Sourcing In Supply Chain Management: 5 Benefits Of Innovative Kitting & Packaging

Kitting and packaging are integral elements in the typical manufacturing process. In most cases of sourcing in supply chain management, these elements are taken for granted, such that many manufacturers underestimate the myriad advantages to be gained from streamlining these important tasks.

Electronics manufacturers, in particular, stand to benefit from more efficient kitting and packaging systems. These manufacturers are often faced with the unique challenge of having to find ways to effectively ship the most up-to-date products and the latest packaging to retailers. This can be a difficult feat to accomplish in a timely manner due to the frequency with which product upgrades, documentation changes, software updates, and changes in promotional strategies are made by the engineering and marketing departments. Due to the speed with which these elements can change for any given product, manufacturing departments often cannot effectively keep up with these changes in the context of conducting their kitting and shipping procedures.

Here are 5 benefits manufacturers can realize by streamlining their kitting and packaging processes:

1 - Ability to implement special offers and product upgrades with shorter lead time:

In today's competitive environment, corporate marketing departments need to remain responsive to market needs by offering special promotions in short order. When such promotions are implemented with short lead times, the situation affords the manufacturing department insufficient lead time to reflect those special offers in the packaging. Similarly, the need to upgrade products due to the detection of product defects or the introduction of new technologies puts pressure on the manufacturing department to respond to these changes quickly and efficiently.

When such promotional changes or product upgrades are required, manufacturers who are not streamlined are often forced to unpack and then repackage existing stock before it leaves the warehouse. Or, just as inconveniently, the special offer or product upgrade is not implemented in time for shipments to be made. However, by outsourcing these tasks to a third-party logistics partner who manages the kitting and packaging tasks on site, products can remain unpackaged until just days before they are to be shipped. The result is a much more flexible and responsive manufacturing process.

2 - Ship only the most up-to-date product software and documentation:

Electronics and software manufacturers face the unique challenge of needing to implement product updates much more frequently than do manufacturers of most other types of products. Firmware updates, new specifications, actions by competitors, and other realities of the high tech world force engineers to update product software and documentation within very short time spans - often much more rapidly than manufacturing planners can respond to effectively.

By streamlining the kitting and packaging processes so that they can be performed as closely in time as possible to actual product ship dates, manufacturers can realize a significant savings in terms of avoiding these unpacking and repacking costs.

3 - Improve relationships with retailers:

Retailers do well when their customers are happy, and their customers in turn are happy when they feel they have access to the latest products and services in retail stores. Fortunately, manufacturers stand to improve the relationships they have with their distribution partners and retailers by supplying them with the latest, hottest products in a more timely manner. By being able to react quickly to market changes through better efficiency in packaging, manufacturers can keep retailers (and their customers) pleased.

4 - More effectively target specific customers:

Manufacturers that can flexibly tailor their marketing efforts to specific target segments have a decided advantage in the marketplace today. With the increasing availability and use of sophisticated market segmentation techniques by many companies, they have the ability to more specifically target very well-defined, niche segments. This trends often manifests itself in the diversification of a brand's product lines, as well necessitating the tailoring of product positioning and messaging for various segments or niches simultaneously.

By remaining as flexible as possible through streamlined packaging, more variation (in terms of both product diversification and product positioning) becomes possible - and better profitability follows.

5 - Saving money on shipping costs:

For companies whose original equipment manufacturers (OEMs) ship their products from overseas locations (e.g., China) to in-country distribution warehouses, shipping costs comprise a significant portion of total cost of goods sold. However, by shipping finished goods to distribution centers in an unpackaged state, companies can ship up to 2-3 times more product per pallet - resulting in significant shipping cost savings.

Taking advantage of recent advances in kitting and packaging can afford significant advantages to electronics manufacturers. These advantages include the ability to avoid the additional cost of relatively last-minute unpacking and repacking, lower shipping costs, and greater responsiveness to making needed product, packaging, or documentation changes due to internal or market demands.