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Grouped or Kit Fulfilment

Published October 2020

  1. Introduction

    Grouped item fulfilment against a sales order is a common challenge across many sectors. With the need to link items together to form a kit or assembly. This may be a few items that need to be shipped together or it may be many individual components that form a complete assembly.

    However, often automation is ignored as being too expensive or complex for small and medium-sized organisations.

    This article looks at how small and medium-sized organisations can effectively automate this from an initial sales order. Ensuring that kits are complete and stock levels are replenished and all necessary commercial transactions occur.

  2. Grouped Item Fulfilment

    Grouped item fulfilment is where a requisition or purchase order for a kit of parts can only be fulfilled by creating this kit from its component parts: capturing all the items and quantities needed to fulfil the requirement. A kit or group of items is allocated against the order, instead of entering each item and quantity separately: ensuring that all items are linked to a single identified kit number and originating order.

    Typically, line items come from stock and are picked within a warehouse, though the direct ordering of parts can also occur where lead times allow for fulfilment on an as-needed basis. Packaging, postage and shipping can also be included as part of a kit.

    Orders and Invoicing

    Order acceptance, fulfilment and invoicing all need to be part of the automation process. Both in the direction of the customer and the direction of the suppliers of the kit’s component parts.

    Plus, at the end of the process, there needs to be three-way matching, with validation of an invoice against a valid purchase order and the goods or services received.

    Stock

    Where stock is used, the action of stock being allocated needs to automatically adjust the stock levels and trigger any re-ordering of stock where appropriate. Ensuring that stock is always above a minimum required level. Managing stock is a critical part of the process, with the level of stock held automatically monitored.

    Pick pack and dispatch processes should be driven from the automation, with outbound delivery notices generated. Flagging delivery action and triggering appropriate invoice processes. Any invoice created could be sent directly from the procurement systems or sent via a finance system. Approvals for invoicing being part of the process.

    Supply

    On the supply side, receipt of goods should start an acceptance process and trigger the appropriate payment action. With delivery confirmed on the system by warehouse staff matching the order to the actual delivery. Approvals for payment being part of this process.

    Audit Trail

    An audit trail of all activity is essential, capturing transactions throughout this process. This ensures that management reports can easily be created and that any exceptions can be easily traced.

    Some examples of kits:

    • Spare part kit – many industries and products
    • First Aid Kit or specific medical kit
    • Sanitisation station
    • Playground equipment
    • Flatpack furniture
    • Air conditioning system (multi-part system)
    • Any item with a manual, box and postage is also a kit
  3. Manual or Ineffective Automation

    It is often the case, that manual processes are used for grouped item purchases. It is either that or the use of inappropriate automation tools. Usually, this is because ERP systems are investigated as the only possible solution for automation and found to be prohibitively expensive and complex for the organisation.

    If you are attempting to manage the process of selling “kits” from stocked items, replenishment and sourcing components from suppliers manually, in part or as a whole, you will already know many of the issues.

    Typical issues include:

    1. Incomplete kits
    2. Out of stock parts holding up completion of kits
    3. Supply of wrong items (picking errors)
    4. Invoice errors
    5. Supplier shipment errors
    6. Lost paperwork
    7. Firefighting of orders (lack of prioritisation)
    8. No visibility of ordering or supply quantities
    9. Poor management reporting
    10. Paperwork filing issues and tracing of documents
    11. Rescheduling installations or assembly activities.

    Partial automation

    Partial automation can clear some of these issues, however, the use of typical ERP and S2P systems can create more issues than they fix: these systems tend not to specifically address grouped purchase orders and often manual or clunky intervention is necessary. These systems provide badly implemented functionality or poor “workarounds”. Plus, if there are ERP systems that support better functionality, they are ultimately prohibitively expensive to most organisations.

  4. Effectively Automating Grouped Item Fulfilment

    Effectively Automating Grouped Item Fulfilment and Procurement of Parts is essential to minimise on operational costs and maximise on customer satisfaction.

    The following diagram identifies the key process flow for grouped item fulfilment activity and parts procurement, highlighting the necessary automation points.

    Note: boxes in blue would normally be outside of the automation process and, in the case of an online catalogue, a catalogue may not be needed if order entry is made via a sales team.

    The ability to create catalogues of products that are made-up of kits of parts for assembly by the customer or installation team; being able to communicate that order to warehouse ‘picking staff’, without missing a component from the order; and achieving this at a realistic cost is all achievable for small and medium-sized organisations.

    The key is to ensure that all the processes involved between each of these components is automated and transactions captured, within one unified approach.

    Plus, ensure it is possible to generate orders internally (by a salesperson) or trigger orders from an online customer catalogue (Buyer Portal specific to that customer.) Allowing for sales-driven internal ordering or placement of orders via phone or email.


  5. Claritum

    Claritum delivers a cloud-based solution which will successfully manage and control your products ordered for kits or assembly from stocked parts. Replacing your current manual processes or replacing/augmenting any current automation solution.

    The Claritum Enterprise Platform delivers this solution out of the box at a price you can afford.

    See detailed video on the capability

Claritum overall features and functions

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If you would like to discuss this then please

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