Using a 3PL for Meal Kits, Subscription Boxes & Kitting
Outsourcing fulfillment of subscription boxes, meal kits & other kitting functions to a 3PL can produce labor & cost savingsCustomized Fulfillment of Subscription Boxes for Consumers
Today, consumers like the convenience of a “set it and forget it” mentality. They purchase subscriptions for everything from clothing, technology, food, personal care items and much more, have the automated payment handled via their credit card and shipped automatically to their door.
But who handles this?
It turns out that this is big business for third party logistics providers. These 3PLs operate warehouses and distribution centers and can provide customized fulfillment options that eliminate the logistics and billing headaches for their clients. Using
Why is kitting and assembly challenging?
- First, there is the matter of ensuring that you have all the products needed in stock at the correct time, based upon the customer’s order and/or preferences
- Next, each order must be kitted accurately and assembled in a manner that will ensure a positive customer experience
- Finally, the speed of order and fulfillment is rapid
- Often subscription boxes include a combination of items which has been assembled for an individual customer. This distinguishes it from merely being another online order.
What is Kitting?
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Kitting is used for seasonal goods such as gift baskets or holiday gift packs as well as for:
- Sample packs
- Variety packs
- Corporate gifts
- Travel packs
- Subscription boxes
- Meal kits
Kitting can be done “on the fly” or via pre-assembled prior to order. Building kits ahead of orders tends to save time and money as long as all the necessary goods are in stock at the time of kitting and assembly. Processing the kits before they are needed helps to reduce order fulfillment time and enables efficiencies that keep costs under control.
When is it a Good Idea to Use Kitting?
- Ideal to sell items that coordinate, often one that is slow moving with an item that is more popular. Consider
kitting as a way to increase sales or to increase the sale ofslow moving inventory. - Need to have adequate stock of goods
- If both or all goods are compatible to package together (consider potential risk or damage when packaging items together)
How do 3PLs Handle Fulfillment of Subscription Boxes or Kits for Consumers?
Most fulfillment-oriented third party logistics providers are experienced in supply chain and logistics and have warehouse management systems that can properly handle inventory management for a wide range of SKUs. The 3PL should utilize a WMS that can manage the kitting, assembly and packaging process and properly bill according to the contract each of their clients establishes.
In selecting a 3PL to handle your kitting needs, it is important that the company:
- Is experienced in dealing with kitting and assembly and already has the people, processes and facility organization necessary to meet your needs.
- Has the information technology in place for supply chain visibility and inventory control as well as for inventory management including that of raw materials, finished goods and kits.
- Can provide you with the visibility of order and shipping information
- Is capable of de-kitting if necessary
- Can process exchanges and returns if desired (reverse logistics)
- Can handle track and trace of products in the incidence of a recall
- Can provide you with experienced customer service to ensure a seamless customer experience
- Can bill you accurately and in a timely manner for the services needed at the rates you negotiate. Billing should be easy to understand and transparent, not done in a way that eliminates your ability to understand and track costs.
- Has the information technology, software solutions and capability to operate in a highly flexible manner to meet changing consumer demands
Why Outsource Fulfillment of Subscription Boxes or Kits to a 3PL?
- Kitting tends to be labor intensive and can take up quite a lot of space in your facility
- Facilitates a positive customer experience. Enables consumers to experience the consistency of brand impression with customized packing slips, shipping confirmation, packaging, customer service and other options
- Outsourcing reduces the cost of fulfillment, labor and other costs and ensures continuity of care for your orders
- Relying on a trained workforce to handle re-labeling, re-packaging and other services means you are getting workers who have already figured out the most efficient way to handle this type of work, typically producing cost savings in materials and labor as well as in processing and response time
- Enables adequate storage and scalability of operations for your changing needs, key for seasonal demand
- Can produce potential cost savings in shipping and freight
How are 3PL Services Charged for Subscription Box Fulfillment?
What is an order fulfillment fee? This is the cost that is associated with the services typically associated with the order fulfillment process and can cover receiving, storage of inventory, processing of orders and returns.
Here are some of the bases on which order fulfillment services are charged:
Inventory storage cost
- By the cubic foot
- By the pallet
- Long term storage fees may apply if goods remain in storage for a considerable period of time
Receiving cost
- By the shipment
- By the unit
Customer support cost
- Flat rate
- By the hour
Pick and pack cost
- By the order
- By the unit
- Minimum monthly fees may apply if order volume is too low
Kitting cost
- By the kit
- By the hour
Some 3PLs offer a wider range of order fulfillment services including the ability to:
- Manage backorders
- Handle recurring shipping programs via auto-ship
- Handle advance orders
- Process re-ships and exchanges
- Manage complex transactions
Conclusion:
Kitting is the process of grouping items together as one sellable unit (SKU) for consumer purchase. Outsourcing kitting and assembly activities to a third party logistics provider is often desirable due to space and labor concerns. If you are thinking about outsourcing kitting, consider a third party logistics provider who has experience in managing the supply chain, especially one that can enable cost savings with logistics operations.
Today, 3PLs provide a wide array of services including logistic solutions, ecommerce platforms and reverse logistics in addition to order fulfillment. Selecting an experienced 3PL that utilizes the information technology and software solutions necessary for track and trace, pick and pack processing, kitting and assembly and accurate, timely 3PL billing will help ensure that your business receives affordable, quality service for your brand.