fly, other items you stage pre-assembled so those are prebuilt kits, some of both are customizable and some aren’t, and then we use AccountMate’s Manufacturing module for the complex multi-step processes which require that level of detail.
Kitting simplifies order entry. It provides the inventory tracking you need. And it allows you to deliver more value to your customer!
Additional and unique kitting options in AccountMate
Do your items include serial numbers, lot numbers, and other tracking for compliance and traceability? AccountMate is REALLY strong in this area, and all these details are retained and tracked through all processes, including kitting. Even when items come back out of kits if you disassemble some kits later.
If you need to break a prebuilt kit apart to sell individual components, no problem. AccountMate handles the inventory count adjustments in one simple step for you and ensures that everything adds up properly.
➤ Staging areas
If your kitting process requires extra time, you can move kit components out of inventory and into a temporary imaginary “warehouse” for assembly, so that the items won’t appear as inventory on hand for sale. Then transfer the finished goods to your regular inventory when the kits are ready to sell.
➤ Labor costs
AccountMate offers the ability to add units of labor or operational cost to each kit, accounting for the costs of putting the kits together. This way you can make sure you’re not giving away margin in your kit pricing.
➤ Warehouse kitting
If kitting is the primary focus of your business, AccountMate offers maximum flexibility. Whatever your customers need, you can provide the flexibility, speed, accuracy, quality control and reporting to meet their requirements in a very competitive fashion:
- High-volume kits
- Order fulfillment with drop-shipped kits
- Kits with custom branding and packaging
- Tracking of inventory that your customer owns and you warehouse
- New kits created quickly for just a short duration
- And more
➤ Uncommon kitting needs
Have you read this far and not seen what you’re looking for in kitting? AccountMate is the world’s most flexible accounting system, because it offers direct source code access and features that make it easy to customize ANY aspect of the software. You’re not limited to configuration choices on a menu. NexLAN specializes in accommodating unusual business requirements within AccountMate for our clients.
If your kitting works differently than most, or you have a kitting idea that other systems can’t handle, don’t hesitate to ask us about it. Chances are excellent that AccountMate can help you run your business the way you want to run it, quickly and cost-effectively.
What automations would help you manage your company’s kits?
Give us a call to talk about your specific kitting questions and needs. We can do an online screen share to show you how AccountMate would handle kitting configurations like yours. So you can envision what life could be like with always-accurate inventory counts for kit components and easy soup-to-nuts management of your kitting!
Flexible Package Tracking
When a manufacturer of surgical instruments greatly expanded international sales, they needed their shipping to handle the tracking of products to all corners of the globe.
NexLAN integrated a shipping solution that includes “cartonization,” which tells their customers exactly what each carton contains when orders are split across multiple boxes.