If your operation is one of the tens of thousands of warehouses in the United States still using paper, Microsoft Excel, or processes first developed in the late 70s/early 80s, we’re here to help. To give you tools, information, guidance, tips, proven methodologies, we offer you the forthcoming "Best Practice Series for Inventory and Warehouse Management."
Inventory and Warehouse Management Best Practices: Slotting for Dollars
Posted 06-08-2008 at 08:42 PM by Kevin Collins
Updated 06-10-2008 at 12:12 AM by Kevin Collins (updated)
Updated 06-10-2008 at 12:12 AM by Kevin Collins (updated)
Your warehouse is a limited resource environment. You have a finite amount of people, equipment, products and available storage space. Slotting will help you make the most of the cubic space you have.
At its most basic level, slotting is the series of tasks that precede the decision of where to put away inventory based on space available within your warehouse facility. Who benefits from better slotting? Any organization that needs to improve resource management, increase shipping performance, respond to seasonal variances in product shipping, or optimize a limited number of pick faces. Good slotting practices are a prerequisite for optimal picking. You’ll optimize space utilization and minimize the time and effort required to efficiently receive and store incoming products.
Slotting Benefits
When you optimize the storage of goods in your warehouse through slotting and reslotting, you’ll increase productivity and greater facility throughput. Two critical components to this optimization are the locations where products are slotted and the distance people have to travel to pick them—especially when it comes to fast-moving items. Do a few products account for most of your workers’ visits to the pick face? Do their visits spread across a wide number of bins? The more your inventory activity is concentrated in fewer SKUs, the greater the benefits of slotting improvement. You’ll be able to reduce operational (especially labor) costs and increase facility throughput without adding personnel.
Let’s look at some specific slotting benefits:
Reduced labor costs
This is critical. According to industry insiders such as Tom Singer, author of the DC Slotting survey report, “few operations can afford to ignore slotting because product location is the key to optimizing warehouse operations.” Improving picking productivity reduces costs, particularly if your staff is paid hourly rather than salary.
Your warehouse space is valuable so optimizing product placement is essential. Efficient slotting helps ensure that no storage space is wasted. You’ll also increase the opportunity to absorb new products or SKUs into your warehouse.
Minimize picker travel
By optimizing SKU locations to make pick paths more efficient, you’ll reduce the distance pickers have to walk every day. They’ll pick faster and build pallets faster, providing you with improved fill rates and more on-time, accurate shipments.
Optimized slotting reduces visual search time and the movements pickers must make to retrieve items. Easier-to-reach placements improve worker safety as well as reduce ergonomic problems, which can in turn reduce worker compensation claims (and premiums).
Increase key performance indicators
As your warehouse efficiency rises, you will be able to track related improvements in many of your key metrics (KPIs) such as picks per hour, cycle times, and inventory turns.
Reduction of multiple object handling
This one is self explanatory. Configure your warehouse to minimize the number of times an item, case, or pallet is touched and you’ll save money.
Reduction in stock damage
Fewer touches of items, and easier, more ergonomic access to them will reduce damage to SKUs and their packaging.
Slotting 101
If you want to implement slotting, you have a variety of options to figure out where to put your Stock Keeping Units (SKUs):
How prevalent is slotting in a sector like retailing? A work in progress, if you believe a Supply Chain Consortium March 2007 survey of 100 top retail and related companies. Only 31% of respondents categorized their slotting plan as efficient or near optimal in terms of minimizing picking travel times. Slightly more than half (51%) reported using an internally developed spreadsheet, database tool or slotting software package to develop their slotting plans. Strangely, the majority reported that they do not use sales forecast data to support slotting plans.
Whatever method you use to implement slotting, generally speaking, you place slow moving items in manual picking areas, and faster turning items in automated areas.
Slot by velocity
You can slot items by velocity into locations based on fit and picking flow in your warehouse. For example, fastest moving items are stored closest to your pick/pack station.
Slot by velocity w/bulk picking
You may be able to slot by aggregating smaller units into bulk picks.
Slot by fit
You can select a location that closely fits the item and sequence defined by its velocity will maximize cube utilization.
Balancing slot zones
You can choose to balance picking zones by distributing velocity across zones as evenly as possible. For example, put a few fast moving items in each row if you use zone picking and assign pickers to different rows. This way your picking work is more evenly distributed among your pickers.
Planning Your Slotting Strategy
There aren’t any quick answers. The contents of your warehouse are not static so don’t expect that your slotting activities can remain forever unchanged. Plan on continually tweaking your slotting strategy in response to unforeseen events or deviations from plan. Ideally, your slotting strategy would change in sync with your historical or forecasted product usage information, and things would remain fairly smooth. Unfortunately, though, the deviations from plan may be bigger than expected. Demand for one of your products might take off…or plummet far below your sales projections as demand for it never materializes. Beyond sales projections, you should also include criteria such as historical and forecast demand, seasonality, marketing and advertising programs in your slotting planning.
Moving Forward
If you don’t have time to read Frazelle’s book, here is how to get started on your own:
Kevin Collins,
Director, Product Management
SmartTurn, Inc.
1000 Broadway
Oakland, CA 94607
USA
Sales: 1-888-667-4758
Tel: 1-510-267-5150
Fax: 1-510-208-5754
About SmartTurn
SmartTurn™ Inventory and Warehouse Management System is the first true on-demand warehouse management system to provide enterprise class functionality at a fraction of the cost of traditional license and install software. Designed for quick implentation, ease-of-use, real-time inventory accuracy and warehoues performance, the SmartTurn system provides visibility on every item across single or multiple warehouses. Founded on the premise that software should be smart, simple and safe, SmartTurn’s customers span the value chain of most industries to include manufacturers, wholesalers as well as 3PLs. SmartTurn is privately held and backed by leading investors, NEA and Emergence Capital Partners. Website www.smartturn.com
About the Author
Mr. Kevin Collins joins SmartTurn having been in the warehousing and distribution business for over 15 years, where he fulfilled leadership roles for a military distribution company (www.cpfd.com), a third party logistics service provider and distribution center (www.weberdistribution.com), a heating, ventilation and air conditioning supplier/manufacturer (www.calcooling.com), and two other retail service warehouses (Big Bear Distribution and Fleming Foods) where he also partook in two acquisitions. Mr. Collins has spent his entire career learning the art of warehousing and logistics, and has been in every conceivable role within a warehouse; from picking to distribution systems management and everything in between. During that span, Mr. Collins has also had the privilege of working directly with application developers learning about software from inventory and procurement to transportation and warehouse management systems. Mr. Collins brings to Smartturn an invaluable background and information about processes, software and logistics, and the intricate balances between them.
At its most basic level, slotting is the series of tasks that precede the decision of where to put away inventory based on space available within your warehouse facility. Who benefits from better slotting? Any organization that needs to improve resource management, increase shipping performance, respond to seasonal variances in product shipping, or optimize a limited number of pick faces. Good slotting practices are a prerequisite for optimal picking. You’ll optimize space utilization and minimize the time and effort required to efficiently receive and store incoming products.
Slotting Benefits
When you optimize the storage of goods in your warehouse through slotting and reslotting, you’ll increase productivity and greater facility throughput. Two critical components to this optimization are the locations where products are slotted and the distance people have to travel to pick them—especially when it comes to fast-moving items. Do a few products account for most of your workers’ visits to the pick face? Do their visits spread across a wide number of bins? The more your inventory activity is concentrated in fewer SKUs, the greater the benefits of slotting improvement. You’ll be able to reduce operational (especially labor) costs and increase facility throughput without adding personnel.
Let’s look at some specific slotting benefits:
Reduced labor costs
This is critical. According to industry insiders such as Tom Singer, author of the DC Slotting survey report, “few operations can afford to ignore slotting because product location is the key to optimizing warehouse operations.” Improving picking productivity reduces costs, particularly if your staff is paid hourly rather than salary.
Maximize space utilizationROI Insights: If you’re not updating your slotting strategy, your labor costs are higher than they should be.
Your warehouse space is valuable so optimizing product placement is essential. Efficient slotting helps ensure that no storage space is wasted. You’ll also increase the opportunity to absorb new products or SKUs into your warehouse.
Minimize picker travel
By optimizing SKU locations to make pick paths more efficient, you’ll reduce the distance pickers have to walk every day. They’ll pick faster and build pallets faster, providing you with improved fill rates and more on-time, accurate shipments.
Improved worker health and safetyTips: Some companies have found that re-assigning slow moving products to bin shelving can significantly decrease pickers' travel times and free up warehouse space.
Optimized slotting reduces visual search time and the movements pickers must make to retrieve items. Easier-to-reach placements improve worker safety as well as reduce ergonomic problems, which can in turn reduce worker compensation claims (and premiums).
Increase key performance indicators
As your warehouse efficiency rises, you will be able to track related improvements in many of your key metrics (KPIs) such as picks per hour, cycle times, and inventory turns.
Reduction of multiple object handling
This one is self explanatory. Configure your warehouse to minimize the number of times an item, case, or pallet is touched and you’ll save money.
Reduction in stock damage
Fewer touches of items, and easier, more ergonomic access to them will reduce damage to SKUs and their packaging.
Slotting 101
If you want to implement slotting, you have a variety of options to figure out where to put your Stock Keeping Units (SKUs):
FixedSlotting in the Field
This is the simplest, and, arguably, least efficient approach. Without analyzing potential operational improvement in areas such as workflow or labor usage, you simply assign SKUs to locations based on item size or physical characteristics. If you choose this method, cross your fingers and hope for the best.
Spreadsheet (Microsoft Excel)
You can also use a spreadsheet or database tool to help you manually assign SKU locations. You have to dig through a lot of data to arrive at your slotting decisions if you’re going to be successful with this method.
Manual
Using your knowledge of how slotting decisions affect individual SKUs in the warehouse, you select locations based on physical characteristics or units of measure. The manual method differs from the fixed method in that the manual method allows you to control where to place those items and you have control of the type of slotting you want to use.
How prevalent is slotting in a sector like retailing? A work in progress, if you believe a Supply Chain Consortium March 2007 survey of 100 top retail and related companies. Only 31% of respondents categorized their slotting plan as efficient or near optimal in terms of minimizing picking travel times. Slightly more than half (51%) reported using an internally developed spreadsheet, database tool or slotting software package to develop their slotting plans. Strangely, the majority reported that they do not use sales forecast data to support slotting plans.
Types of Slotting Strategies
Whatever method you use to implement slotting, generally speaking, you place slow moving items in manual picking areas, and faster turning items in automated areas.
Slot by velocity
You can slot items by velocity into locations based on fit and picking flow in your warehouse. For example, fastest moving items are stored closest to your pick/pack station.
Slot by velocity w/bulk picking
You may be able to slot by aggregating smaller units into bulk picks.
Slot by fit
You can select a location that closely fits the item and sequence defined by its velocity will maximize cube utilization.
Balancing slot zones
You can choose to balance picking zones by distributing velocity across zones as evenly as possible. For example, put a few fast moving items in each row if you use zone picking and assign pickers to different rows. This way your picking work is more evenly distributed among your pickers.
Planning Your Slotting Strategy
There aren’t any quick answers. The contents of your warehouse are not static so don’t expect that your slotting activities can remain forever unchanged. Plan on continually tweaking your slotting strategy in response to unforeseen events or deviations from plan. Ideally, your slotting strategy would change in sync with your historical or forecasted product usage information, and things would remain fairly smooth. Unfortunately, though, the deviations from plan may be bigger than expected. Demand for one of your products might take off…or plummet far below your sales projections as demand for it never materializes. Beyond sales projections, you should also include criteria such as historical and forecast demand, seasonality, marketing and advertising programs in your slotting planning.
Make sure you identify slow moving items. Remove them from prime warehouse locations. Keep the better locations for faster moving items. Ideally, you would have downtime to decide which slower moving items you want to move and move them before you hit your peak. If you’re an online retailer, for example don’t wait until Thanksgiving to reslot.
An important consideration is how much effort will be required to maintain your new slotting plan. If you have a Warehouse Management System, will it support the slotting program you want to implement? How much does your product line change during the year? Do you typically carry over 70-80 percent of the items from year to year? Do you have the proper sizing of pick locations? You might even have to invest in new racking, shelving and wire decking.
Moving Forward
If you didn’t know it already, improving slotting practices is a complicated process. There's a lot more to improving slotting than simply shortening the pick path. Hopefully, you’ve seen the benefits and understand that it’s worth making the effort. You might be surprised to learn that some companies create new slotting plans every day. For them the ROI is worth it. Regular slotting analysis (even if it is much less frequent than daily) ensures that fast moving items in inventory will be regularly moved into the fast turnover area slots and that slow movers will be removed.
Our Best Practice series is designed to set you on the path to inventory and warehouse management excellence. To supplement our chapters, you should continue reading as widely as possible on inventory and warehouse management subjects. An excellent slotting resource is World Class Warehousing and Material Handling by Dr. E. Frazelle, published September 18, 2001, ISBN-10: 0071376003 and ISBN-13: 978-0071376006.
If you don’t have time to read Frazelle’s book, here is how to get started on your own:
- Find out the level of sophistication your warehouse management system will support
- Make a task list of everything you need to do to optimize your inventory
- Calculate the expected ROI for making each change.
- Prioritize this list
- Start at the top with the task promising the greatest return. That’s it
- Start tomorrow
Kevin Collins,
Director, Product Management
SmartTurn, Inc.
1000 Broadway
Oakland, CA 94607
USA
Sales: 1-888-667-4758
Tel: 1-510-267-5150
Fax: 1-510-208-5754
About SmartTurn
SmartTurn™ Inventory and Warehouse Management System is the first true on-demand warehouse management system to provide enterprise class functionality at a fraction of the cost of traditional license and install software. Designed for quick implentation, ease-of-use, real-time inventory accuracy and warehoues performance, the SmartTurn system provides visibility on every item across single or multiple warehouses. Founded on the premise that software should be smart, simple and safe, SmartTurn’s customers span the value chain of most industries to include manufacturers, wholesalers as well as 3PLs. SmartTurn is privately held and backed by leading investors, NEA and Emergence Capital Partners. Website www.smartturn.com
About the Author
Mr. Kevin Collins joins SmartTurn having been in the warehousing and distribution business for over 15 years, where he fulfilled leadership roles for a military distribution company (www.cpfd.com), a third party logistics service provider and distribution center (www.weberdistribution.com), a heating, ventilation and air conditioning supplier/manufacturer (www.calcooling.com), and two other retail service warehouses (Big Bear Distribution and Fleming Foods) where he also partook in two acquisitions. Mr. Collins has spent his entire career learning the art of warehousing and logistics, and has been in every conceivable role within a warehouse; from picking to distribution systems management and everything in between. During that span, Mr. Collins has also had the privilege of working directly with application developers learning about software from inventory and procurement to transportation and warehouse management systems. Mr. Collins brings to Smartturn an invaluable background and information about processes, software and logistics, and the intricate balances between them.
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Recent Blog Entries by Kevin Collins
- Inventory and Warehouse Management Best Practices: Slotting for Dollars (06-08-2008)
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