Kitting is the process of assembling individual SKUs into a single bundled product, either at the time of order or pre-built and stored. WMS platforms track both the finished kit and its components for accurate inventory deduction. For example, a skincare brand may pre-kit a gift set containing cleanser, toner, and serum—allowing easy picking while managing component inventory. 

Kitting is the process of assembling individual SKUs into a single bundled product, either pre-built and stored as finished goods or assembled on-demand during order fulfilment. This value-added service transforms separate components into cohesive products whilst maintaining accurate inventory tracking across both kit and component levels.

Modern WMS platforms track the relationship between finished kits and their components, automatically deducting component inventory when kits are created or sold. For example, a skincare brand pre-kits gift sets containing cleanser, toner, and serum—enabling single-pick efficiency whilst maintaining real-time visibility of component stock levels.

How Kitting Works in Practice

Kitting strategies vary based on business needs:

Pre-Built Kitting (Build to Stock):

• Assemble popular bundles in advance

• Store as single pickable units

• Ideal for stable, high-volume combinations

• Reduces pick time during order processing

Example: A electronics retailer pre-builds "home office starter kits":

• Wireless keyboard (SKU: KB-101)

• Mouse (SKU: MS-202)

• Webcam (SKU: WC-303)

• Headset (SKU: HS-404)

• Creates finished kit (SKU: HO-KIT-500)

On-Demand Kitting (Build to Order):

• Assemble when customer orders

• Maximum flexibility for combinations

• No finished goods inventory

• Ideal for customisable or low-volume kits

Example: A craft supplier offers "build your own craft kit":

• Customer selects 5 items from 50 options

• System creates pick list for components

• Kitting station assembles during fulfilment

• Packed as single shipment

Hybrid Approach:

• Pre-build core kits

• Add personalisation on-demand

• Balance efficiency with flexibility

Common Challenges and Practical Solutions

Component Availability Complexity

The Challenge: A gift basket requires 8 components. If one item is out of stock, can you sell the kit? How do you track availability when components are shared across multiple kits?

Intelligent Solutions:

Hard Allocation:

• Reserve component stock specifically for kits

• Prevents overselling individual items

• Guarantees kit availability

• May increase overall inventory needs

Soft Allocation:

• Share components between kits and individual sales

• System calculates kit availability in real-time

• More flexible but requires careful monitoring

• Ideal for businesses with good demand planning

Substitution Rules:

• Define acceptable alternatives for components

• "If organic soap unavailable, use premium soap"

• Maintain kit value proposition

• System automatically suggests substitutions

Labour and Space Management

Kitting is labour-intensive and requires dedicated space:

Space Challenges:

• Component staging areas

• Assembly workstations

• Finished kit storage

• Quality check zones

Efficiency Solutions:

• Ergonomic kitting stations with all tools

• Batch similar kits together

• Use zone picking for component collection

• Implement assembly line principles for volume

• Mobile kitting carts for flexibility

Kit Version Control

The Challenge: Kit contents change over time due to:

• Seasonal variations

• Supplier changes

• Product discontinuations

• Marketing decisions

Version Management:

• Timestamp kit definitions

• Track historical kit compositions

• Handle returns of older kit versions

• Maintain cost accuracy across versions

• Clear documentation of changes

Business Impact of Strategic Kitting

Well-executed kitting delivers multiple benefits:

Revenue Enhancement

• Higher Average Order Values: Bundles command premium pricing

• Cross-Selling Success: Introduce customers to new products

• Gift Market Access: Tap into high-margin gift segments

• Personalisation Premiums: Charge more for customised kits

A beauty brand increased AOV by 40% after introducing curated discovery kits.

Operational Efficiency Strategic kitting improves warehouse productivity:

• Single pick instead of multiple items

• Reduced packing complexity

• Lower shipping costs (one parcel vs many)

• Simplified inventory management for popular combinations

Customer Experience Kits enhance the customer journey:

• Convenient one-click purchasing

• Curated product discovery

• Gift-ready presentation

• Consistent unboxing experience

This is particularly valuable for subscription box businesses built entirely on kitting.

Inventory Optimisation

• Move slow-selling items in bundles

• Reduce obsolete stock through creative kits

• Better forecast demand for components

• Minimise picking errors on multi-item orders

Key Metrics to Monitor

Track these KPIs for kitting operations:

Efficiency Metrics:

• Kits assembled per hour

• Labour cost per kit

• Component pick accuracy

• Assembly error rates

• Space utilisation in kit zones

Financial Metrics:

• Kit profit margins vs components

• Revenue from kit sales

• Inventory carrying cost impact

• Labour ROI on kitting

Quality Metrics:

• Kit accuracy rate

• Customer complaints on kits

• Return rate for bundled items

• Component damage during assembly

Strategic Metrics:

• Kit sales as % of revenue

• New customer acquisition via kits

• Component velocity improvement

• Kit customisation uptake

Understand how kitting impacts overall order accuracy rates.

Frequently Asked Questions

Should we pre-build kits or assemble on-demand?

Consider these factors:

Pre-Build When:

• Kit composition is stable

• Volume is predictable

• Components have long shelf life

• Speed at dispatch is critical

• Labour is available off-peak

Build On-Demand When:

• High customisation required

• Components have short shelf life

• Kit contents frequently change

• Storage space is limited

• Volume is unpredictable

How do we price kits versus components?

Pricing Strategies:

• Discount Bundle: 10-15% less than component total

• Value Bundle: Same price but includes "free" item

• Premium Bundle: Higher price for curation/convenience

• Loss Leader: Below cost to drive volume

Consider perceived value, competition, and margin requirements.

Can we disassemble kits if needed?

Yes, with proper controls:

• Configure "de-kit" permissions

• Track reason for disassembly

• Update all inventory levels

• Adjust financial records

• Monitor de-kit frequency

Excessive de-kitting indicates poor demand planning.

How do we handle returns of partially used kits?

Establish clear policies:

• Accept only complete kit returns

• Process individual item returns with restocking fees

• Quality check all components

• Quarantine until verified complete

• Consider component resale separately

Integration Considerations

Successful kitting requires:

System Capabilities:

• Component SKU tracking

• Bill of materials (BOM) management

• Real-time availability calculation

• Work order processing

• Kit history tracking

Physical Infrastructure:

• Dedicated kitting stations

• Component staging areas

• Assembly tools and supplies

• Quality check zones

• Finished kit storage

Process Design:

• Standard work instructions

• Quality checkpoints

• Component replenishment triggers

• Kit labelling standards

• Performance monitoring

Technology Support:

• Barcode scanning for accuracy

• Light-directed assembly options

• Digital work instructions

• Photo documentation capability

• Integration with order management

Alternative Approaches to Product Bundling

Virtual Bundles

Marketing bundles without physical kitting. System groups items for pricing but picks separately. Simple but misses operational efficiencies and premium presentation.

Supplier Pre-Packs

Having suppliers create bundles before delivery. Reduces labour but limits flexibility and requires supplier coordination. Quality control becomes challenging.

Pick-and-Pack Bundles

Pickers collect all items and packing creates the bundle. No pre-assembly required but slows packing operation and increases error risk.

Strategic Kitting Operations

Dedicated kitting function with optimised processes, systems support, and quality controls. Maximises value while maintaining flexibility. Essential for eCommerce retailers competing on experience.

Next Steps: Launch Your Kitting Strategy

Evaluate kitting opportunities in your operation:

• Identify frequently bought together items

• Calculate potential labour and space requirements

• Assess system capabilities for BOM management

• Design pilot kit offerings

Schedule a Consultation to implement kitting operations that boost revenue and delight customers.

Related Topics: Component SKU | Pick and Pack | Order Consolidation