You’ve been tasked with slotting your inventory. Your boss just signed you up for a marathon, and like it or not you’ve got to run it. All smart marathoners start with a training plan – several short runs during the week and a long run on the weekend - increasing their mileage gradually each week. They drink more water, increase their fruit and veggies, invest in nipple tape (seriously worth every penny) and commit to the hard work that lies ahead. And in the end, after some blood, sweat and tears they cross the finish line – victorious!
Same goes for slotting your inventory– you need a plan. Sure, some people try to get right off the couch and run the marathon – but most of them end up at mile 21 on the side of the road with a strained hammy. Getting your inventory into shape is a commitment that will require dedication, planning, hard work and maybe some blood, sweat and tears, we’ll see.
Warehouse Slotting Strategies… What’s the Point?
Slotting inventory seeks to achieve maximum efficiency and storage capacity. Common slotting goals include:
- Improve Space Utilization
- Minimize Handling Of Parts
- Increase Productivity
- Balance Workflow
- Improve Inventory & Accuracy
- Enhance Worker Ergonomics
- Minimize Travel Time To Product
- Reduce Search Time
Warehouse Slotting Optimization
Warehouse slotting optimization, however, is widely recognized as a “thankless job.” That’s because warehouse slotting requires inventory data. Lots of data—at least a full year’s worth, including any seasonality and projected inventory growth. For companies with a warehouse management system (WMS), inventory slotting software or functionality is often included or can be added-on as an additional module. For companies without a WMS, a standalone warehouse slotting software application can be purchased, or, in certain cases, a spreadsheet program like Excel may be all that’s needed. Alternatively, a third-party consultant can be engaged to perform the slotting analysis and make slotting optimization recommendations.
Collected inventory data of a slotting analysis should encompass:
- SKU picking methodology
- Number of pallets, cartons and broken case eaches of each SKU
- SKU hits (the number of times a product is picked)
- SKU numbers and descriptions
- Pick quantities (number of SKUs picked per order)
- SKUs that are frequently picked together
- SKU sizes and weights
- Total SKU quantity, reorder point and reorder quantity
Slotting Best Practice #1: Slot Inventory by SKU Velocity
Armed with inventory data, it’s time to create a warehouse slotting strategy. First, slot each SKU in the proper equipment based on SKU velocity. This means fast and medium movers should be located in the most accessible areas, while slow and very slow movers should be stored in areas that are less accessible, or farther away – common sense, right? Read more about that here.
Slotting Best Practice #2: Slot SKUs by Zone or Technology
Then, determine where within the storage equipment each SKU should be placed. This can get a little trickier. Certain constraints may factor into the slotting strategy. This is where the information about SKU size and weight particularly comes into play, for example, if the product’s dimensions or volume make it impossible to store it in the ideal equipment. Also consider how the product is accessed—by hand, ladder, fork truck or scissor lift, for example)—and whether there are opportunities to group SKUs that are commonly picked together in close physical proximity, known as kitting, read more about kitting here.
For medium movers, a general rule of thumb is to maintain a 20 day supply. Less than a 20 day supply requires excessive time for replenishment. More than a 20 day indicates the space could be better utilized for other SKUs.
The most difficult part of warehouse slotting optimization is that it’s a never ending process. To have a truly optimized and highly functioning order fulfillment strategy – inventory slotting has to be ongoing. A continuous process of gathering data, analyzing data, making inventory changes and repeat.
So settle in – Warehouse Slotting is a Journey, Not a Destination.
Slotting Case Study
In real life, Kubota’s parts distribution center in Ontario, Canada implemented a zone picking strategy with six horizontal carousels, four Shuttle VLMs and racking to double productivity and recover 83% floor space.