SQUARE PEGS

Apr 01, 2002 10:30 PM  By

This is not an IQ test — it’s the kind of situation that arises in DC design and layout all the time. Choosing the correct slotting strategy for a new facility can make the difference between starting it up smoothly or suffering years of pain re-profiling inventory.

Slotting is also one of the best ways to improve an established operation. A properly executed slotting project can increase labor savings by 5% to 8% in order selection and replenishment. Slotting can improve utilization of space; reduce equipment requirements; improve inventory accuracy; and reduce product handling and damage. A case in point is the slotting project recently carried out by Liberty Hardware Manufacturing Corp., headquartered in Winston-Salem, NC.

Faced with the need to fit over 20,000 SKUs into a new, 600,000-sq.-ft. DC, Liberty Hardware chose to configure the space to fit the SKUs using software-based slotting. The company, a subsidiary of Taylor, MI-based Masco Corp., manufactures and distributes products that include decorative hardware, kitchen accessories, and locks to customers such as big-box home centers, independent retailers, and cabinet manufacturers.

Peg o’ my heart

In 1999, Liberty Hardware realized that it had outgrown its existing 180,000-sq.-ft. facility in Greensboro, NC. The company, along with the engineering group at corporate parent Masco, determined that a new facility would need to measure 600,000 sq. ft. to accommodate inventory and growth projections.

Liberty Hardware committed itself to create a system in the new distribution center that would provide 100% accurate and on-time customer orders. The company chose Long Grove, IL-based Tom Zosel Associates Ltd. (TZA) to develop the internal warehouse layout and design. The core of the design and implementation project team included Robert Buck, vice president of operations for Liberty Hardware, Paul Dillon, a senior materials management specialist from Masco, and members from TZA.

Pegboard layout

Inventory in Liberty Hardware’s old Greensboro DC included roughly 13,000 active SKUs. The facility shipped over 300 orders consisting of about 15,000 cartons a day. The new facility was designed to handle over 20,000 SKUs and to ship 600 orders and 34,000 cartons a day.

By performing a customer order analysis to help determine inventory ordering patterns, the design team found that customers could be grouped according to the inventory they had ordered, and that grouping customers this way improved customer service. This general strategy helped guide the distribution center design.

An inventory and sales analysis yielded picking and storage fixture requirements. Paying attention to inventory grouping, fixture requirements, and quality mandates helped TZA create various facility designs. Careful productivity, space utilization, throughput, and return-on-investment analyses preceded the final choice of design.

The layout selected included three full-case, pick-to-belt modules, each with three pick levels; a small, expandable repack module for less-than-full-case specialty hardware orders; and rack pick areas that included bins and caseflow shelving located within the racks. Nearly two miles of conveyor were utilized, including a high-speed sliding shoe sorter with 41 shipping lines.

The induction process featured a state-of-the-art camera scan tunnel system for accurate scanning, including the ability to view inducted cartons for additional ship verification and tracking purposes. To support the picking operation and meet customer service requirements, the layout was designed to accommodate 70,000 reserve pallet positions.

The design team developed a customized slotting strategy for each major pick area. Balancing pick-module volume across the three full-case pick modules prevented employee congestion on the floor and took advantage of available accumulation conveyor space. Within each module, heavier base product was slotted on the top level so that these cartons would reach the dock ahead of the other cartons and create a good solid base on each shipping pallet.

Within the rack pick areas, faster-moving product was slotted toward the shipping and receiving areas; slower-moving product went toward the back of the facility. Product was also slotted with heavier base product toward the start of the path. This helped create stable pallets and reduce travel time to pick each order.

The strategy in the special order area was to slot the faster movers within the caseflow fixtures that ringed the pick area and the slower movers in bins located in the center of the area. Within the bins, the faster-hitting items were located closest to the main travel aisle that ran in front of the caseflow.

While the new facility and equipment were being installed and tested, the slotting project was under way. Liberty Hardware wanted to ensure that the macro-slotting strategy was not only implemented for the start-up of the new facility, but that it would be maintained on a regular basis. The team determined that achieving these goals using a manual slotting methodology would be too cumbersome and that the slotting would ultimately degrade. Therefore, Liberty Hardware chose a commercially available software-based slotting solution.

Profiles in cubage

Obtaining accurate dimensional data (cube) was paramount to the success of the slotting effort. Liberty Hardware committed itself to the major effort of verifying and updating all carton dimension information within its item database prior to the slotting project. “We knew that for this program to be a success and to take full advantage of the slotting software, we needed accurate information,” says Buck.

The next steps included entering all warehouse locations, location types, and location capacities into the software. The finalized layout of the new facility served as the “official map” during the data entry process. Then Liberty, TZA, and the software provider worked together to define the slotting rules and goals, and configured the software to slot according to these criteria.

Next, an item file was introduced into the slotting software, and testing began. The team performed multiple facility slotting iterations, with various changes to the rules and goals, until the optimal slotting profile was produced. New sales information allows the slotting software to frequently compare the current picking location of an item against its optimal location. At any given time, the slotting software can provide a suggested list of item moves that will create the most bang for the buck.

Liberty Hardware is now reaping the tangible benefits that a proper strategy supported by software-based slotting can provide. Orders are picked and shipped faster than in the old facility, and outbound order quality has increased by 10%.

Get in the groove

Manual slotting can include using paper reports, spreadsheets, or database programs to analyze data and determine recommendations. The technique allows for the personal touch that sometimes gets lost in “black box” software solutions. The tools are readily available and fairly simple to use and understand. On the other hand, this method can be time-consuming to perform.

But software-based slotting is not for the faint of heart. The cost can be prohibitive, and setup can take as long or longer than setup for a manual project. Successful software slotting depends on a number of factors: Item data must be accurate, slotting strategies and goals must be sound, effective interfaces must be developed, and manpower must be allocated to the continuous process of re-profiling.

The real advantage of software-based slotting comes later, with ease of ongoing slot optimization. “Of all the continuous improvement strategies we’ve worked with since our company was founded in 1984, optimal product slotting has to be among the best-kept secrets,” says Ron Hounsell, vice president of software solutions at TZA. “It’s a key ingredient in facility design and, because the business is constantly changing, the well never dries up and savings continue to be realized.”

Michael J. Wells is vice president at Tom Zosel Associates, a distribution and logistics consulting firm based in Long Grove, IL. He oversees all activities associated with facility design and layout, including implementation project management. Wells can be reached by phone at (847) 540-6543 or by e-mail at mwells@tzaconsulting.com.

Pigeonholed

Slotting, or profiling, means to group and locate items strategically to optimize the total distribution operation (putaway, picking, replenishment, shipping, and customer service). An operation that displays some or all of the following characteristics may be a candidate for a slotting program:

  • Focus on continuous optimization
  • Excessive replenishment activity
  • Poor outbound order accuracy
  • Warehouse layout changes or introduction of new methods
  • Dynamic SKU environment with frequent new items or high item turnover
  • Seasonal/monthly/weekly/daily swings in item mix
  • Use of planned ads and catalog releases
  • Recent company merger or consolidation of inventory
    MJW

Play the Slots

An organization’s layout, product lines, and customer service policies will determine its unique slotting strategy. Depending on your requirements, one or more of the following strategies may serve to get you started on the right path.

  • Use cube movement or on-hand inventory to drive items into specific fixture groups. To size the pick location, use cube movement to reduce replenishment activity. Calculate cubic feet with the formula L” × W” × H” divided by 1,728.

  • Use “hits” (also called lines) to locate an item within a fixture group. Items with higher hits should be located closest to the main travel aisle within a fixture group. This helps to reduce travel distance.

  • High hitters can also be the criterion used to locate items within the “golden zone” of a fixture. Working in the golden zone — the area of movement from thigh to chest — reduces fatigue and increases efficiency.

  • Group items by handling characteristic (e.g., full case, each pick, full pallet, security, fragile, hazardous, long, bulky, machine pick). This can improve both space utilization and productivity.

  • Group by product line, vendor, or vendor within department. This strategy is appropriate if different groups of customers order from a narrow inventory subset. Items are easier to put away when grouped by vendor. Travel time is reduced for these orders. But be careful not to create a congestive work environment with this strategy.

  • Spread out similarly packaged items (spark plugs, gum, nuts and bolts, soup and beverages) to reduce picking errors.

  • Slot multi-part items or items likely to be ordered together near each other to reduce travel and consolidation efforts. For example, a wheelbarrow is generally stored in three parts: handles, wheels, and the tub; batteries may frequently be ordered along with a toy.
    MJW