3 Ways Distributors Can Improve Productivity and Reduce Overhead for OEMs with Kitting
By Rock Rockwell
Many progressive OEMs use kitting to increase efficiency and productivity. With kitting, or prefabrication, OEMs save time, eliminate bottlenecks in production and ensure the correct quantities of stock are on-hand.
Kitting involves packing two or more similar parts or sub-assemblies together into one kit that is labeled as a single item for inventory management purposes. This can include grouping single components used together or a fabricated sub-assembly for a manufacturing task on an assembly line.
Many industrial distributors offer kitting as a value-added service for their customers, putting together components and sub-assemblies for their customers’ use. For example, distributors of hydraulic components will often fabricate sub-assemblies like hose and fittings, pumps, compressors and the like that are used by customers in the oil and gas industry.
These items are packed together for the customer’s end use and often require serial numbers to track what components were used and where the sub-assembly was manufactured. Kitting provides distributors with an additional revenue stream and elevates their level of customer service. Benefits to their customers include:
- The kitting process supports lean and just-in-time manufacturing processes and reduces the number of times operators need to handle the material at the point of use. This reduces bottlenecks in the system and therefore, takt time, the rate at which a plant must produce its product to satisfy demand.
- OEMs save time and money by centralizing components and pre-fabricating and assembling components for a product. By pre-packaging kits used for a specific task on the assembly line, OEMs can ensure that the assembly line operator has the correct parts in the right quantities, saving the operator time and allowing the production line to move at a faster pace.
- By pre-packaging items in advance that are used in the assembly process, OEMs can monitor the quantities more accurately and ensure there is enough stock to meet demand. This will reduce machine downtime due to unavailable parts.
The problem is that while implementing a kitting program has many benefits for both the distributor and their customer, managing it can be a challenge, especially if done manually. The primary issues companies encounter in managing kits involve tracking and replenishing inventory, managing inventory while the work is in process (WIP), and assigning and managing serial numbers.
Distributors and OEMs have no reason to manage this job manually with so many inventory management software solutions available today, from reasonably priced sophisticated mobile apps that can be integrated with existing ERP software solutions to expensive custom solutions. To choose the right mobile app or software solution to manage kitting, look for the following features:
Real-Time Visibility into Stock - Any software or mobile app you choose should allow users to manage on-hand quantities and track consumption. This is a huge time saver over tracking these manually.
Automatic Replenishment - Kits should be able to be ordered from suppliers using a kit part number or its component parts and quantities and be replenished automatically using min/max parameters. Being able to use a single part number to order or pull multiple items at one time drives productivity.
Work Orders and Management of Work in Process (WIP) - This feature allows labor and non-inventory items to be accounted for and is especially critical for tracking expensive components used in kits and sub-assemblies. Items should be able to be transferred in and out of general inventory from the WIP as needed.
Serial Numbers – The software app should be able to assign and manage serial numbers. Many OEMs that bid on government jobs or are in the oil and gas industry, for example, require serial numbers on the completed kit, and the ability to generate and track these versus doing this manually is critical in meeting ISO standards.
Traceability – OEMs require accountability at every stage of the manufacturing process, and having an app that can delineate every step of the process and who performed each action is important.
Supplier Independence – The software solution should not be tied to one supplier or rely on supplier partnerships. Using a multi-supplier inventory replenishment app is a huge benefit to OEMs because they would have the ability to replenish all the products in their stockroom with one app.
Inventory management software with robust kitting and automatic replenishment features will let you build simple or sophisticated kits to stock in inventory for customers, reducing downtime and increasing productivity.
Rock Rockwell is CEO of eTurns, a point of use inventory management app that automates inventory replenishment in stockroom and service trucks using phones, RFID and TrackStock SensorBins. Contact Rockwell at rock@eturns.com.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
