Chain of Thought

How Warehouse Slotting Supports Corporate Plotting

In my last blog I told you how Kathleen Shafer, senior director of supply chain transformation for CVS Caremark, is dedicating herself to eliminating silos in her organization so that functions like merchandising and marketing become part of supply chain management. Although this is part of a five- to seven year game plan, it will be won by gaining steady yardage—not by throwing a Hail Mary pass. She’ll be busy analyzing and modeling distribution networks, studying cycle times, looking at store delivery models and figuring out customer shopping patterns.

Shafer was one of many speakers sharing their long-range strategies with attendees of the annual Warehousing Education and Research Council (WERC) Conference that concluded this week in Dallas. Just like any educational program, the value it delivered to those attendees depended on how well those students designed their curriculum.

I’ve found that the best value from such multi-track conferences comes from mixing strategic overview sessions like this with the nitty-gritty detail that comes from sessions on things like warehouse slotting. Dan Basmajian, president of Optricity Corp., offered the perfect complement to Shafer’s 50,000-ft view of the CVS enterprise with one of the components necessary to the structural integrity of any long-range plan like hers: warehouse slotting.

Slotting is one of those disciplines that, if you don’t revisit it periodically, will make you sorry you didn’t. Kind of like your mother, but in a more sinister way. Basmajian told his audience that an old slotting plan can deceive you. You may one day say “Uh-oh, I’m out of space,” but you’re not out of space, you just have it racked for something that happened two years ago and isn’t happening today. That could mean an opportunity to cut your bar height from 80 inches down to 40.

“Your strategy stays the same,” he said, “you want the best use of space and the highest rate of return on slotting as you can. You’re just stuck with a new issue, which is that your pallet pattern has changed and your rack is probably not aligned with that.”

That can happen gradually over time if you’re not watching it. Basmajian told of an electronics retailer that hadn’t touched its rack or slotting plan in years. They were picking out of four modules on the floor and four on a mezzanine. One of their challenges was they had poor pick density.

“We ran through a slotting exercise with these guys that took them from eight modules down to four,” he said. “They were in the electronics business and not racked appropriately. TVs used to be huge, but today they’re thin, so you could put ten times as many in an opening than you could before.”

Seems like an obvious example of low-hanging fruit. One that’s not as obvious but potentially just as beneficial is slotting for distance rather than height. It might seem more efficient to rack everything in as small a walking distance as possible, but making pickers bend and reach in many cases is less efficient in the long run than a long walk. Of course a lot depends on order volume and staffing, but walking is less stressful and more sustainable time-wise.

So pay regular attention to your SKU mix. Such diligence in the short term will contribute to the clarity of your 50,000-foot perspective.

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