by Consultant, Trey Taylor

This post is part two of the Upgrade Your DC series. If you missed the first post where we covered scanning, you can access it here

In the distribution and logistics space, there are countless ways for businesses to achieve their goals. Some solutions can include highly automated systems that challenge even the most astute industry professional while other solutions are simpler, requiring a “nuts and bolts” approach to meet organizational needs. Whatever the design, the most important objective is getting items to those who order them as quickly and efficiently as possible. As a cornerstone of the industry, slotting options seem endless with many different solutions offering individual advantages based upon one’s business needs, but what is the correct configuration?  

Let’s start by describing slotting. Slotting is the strategic placement of products within a warehouse facility in order to maximize use of available space and reduce labor. When considering your company’s slotting strategy, what drives the decision of what goes where?

There is a science behind the placement of products throughout a warehouse. When developing your slotting strategy, you should take into account external impacts on warehouse costing such as seasonality, promotional or marketing events and consumer demand, while also considering internal impacts to productivity like foot travel, proximity of related products and overall unit dimensions. A wise man once told to me “slotting is a very broad topic, an entire book could be written to cover the many complexities,” and I agree. With this in mind, let’s cover a few fundamental slotting strategies that can be used to establish a roadmap toward improved slotting efficiencies.

1. Activity and Velocity

When considering activity and velocity of a particular SKU, we are referring to the volume shipped per period, number of orders for which the product is picked or the amount of cubic feet of product sold within a given time. The importance of placing fast-moving SKUs in prime locations allows for reduced travel and pick times for highly sought-after items. By reducing travel and pick times to and from high moving units, warehouse associates can better manage their time and facility leadership can benefit from higher utilization of their staff.

For instance, let’s say that there is a particular item that is seeing heavy sales and is subsequently being picked by warehouse staff regularly throughout their shift. Based upon the activity for this particular SKU, it would make sense to slot these items in areas that are prime locations—meaning easy to reach and identify, requires little travel to and from staging areas and is close to outbound areas. This approach could prevent picking and replenishment teams from falling prey to hidden costs such as excessive travel and help leadership with their decision making around staffing relative to customer service targets.

2. Storage and Pick Types 

When items are going to be picked, what does the pick entail or how is it going to be picked? For example, are you pulling full pallets, single SKU pallets, mixed SKU pallets, full cases, partial cases or singles units? Each of these scenarios will require unique handling times as well as individual attention to the surrounding area to effectively support the work being performed as it is unlikely that all your units are similar in size and share the same pick density.

Dimensions of a unit will also drive the direction of slotting configurations. Smaller units that can fit in the palm of your hand don’t require as large of a footprint as an oversized item that might need a full pallet position to hold, handle and process. Conversely, smaller slots hold fewer units than larger slots of similarly sized units requiring more frequent replenishment of the location and the introduction of an out-of-stock scenario.

3. Sorting by Product Similarity

Grouping similar products in an area helps order fillers pick units that may be used or ordered together. This approach also allows associates to gather their pick tickets—generally arranged by product category—and cover a defined area instead of working the entirety of a picking area.

For example, let’s imagine a recreational sports retailer who ships athletic shoe orders directly to the end user. This retailer also sells a pair of socks with the majority of their overall footwear sales. Taking into consideration the likelihood of selling shoes and socks in tandem, the case for slotting these items in close proximity to each other is justified to maximize the productivity of the staff by allowing them to reduce travel time spent between locations per unit(s) fulfilled.    

Now, let’s apply our slotting strategies through a few “real world” approaches to these points.

Speed Cells

Speed cells are a simple, yet effective, tool for maximizing storage density, reducing slot footprints and providing other related improvements in labor utilization. By utilizing existing rack or shelving, speed cells provide more pick facings and greater SKU density by storing products in multiple columns per bay subdivided into cells. In the event that a large number of slow moving units needs to be brought into a facility, speed cells allow a DC to create many additional SKU addresses for low volume units with little impact to prime slotting capacity.

Slotting Optimization

Slotting optimization allows a facility to become more dynamic with their slotting strategy. By using advanced systems or manual processes we can realize the benefits of our investment by remaining proactive relative to consumer demand and seasonal impacts. The benefits that can be measured to provide meaningful improvements could include: increased pick accuracy by grouping similarly ordered products to limit associate confusion which is a primary contributor to accuracy issues, reduced foot travel, replenishment efficiency and improved workload balancing among the warehouse team.

Labor Management Systems

Labor management systems (LMS) have proven to be an effective tool for managing the cost of labor, a primary expense for many distribution centers. However, how does this correlate to slotting strategy? By managing the relationship between LMS data and our slotting strategy we now have the ability to analyze LMS metrics suggesting when slotting might be needed and LMS functions testing the cost of slotting recommendations. Additionally, if engineered labor standards have been developed to complement your LMS, this allows site engineers to determine whether or not labor savings will be attained through a new slotting plan by measuring impacts to elemental times established during initial standard development.  

With these tips in mind, we hope you’ll go back to your distribution center and evaluate which aspects of your slotting can be reworked to build an even stronger foundation for your operations. And if you’re considering a Labor Management System as a part of those changes, check out the next post in the series where we outline everything you need to know to make sure you select the right LMS for your operation.