ONLINE EXCLUSIVE: 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 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?

Pamela Davey is a senior consultant at Sedlak Management Consultants, headquartered in Richfield, Ohio. Sedlak provides facility and software planning, design services, and implementation services for distribution operations in the manufacturing/wholesale, retail, and direct to consumer markets. She may be contacted at pdavey@jasedlak.com

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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