How do you determine the best location in a warehouse for your products? Most companies begin by looking at their order pattern. Fast-moving products are placed in the front of the warehouse, while slow-moving ones are placed in the back.
This strategy works as long as all the fast-moving products do not end up in the same aisle. If this happens, a new problem can arise—congestion. It is very easy for activity levels in one place to become so high that order pickers find themselves in each other’s way.
And that example demonstrates why determining the best location for each product is such a complex job. Productivity, ergonomics, and security all need to be taken into account.
Regarding productivity, one benefit of optimized slotting is a reduction in walking distances. This can be achieved not only by putting fast-moving goods toward the front but also by grouping together those products that are regularly sold together. It is also more efficient to put bulk stock close together for replenishment. Fast-moving goods are best located at waist-height in warehouses with “roll-on” racks. This serves not only to improve productivity but also provides the best ergonomic solution. For the same reasons, heavy products are best placed at hip or shoulder level.
Then there are security benefits. For instance, in warehouses containing volatile substances, certain products must not be placed close to each other, because of possible chemical reactions.
A good slotting plan can also help to limit damage and mistakes. Heavy products should be loaded at the bottom of a pallet and not on top of breakable products, for example. Furthermore, picking errors can be reduced by avoiding the placement of similar-looking products together.
The job of calculating an optimized slotting plan that takes into account all these factors is vast and nearly impossible with a paper-based system. That is where a warehouse management solution (WMS) with a slotting optimization function comes in. Data–including the measurements, location, and number of products in a box; the number of boxes on a pallet; and the storage conditions of each article–are entered into the WMS. Information about the pick locations is also needed; this includes measurements, carrying capacity, walking distance, and the types of products that may be put on them. Finally, the system requires data about the movement of goods, such as the number of picks per product and its demand forecast.
To make its calculation, the system distinguishes between constraints and goals. Constraints, such as weight restrictions or storage conditions for harmful substances, have to be met by the location layout. Goals are elements that have to be optimized, such as the walking distance between picking points or the allocation of jobs. The result from the WMS will be a series of suggested reslotting moves for layout alterations. In addition, a warehouse management solution can determine racking requirements for new facilities or if changes are required within existing facilities to ensure a fully optimized slotting layout.
Many WMS vendors have integrated a slotting system with their labor management functions, which record the distances between locations and determine precise costs associated with picking. A simulation then shows if proposed changes would actually improve upon the existing plan. It is also possible to determine how much effort it will take to execute the proposed changes. If the benefits are outweighed by the time needed to move a pallet to another location it may be better to leave the products in their original location.
A European survey from IPL Consultants and Fraunhofer IML shows that six out of 10 warehouse management systems now support slotting. Most of these, however, consist of the alphabetical rearrangement of goods or of the grouping of similar goods together to create more space. Only 43% of warehouse management solutions possess further slotting functionality, such as the distribution of workload across different warehouse zones. Less than one out of three systems can suggest improvements to stock location based on factors such as the matching of pallet dimensions to a particular location.
For true warehouse optimization, an advanced slotting system is essential. Advanced systems can generally be bought as part of a WMS or as a stand-alone product, and they will take into account demand patterns at pallet, package, and item level. For example, one item may be considered as fast-moving at pallet level but slow-moving at package level
The warehouse is one of the primary areas in which information technology can still bring about dramatic improvements in productivity. In the struggle to process orders faster while keeping costs under control, time lost due to an inefficient layout can make the difference between sending an order by truck or by airplane or between employing 50 people instead of 60. The optimized use of space can reduce bottlenecks, shorten order cycles, and maintain level workloads. The human brain can produce a good layout with a combination of hours and effort, but the right software can produce an optimized one in minutes.
Paul Maurer is senior director, product management for Atlanta-based supply chain services provider Manhattan Associates (www.manh.com)