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Playing the Slots to Win!

Playing the ‘slots’ can be frustrating, unless you are very lucky.  But, more than likely you’ll be doing the same thing over and over again, and coming-up with a losing combination.  This might be a great time for some people, but it would drive me crazy.  However, I do find warehouse slotting fun, while it can also be frustrating and a challenging game to win.  But, unlike playing the ‘slots’, warehouse slotting is less a game of chance and more about defining your winning slot combination.  Identifying this combination results in increased picker productivity, faster order cycle times, manageable replenishment volumes, less stock-outs, fewer pick errors, reduced product damage, improved space utilization, and fewer employee injuries.

The most common approach to product slotting is velocity-based, which is locating the fastest movers in pick locations that reduce travel and provide good ergonomics.   But, complicating this strategy is the need to consider the pick unit of measure (i.e. pieces, inner packs, full cases and pallet), item weight and size, order commonality, similar looking items, store department slotting, hazardous factors, and more.

No fear, there is a winning slotting combination for your operation, and if you have the right mix of storage equipment, the only cost is labor to execute the moves.  And, if the right storage equipment is not available, there are ways to reconfigure location types/sizes with minimal capital investment.  If you are fortunate to be starting-up a new operation, then developing your initial slot plan is crucial to an efficient operation!

Getting Started

To get started, it is important to discuss your overall slotting strategy.  Do you need to provide store department totes (units in a tote are for a specific store department), because this could limit warehouse slot savings?  You can slot by velocity within each department pick zone, but not for the overall product velocity profile.  Do you have the ability to batch pick multi-line orders into totes, or are you forced to only use discrete order picking?  If you are discrete picking, then order commonality (items that are frequently ordered together) is an important factor.  If you batch pick then pure velocity-based slotting may be the right strategy.  These are just a few examples of factor that impact the objectives of the slotting strategy.  And, modeling multiple slot scenarios informs management of the costs and benefits of the various options.

Also, in most businesses, the customer can order in various units of measure – pieces, inner packs, full case and full pallets.  An important initial step with developing the slot strategy is to define the unit of measure(s) ordered for each product.  Based on these results and your WMS capabilities, separate pick areas may be set-up for the different unit of measures – i.e. pick pallets from reserve, forward pick areas for full cases and inner pack / piece picking.

Product Characteristics

Item profiling is required to select the right location types, and is driven by the product unit of measure and dimensions.  The product dimensions (length, width, height) are multiplied by the items daily unit volume to determine the pick media type (shelving, carton flow, pallet flow, etc…) and location size.  The resulting daily item cubic foot velocity is applied to the target days-on-hand (DOH) in the pick location to finalize the selection of the pick equipment.  A common target for the minimum days on hand in the pick location is five (5) to ten (10) days.

Other product characteristics influencing slotting include stackability and weight.  The product stackability and weight should be factored to reduce damage and support an efficient pallet build.  This is especially true when picking full cases directly onto a pallet. The product weight is also a factor in terms of the pick level assignment to prevent lifting injuries.

Line Velocity and Order Commonality

Product line velocity is a key factor in determining the optimum slotting assignment.  Line velocity is defined by the number of times an item is ordered, which relates to the number of trips taken to a pick location.  Products visited more often should be located on the most ergonomic pick level (i.e. golden zone) and positioned to reduce travel during order picking.  However, balancing volumes across aisles and/or bays is required to reduce operator, product, and conveyor / divert congestion.  In addition, considering slotting items in close proximity to each other when they are frequently ordered together can reduce order cycle times when discrete order picking.

Initial and Slot Maintenance

While slotting can be done with manual spreadsheets, the use of advanced slotting software only improves your chances of developing an effective slotting strategy.  This is especially true if you have a high number of SKUs, many product types, seasonal business, high volumes, and unique product characteristics.  When using a slotting program, it is faster and easier to re-run and maintain your slotting effectiveness through seasonal peaks.  A quality slotting program will prioritize moves and show the benefits (and costs) of making moves.  Slotting performance should be reviewed at least monthly for the majority of companies.  The top indicators for slotting maintenance include declining pick productivity, increase in location stock-outs, high emergency replenishments, heavy reliance on demand-based replenishments, and pick zone congestion.

And, Finally

There are many factors to consider when developing and executing a product slotting strategy.  But, nothing is more important than having accurate product dimensions and weight.  If this information is lacking you should start collecting data within the receiving process.  Any quality slotting tool requires item dimensional and weight data to develop and maintain a slotting strategy.

The slotting combination to unleash your fulfillment performance depends on the evaluation of the following factors:

  • Balancing pick and replenishment labor
  • Right-sizing the forward pick square footage
  • Defining optimum pick location days of supply
  • Enabling target days of supply with right pick equipment types
  • Maximizing location cube utilization
  • Minimizing replenishment frequencies
  • Placing fastest movers and heavier items in the golden zone
  • Reducing travel distances to pick orders
  • Balancing volume across aisles/bays to reduce congestion
  • Picking slowest movers from reserve storage (using order pickers)
  • Slotting products based on weight and stackability to reduce damage (for pallet building)
  • Factoring order commonality to reduce travel during discrete order picking
  • Separating items that look the same (reducing pick errors)
  • Developing effective pick zones (category, department, customer, temp, etc.)

Start your journey today towards Slotting Excellence!
—Norm Saenz, St. Onge Company

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