Across industries, one major priority each year is to reduce costs and improve operational efficiencies. One strategy manufacturers use is customized kitting – creating kits of related components into a single package tailored to the specific production process or line. Using customized kitting not only reduces time spent searching for parts, but it streamlines your production and reduces the Total Cost of Ownership (TCO) for your organization.
What Is Total Cost of Ownership (TCO)?
TCO is the evaluation metric that takes into consideration all of the costs associated with a product or component. From direct costs like the price of the actual component, to the indirect costs like acquisition and shipping, there are many costs involved when purchasing parts or products for a production line. Reducing TCO involves maximizing scale and efficiencies, using resources appropriately, and improving overall production line performance.
The Role of Customized Kitting in Reducing TCO
So how does kitting help an organization reduce TCO? The first step is procurement and inventory management. Using custom kitting helps to consolidate parts into a single SKU. Not only does this reduce purchase orders, but you save by reducing vendors, admin costs, and storage space. Another way kitting helps is with labor costs due to assembly. Pre-packaged kits reduce time workers spend looking for parts or gathering components across a warehouse. Your team can assemble faster and improve workflows in the line.
Waste Reduction and Quality Control
Customized kitting provides better inventory control, with only the parts you need delivered to your warehouse. This reduces the chance of over-ordering or having to wait for parts you need. When you have pre-assembled kits they are inspected for quality which minimizes defects or rework due to missing or damaged parts. Kitting also improves forecasting so you can easily scale when there is more production demand. Kits can also be adjusted as needed if your assembly changes.
Companies see tremendous savings in inventory costs and improvements in production efficiency and error rates when using kitting. This reduces the TCO and improves overall production while cutting waste and enhancing quality. Gexpro Services provides custom kitting solutions as well as assembly services to reduce your TCO, improve production, and create efficiencies in your inventory process. Talk to our team today about industrial kitting and how to reduce your overall TCO.
