Slotting for Warehouse Efficiency

What is slotting?

Slotting is the method of identifying what product lines are ideally placed where within the warehouse. Essentially, it’s all about ensuring that fast-moving products are located in the most accessible areas, and that slow-moving ones are placed more out of the way. Having the highly accessed items in the best locations speeds up picking, putaway and replenishment.

Slotting considerations and calculations

The strategy for identifying the best locations is often based on the 80/20 rule. This would deem in a warehouse slotting situation that 80% of sales volume comes from 20% of SKUs, and therefore that those 20% of SKUs should be optimally placed for picking.

There are more complicated calculations too. Often, the value of a pick face run can be calculated, and compared with others. Then, adjustments can be made until the optimal placing is determined. To ascertain this value, the cube per order index (COI) of each SKU is calculated, and then the SKUs are ranked.

According to the authors of The Handbook of Logistics and Distribution Management, COI is calculated as “the ratio of an SKU’s storage space requirement at the pick slot to the frequency of pick accessions”. This then pinpoints the most valuable locations next to the start or finish of a pick run and these locations should be allocated to the SKUs that are most often picked and which take up the least space.

For example:

COI for SKU1:- 1 cubic metre of pick slot space : 100 accessions a day = 0.01

COI for SKU2:- 1 cubic metre of pick slot space : 20 accessions a day = 0.05

SKU1 has a lower COI, showing that it utilises the space better than SKU2. So, SKU1 should be allocated closer to the start or end point of a pick run.

This optimal area of picking can be further enhanced by placing the products with the best COI at optimal heights – for example at waist height for hand-picked items. Warehouse managers do need to be careful though that this optimal zone does not become too congested with operatives, otherwise the optimisation process will have been in vain.

Improving slotting

Slotting is rarely prioritised in a warehouse environment. Instead, the emphasis is more short-sighted and is on getting orders out the door. Warehouse managers that look at improving their slotting by carefully assessing and planning it will reap the benefits of productivity and efficiency in the longer term.

Balancing picking and replenishment – rather than favouring picking – is what makes the difference. It’s an exercise that takes time and effort, and so is often overlooked or expressly moved down the to do list as seemingly more urgent tasks take priority.

Utilising sales data as well as having accurate forecasting is vital. The optimum pick locations can’t be guessed with a finger in the air method. A deliberate approach to planning is needed, and slotting should be reviewed regularly. HighJump’s Jon Kuerschner recommends looking at it quarterly and also undertaking financial modelling that will allow a distributor to compare different slotting layouts according to cost and efficiency.

Slotting In HighJump Advantage

HighJump Advantage Slotting gives distributors this modelling and analysis needed for them to optimise the storage of goods in their warehouse. SKU placement can be based on a number of criteria, including velocity, fit, zones, and bulk pick.

The HighJump slotting application requires only minimal data and the user can select their own slotting strategy. The software integrates seamlessly with other HighJump WMS solutions.

The system is easy to set up, maintain and use. It’s a powerful solution that generates continuous ROI for a business as it optimises and reoptimises slotting, bringing better productivity and overall efficiency.

The application can help achieve strategic operational goals, facilitating a rapid response to business change and easily integrating into a distributor’s overall business plan.

For more information, please read the whitepaper.