Warehouses have been using basic slotting strategies for decades to determine optimal bin sizes and SKU placement within the warehouse. These warehouse space allocation optimization strategies have helped drive cost savings for omnichannel fulfillment in many ways. Reduced replenishments, more efficient travel routes, and optimized utilization of space and warehouse layouts. You can get in touch with Best Transloading Services in California
What is slotting?
Slotting is the process of organizing warehouse capacity to maximize efficiency. Warehouse inventory is organized by product characteristics such as stock keeping units (SKUs), product type, item size, weight, order history, and more.
The analysis of this data is important to implement a strategy that adapts to sales and inventory management.
Why use Slotting in warehouse operations?
Slotting benefits focus on warehouse operations and compliance and can provide maximum optimization in this area. Some benefits include:
- Simplified, No-Fail Order Fulfillment: Slotting can lead to faster picking and reduces the chance of error by organizing inventory in fulfillment centers in the most intuitive way possible.
- Lower operating costs –Efficient organization makes workflow faster and more cost-effective.
- Preemptive Planning: Slotting creates room to predict inventory needs,allowing businesses to stock up on what they need before they need it
Slotting: now or never
Slotting is the art and science of determining which SKUs should be placed in which pick locations. So in practice, for example, fast-moving products generally need to be placed near shipping doors to reduce travel distance. Or in picking, fast moving SKUs should generally be placed at the level of the most accessible and visible area, to increase operator efficiency. It sounds simple enough, but complexities soon arise.
Making these decisions among hundreds, thousands, and for some companies even tens of thousands of SKUs in a distribution center is beyond human capabilities. Even using spreadsheets or similar tools. Sales forecasts and product life cycles can change rapidly, requiring corresponding changes in slotting plans . Additionally, companies often have multiple types of product storage (pallet flow rack, carton flow rack, static rack, carousels, etc.).
They may want to perform even more sophisticated analytics. As determining which products are frequently ordered together so that they can be located close to each other. Balancing work between picking areas or zones may be another consideration.
Slot optimization software is a decision support tool that takes a variety of information related to each SKU (history, forecasts, dimensions, etc.) and recommends, using advanced calculation, an optimal slotting plan.
Reasons why potential interest in these tools should be at high levels include:
- Trend towards larger distribution centers, which makes the slotting problem more complex and increases the cost of travel time for suboptimal decisions.
- SKU proliferation,meaning that most companies have more products that require slotting decisions
- Changes in order profiles, which continue to drive most companies to need to account for more picking requirements.
- Increase in distribution labor costs.
Companies are gradually trying to become more “demand-driven”. Letting the forecast drive the rest of the supply chain, and if done well, slotting can be seen as an ideal approach to distribution management.
Even so, there are not so many companies that have implemented slotting optimization tools. Part of the problem is training. Many distribution center managers are not well versed in this kind of application.
But there have also been practical problems. The first generations of the tools were difficult to use. More importantly, even when the tools were giving managers the right answers in terms of optimal slotting plans, the effort to make the required slotting moves turned out to be too much for many operations.