Successful Warehouse Slotting

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Increased ROI using the right tools, strategy and management plan

Warehouse slotting, in simple terms, is the assignment of the proper item to the proper location, depending on slotting

criteria. To slot the right item to the right location may involve hundreds of permutations among the item, its attributes and

location storage medium types. The features and benets of a successful warehouse slotting plan are discussed here.

Slotting a very complex modeling exercise that drives

warehouse eciencies, including labor, space, and cycle times.

The objective of a slotting plan is to fully realize attainable cost

and space saving.

Why Slot a Warehouse?

The primary reason to engage in a warehouse slotting

project is cost savings in the form of labor and space. Slotting

represents the ne-tuning of the warehouse. If the warehouse

is a new design, slotting is an integral part of the engineered

design and implementation. Slot types and sizes need to

be calculated for rack conguration and items need to be

assigned their new locations based on a slotting strategy.

If the warehouse has been in operation for several years, the

slotting is probably out of date, as SKU and order proles

change through the course of the product life cycle and both

the rack conguration and the item slotting strategy become

outdated. This gradually causes ineciency, and eciency

costs money — more and more over time.

Essential Elements of a Slotting Plan

• Strategy

• Tools and Analysis

• Criteria

• Ranking

• Implementation

• Re-slotting

These elements will now be discussed in greater detail.

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Successful Warehouse Slotting

Strategy

The rst element of success in a slotting

project is strategy — a slotting strategy

is the “high-level roadmap” to a major or

minor slotting project. The strategy keeps

the project focused and on track. Slotting

is very complex and somewhat dicult to

implement. A high-level plan at the very

start of the project will greatly improve the

attainable success level of the project and

should include some of the following details:

• Project scope and objectives

• Short- and long-range facility planning

• Assumptions

• Timeline

• Project organization

Of particular importance at this point is to

answer a few strategic questions:

• Is there a building expansion planned in

the one-to three-year timeframe?

• Is signicant rack reconguration an

option?

• When can the slotting plan

implementation start?

Answers to these questions and others

relevant to the project will help guide the

nal slotting plan.

Tools and Analysis

Several tools and analysis are needed to perform warehouse slotting.

Material Flow Documentation — ow charts and process documentation that describe the

ow of the product through the warehouse, including picking, putaway, and replenishment

methods.

Material Flow Data — data analyses that describes SKU dimensions, unit and cube

throughput, velocity proles, order proles and order commonality, and all peculiar item data

as needed. enVista utilizes the Material Flow Analysis (MFA) Modeling Tool to produce most of

the required analyses.

Warehouse Conguration — includes facility CAD layouts, rack elevation layouts, and

quantities of existing slot types.

Modeling Tools — essential in order to build the material ow analysis described above

and to produce the nal slotting plan from the slotting criteria listed below. Modeling tools

may be a simple combination of Access database and advanced Excel spreadsheets (or

equivalent), or may take on a more sophisticated form such as a slotting module within a

WMS or a stand-alone slotting program.

Slotting Criteria

Slotting criteria includes slot type, ABC velocity rating, and additional criteria (identied

below). ABC velocity is the most commonly used slotting criteria; however, it is very short-

sighted to not analyze and recommend slot type based on cube throughput analysis.

Additional criteria are peculiar variables applicable to a particular operation or product mix.

Slot Type

Slot type denes the type and dimensions of

a storage medium. Typical slot types include

shelving, decked rack, case ow, pallet rack,

and pallet ow of varying dimensions. Slot

type is critical to slotting for space, equipment,

replenishment and picking considerations.

In a primary pick model, the number of

replenishments is a function of item cube,

throughput, and storage cube size. An

undersized pick face will cause excessive

replenishment, resulting in higher operating

costs. An oversized pick face is a waste of

space and the resulting operating cost of the

space. An oversized pick face, in

most cases, will also introduce

picking ineciencies in the form

of additional travel time. A balance

should be sought between

replenishment and picking labor

cost, space available and cost.

Additionally, slot type is a factor in

the pick rate. The overall cumulative

slot type prole is more or less

relative toward a higher density

or lower density pick zone. A high-density

pick zone is more ecient for picking, but will

hold less product. A low density pick zone will

require greater travel distance, and therefore,

is less ecient for picking, but will hold more

product. This is the third variable to factor into

the equation.

To determine slot type, use the output from

the material ow analysis and warehouse

conguration information, both current and

proposed, to determine a slot type by item.

This then becomes the primary slotting criteria.

ABC Velocity Rating

The ABC velocity rating is output from the

material ow analysis. The output represents an

ABC rating for each SKU with “A” representing

fast movers and “C” representing slow movers

in terms of “hits” or “lines per day.”

Velocity slotting primarily reduces travel time.

The objective is to minimize the pick path or

travel distance required to pick an order, a

cluster of orders, or a batch. This is done by

grouping product by ABC rating, with an “A”

representing the fastest moving items in the

warehouse, and “C” the slowest. Additional

ratings are usually added for very slow “D”

items. ABC slotting is combined with slot type

and order commonality (discussed below) to

balance labor and space costs and produce the

optimal slot plan.

Additional Criteria

• Order commonality is a group of items likely

to ship together on the same order. This

group is then slotted together or close by

within a specic slotting zone.

• Base product applies to picking-to-pallet.

In a pick-to-pallet using an order picker,

pallet jack or lift truck, the challenge is to

build the pallet while picking and avoid

the double handling of pallet rebuild and/

or consolidation at the shipping dock. In

this slotting criteria, the base product that

is the heaviest and/or bulkiest is placed rst

within the pick path. The slotting may have

intermediate zones, but, in any case, the

lighter and/or smaller product ends up on

the top of the pallet. If base is a criterion, it is

usually the primary slotting criterion and all

others, including velocity, are subordinate.

• Source slotting or slotting by vendor is

sometimes used to help minimize putaway

labor by grouping items together from the

same vendor. This applies more to mixed-

pallet receiving.

• Customer slotting refers to grouping items

together that are more or less customer

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Successful Warehouse Slotting

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Successful Warehouse Slotting

specic. These may be picked together in

close proximity to ll a signicant portion of

the order.

• Slotting by product type strives to place

similar product together, primarily as a way

to organize the warehouse — especially

one containing many SKUs. This is closely

related to source slotting, but considers many

sources for a product type or group.

• Special storage requirements may include

temperature control and environmental

controls, hazardous material controls, oversized

items, special packaging requirements, etc.

These criteria must be taken separately and

handled as well as possible.

Ranking

Criteria ranking is the primary slotting criterion

and will take on the most signicance. The

second and third slotting criteria will also

be important. However, after that, slotting

variables become exceptions, because more

than two or three slotting variables cannot be

incorporated into a single slotting equation.

Additional variables must be removed from

the equation and handled as exceptions. So

deciding on the ranking of the variables is of

highest importance to realize the most from

the exercise.

Implementation

The strategy, tools and criteria together

facilitate the output of a slotting plan. The nal

section to a slotting plan is the implementation

plan. A well-designed slotting plan is usually

not easily implemented and bears a risk of

sitting on the shelf until it is out of date. A well-

crafted implementation plan greatly improves

the odds of success — that the slotting plan

will be fully implemented.

Reslotting

Finally, a slotting plan lasts only so long. As new

product is introduced, SKU proles change and

order proles change until eciencies in labor

and space start to erode. Reslotting on a timely

basis is critical. Once the initial slotting plan is

implemented, reslotting is much easier as it

is more of a tweak and requires less change.

However, if reslotting is not done periodically,

not only does the operation suer in terms

of lost eciencies, but when the reslotting is

done, it will be a major exercise.

A critical tool in reslotting is a labor

management system (LMS). A LMS that is

properly integrated to the slotting system will

provide information needed to determine if

components of the slot plan are justied in

terms of the labor performance. For example,

a slot plan output from the slotting system

may recommend certain moves, based on

the slotting rules, but are the moves worth

the eort? Since most of the time used in

picking activities is spent in travel, associate

performance can be increased by reducing

this travel distance by reslotting. These days an

LMS can capture associated costs because of

the distance between locations, so a reslot can

be proved to lower labor costs and increase

associate productivity by simulating this new

“map.” An LMS will provide additional data

in terms of the resulting savings from the

recommended moves as well.

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Successful Warehouse Slotting

Summary

Success occurs when a slotting plan is

implemented and when benets are being

realized. Success rst indicates that the slotting

plan was implemented. Secondly, that the

benets of slotting are being achieved. Benets

are summarized as follows:

• Space maximization. Utilizing the

recommended slot sizes helps to maximize

the warehouse cube, thereby cutting the

square footage requirements.

• Picking eciencies. ABC Velocity slotting, as

well as order commonality slotting, reduces

travel time. Slot size prole also contributes to

picking eciencies in terms of high-density

versus low-density pick paths.

• Reduced replenishment. Replenishment

to the primary pick location is usually labor

intensive in less than full-pallet quantities.

A balance must be attained between

replenishment rate, which is a labor cost, and

cube size, which is a space and equipment

cost, and usually aects labor (pick rate) as well.

• Putaway eciencies. Putaway from

receiving should be considered as part of

the labor equation. However, it is generally

a secondary consideration to picking and

replenishment.

Return on investment (ROI) depends on the

type of slotting being performed, such as a

new warehouse versus an existing warehouse.

ROI can, however, be signicant, especially

when the right slotting tools, strategy, and

management plan are utilized.

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This article is authored by Mike Patterson, a Project Manager at enVista. For more information,