Lost & Found
Has the productivity in your distribution center been
languishing or even declining? Have you tried worker
incentives, mechanization/automation, and new procedures with
limited success? If so, it may be time to investigate slotting.
Forget the old saw that only huge DCs can benefit from or
afford a slotting system. Wider availability of software has
brought this optimization process within the reach of even
small facilities.
Inventory slotting or profiling is the process of identifying the most
efficient placement for each item in a distribution center. Since each
warehouse is different, proper slotting depends on a facility’s unique
product, movement, and storage characteristics. An optimal profile allows
workers to pick items more quickly and accurately and reduces the risk of
injuries.
In smaller warehouses, slotting is often done manually or using
standard computer spreadsheet or database programs. Specifically-designed
slotting software is a valuable tool for operations with a large number of
SKUs (stock-keeping units) as well as for businesses where the items
inventoried change frequently, such as in catalog distribution
centers.
Speed Up
There are several ways to increase picking productivity with slotting.
Placing fast-moving items close to conveyors and aisles minimizes picker
travel time. Using easier-to-pick locations for high-activity items, such
as the center levels of carton flow rack, also facilitates quicker
picking. Items that are often sold together should be stored together to
reduce travel. On the other hand, in warehouses where miss-picks are a
problem, you can separate similar items to reduce the chance of picking
errors.
Heavy items should be placed on the "waist to shoulders" shelves to
minimize the chance of injury to pickers and stockers. In warehouses where
there is a mix of heavy items and crushable ones, the heavy items should
be placed at the beginning of the pick path so that they are loaded in the
bottom of the box or tote.
When distribution centers provide several picking areas for the same
type of item, such as multiple pick modules, they should balance the
workload between the areas. Concentrating too much activity in one zone
can result in congestion and make order consolidation more difficult,
because some portions of the order may be processed significantly faster
than others.
Items may also be grouped within the warehouse based on vendor or
product similarities. Vendor groupings can simplify merchandise putaway.
Family groups may also be established to cluster items that are often sold
together or items with specific storage or handling requirements.
Retailers may use family groups to make sure that their stores receive the
merchandise organized logically for them, such as separating men’s and
women’s clothing.
Careful slotting can also reduce material handling work by placing
items in properly sized locations. Items received in case quantities
should normally be assigned to locations that fit the full case to
minimize stocking effort. The location should hold a sufficient quantity
of inventory to meet the restocking goals for the warehouse. Another
consideration, especially when picking full cases, is to organize items by
height to enable better and more efficient pallet building.
Just the Facts
The first step in any inventory slotting exercise is gathering the
necessary information about the items, locations in the warehouse and
product sales. Item dimensional data may already be stored in the WMS
(warehouse management system) or ERP (enterprise resource planning)
system, or items and cases may need to be physically measured. The
following information is typically needed for each SKU:
- Item length, width, height, and weight
- Active picking location(s) for the item
- Case quantity and dimensions (length, width, height, and weight) for
items stored by the case
- Pallet quantity (or cases/tier and tiers/pallet) for items stored by
the pallet
- Vendor if items are to be stored in vendor groupings
- Family group if items are to be stored by product groupings
- Special storage conditions, if applicable (flammable, refrigeration,
etc.)
- Maximum stacking height or crushability factor, if applicable
- Items that are often sold together, if applicable. They can be
identified by analysis of the order files and/or conversations with the
pickers
- Items that are similar and should not be stored nearby, if
applicable
Each picking location in the warehouse needs to be defined. The
information typically required for each slot is its:
- Location number
- Usable size (length, width, height)
- Weight capacity
- Proximity to material handling equipment and shipping
- Position within the pick path
- Types of items eligible to be stored here (hazard code, vendor or
family group)
Item Movement
Item movement can be captured in terms of the number of times
each item was sold (hits), the quantity sold, sales forecast,
and the on hand quantity. Hits and quantity sold are most
typically used because high hit items should be placed in
the most desirable locations and the optimal size location
can be established using the quantity sold and the dimensions.
If items change frequently and do not have any historical
movement figures, sales forecasts may be used instead of history.
On-hand quantity data is important for warehouses that choose
to size locations in slow pick areas to a typical on hand
inventory level, rather than a sales level.
Slotting Rules
Once the necessary data has been collected, the slotting rules must be
established by setting up constraints (rules which cannot be broken) and
objectives (goals). Constraints include weight limits, hazardous material
areas and vendor/family group areas. Objectives define factors like the
desired stocking level, where faster moving items are placed, and how
activity will be balanced. Examples of some typical rules include:
- For non-conveyables stored on pallets, put the fast moving items
close to the shipping dock and on the lower pallet rack levels. Store
slower moving items on higher levels and further away from the dock.
- In the case pick area, locate taller cases and heavier cases at the
beginning of the pick path. Put faster moving cases on floor/lower
levels.
- In the horizontal carousels, balance the activity among carousels in
pod. Spread faster moving items among the carousels and put them on the
center shelves.
- Place fast-moving items into carton flow rack, with the very fastest
on the center levels. Balance the workload among the flow rack units.
- Put slower-moving items into shelving, with the faster moving ones
placed closer to the take-away conveyor. Locate heavier items on the
center levels.
Keep it proper
Several WMS packages incorporate slotting software, such as the
offerings from Manhattan Associates (SlotInfo), EXE Technologies (EXE
Optimize), McHugh Software (DLx Slotting), Intek (Warehouse Librarian),
and OMI International (Cairo). Some of these products can be purchased
separately from the WMS. In an integrated system, the WMS and the
profiling software can work together to automatically generate tasks for
material handlers to move items to new locations when sales or forecast
changes are detected. Several stand-alone profiling packages are also
available, including FlowTrak (Streamsoft), Opti-Slot (Descartes), and
Easy Profiler (Woodlock Software).
Product placement must be regularly reviewed and maintained. The amount
of change in SKUs and their movement is the primary factor in determining
the optimal frequency for updating placement, but this must be balanced
against the material handling effort required to relocate the items. Below
are two possible slotting strategies for different types of
facilities.
- A catalog company, with very dynamic inventory, may chose to review
all products just before the release of a new catalogue. Initial
placement would be based on projected sales volumes. Between catalog
drops they would review the slotting on a weekly basis and move any
items that are very badly placed because the actual sales did not match
the projections.
- A hard goods distributor, with relatively static inventory, might
opt to re-profile all items on a quarterly basis. New items would be
slotted based either on projections or sales of similar items.
Results
Proper slotting does take time to establish, and regular maintenance is
required to keep items positioned properly. But slotting software can ease
the burden of keeping items in proper locations.
End results? Slotting items properly increases picking productivity and
makes order selection easier, safer, and more accurate. Customer
satisfaction is enhanced when shipments are organized the way they want
them. What business, large or small, wouldn't want to see that
happen?
Case Study
Plow & Hearth, a national catalog distributor of high-quality,
country-theme home furnishings and accessories, recently implemented
a slotting system in its distribution center. In 2000, they
mailed more than 55 million catalogs, which resulted in sales
exceeding $100 million. They will grow to 4 different catalogs
and $150 million in sales this year. Their 300,000-sq.-ft.
distribution center contains pallet rack for storage of non-conveyables
and reserve (overstock), decked rack for full-case picking/replenishment,
and two pick modules. The pick modules contain carton flow
rack, decked pallet rack, and shelving.
Plow & Hearth uses PkMS, Manhattan Associates’ WMS, and needed a
tool to balance the work within and between the two pick modules and to
improve overall picking productivity. They selected SlotInfo, Manhattan’s
profiling product, as their profiling tool, and Sedlak Management
Consultants to guide them through the implementation process.
Several steps were needed to prepare for the new slotting system.
Concurrently, the SlotInfo software was loaded with the warehouse map
information, item data, and initial item placement.
- Items that did not have size information were measured
- Case measurements were gathered for items received or sold by the
case
- The interface between the order entry system and PkMS required
tuning to be sure it was functioning properly
- Standard opening sizes were established in each warehouse area and
storage media type
Next, Plow & Hearth, Manhattan Associates, and Sedlak Management
Consultants worked together to establish the slotting constraints and
objectives. The rules they adopted included:
- Storing a one-week supply of inventory in each active location
- Placing the faster moving items on the center levels of the flow
rack
- Putting the faster moving items closer to the conveyor in the pick
module shelving and decked rack
- Balancing the activity among the decked rack aisles and carton flow
units
- Establishing separate areas for items with special handling
requirements, such as non-conveyables, chaise lounge cushions, and
shoes
Trial re-slotting runs were made to test the rules and refine them so
they would yield the desired results. The interfaces among the
forecasting, ERP, warehouse management, and slotting systems were also
tested and verified. Finally, Plow & Hearth was ready to use the
profiling software. Their strategy was to first refine each storage media
type in the pick modules, then add the workload balancing rule to even out
the activity between the two modules. Moving items within each pick module
first would allow them to get accustomed to using the software while
making moves that were less time and resource intensive.
Plow & Hearth opted to make the profile changes gradually during
normal operations, rather than interrupting their fulfillment activities
to move hundreds of items. They will review item placement on a weekly
basis and move items each night to relocate the most badly misplaced SKUs.
Although it will take several months to achieve the optimal profile,
picking productivity will gradually increase with each set of
moves.
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