Warehouse Basics: A Place for Everything, Everything in Its Place

Slotting a distribution center is the process of finding the most efficient spot in the building for every item. Proper slotting enhances the use of the building's cube, reduces the travel time required by employees to fill orders and helps identify stock that might best be taken out of the product line-up. Sounds easy enough. To do it right, however, takes a mix of technology, persistence and sometimes sorcery.

Ultimately, each company's product line, and how it chooses to supply its downstream customers, become overriding factors in how a slotting program should be designed. A slotting plan can be a chicken-egg conundrum, because in the process, existing storage media and labor components for a distribution center will also be determining factors.

The starting point for virtually any slotting plan is data. The biggest time commitment is the collecting and cleansing of product information. (That's the persistence part of slotting.) The cube and weight of every stock-keeping unit (SKU) has to be gathered. Information on the size of case and pallet lots also has to be determined, along with any special requirements of the items such as temperature controls.

The information can be gathered from suppliers' databases, manually—actually weighing and measuring each item as it comes into the distribution center—or via an automated device such as the Cubiscan machine from Quantronix (Provo, Utah). The Cubiscan automatically records the information about each unit or case, and transmits the data into the slotting software.

A slotting plan can be based on the historic sales fluctuations of a product, current sales activity, or a sales forecast—that's the sorcery part of slotting.

The objective of any slotting plan is to minimize travel time and reach time for employees in the distribution center.

"In our case," says Larry Harness, operations manager, Vera Bradley (Ft. Wayne, Ind.), "We have seasonal products coming and going all the time— and our SKU count is always growing. We're constantly rotating items through the pick faces."

Harness' plan is typical of a fashion retailer's distribution center. In this case it's exclusive handbags and accessories. Fast moving items have to be in an area easily replenished; one that also offers the least amount of bending and stretching for employees. The recent addition of a pick-to-light system here has removed the need to keep specific models and colors together.

"Now," says Harness, "we can move any product to the best spot on the pick face. This has opened needed space along the pick face for small cartons. In the past, we had to leave that space empty so that we could slot like products together."

Harness creates his slotting plan based on some historical knowledge, but he mostly relies on a large mix of order forecasts.

"We're always looking forward, not backward," says Harness. "We can't slot based on size and weight of an item because the fastest mover might be a small change purse. The forecast tells us how much space to allot for each item."

Harness works with spreadsheet data and a solid knowledge of the distribution center activities. Graphically, the slotting plan, or movement of product, has a stair-step appearance. When an item is new and popular, it's in an area that is easily replenished and where pickers can get to it with the least amount of effort. Over the months as the item's popularity declines, it rotates back and up in the racks.

Harness looks forward to the installation of the company's WMS program later this year. It promises an even better way to slot and manage inventory because it will resolve many replenishment issues.

Another way to slot
For another retailer, Pep Boys (Philadelphia), the ideal slotting program was to locate products in the distribution center according to the product's physical attributes, pick frequency and eventual location in the retail stores.

Using Manhattan Associates' (Atlanta) Slotting Optimization solution, Pep Boys created logical picking zones within the distribution center. Within the active pick zone, aisles are set up so that items with the greatest pick frequency are stocked in carton flow racks

on the right side of the aisle, as well as in end caps at the end of the aisle. Slower-moving goods are located in bin shelving on the left side of the aisle. "Optimized slotting continually contributes to keeping labor costs down," says Dave Schneider, director of logistics, Pep Boys.

This layout helps shorten picking travel distances, says Paul Maurer, senior product manager, Manhattan Associates. "Order selectors can easily pick the bulk of products from the carton flow and end caps. The major benefit of slotting is to get the most productivity out of assets."

Frequency of slotting
How frequently a distribution center should be slotted depends on many factors, the greatest of which is often the end-users' need for replenishment of store shelves.

In the past, many companies did not slot frequently, says Tom Kozenski, product market leader, Red Prairie (Waukesha, Wis.), because early programs were cumbersome. It was not uncommon to have a standalone slotting program that required "inheriting" data from a WMS before a move could be made.

Most of the current crop of slotting products are embedded into WMS programs, or can otherwise transfer data from one program to another. And, since slotting is about labor allocation as well as product placement, tying labor management into the slotting program can save time in preparing a slotting plan.

Typically, during the review of a proposed slotting plan, the impact on labor is a key factor in acceptance. "Based on estimates of labor involved," says Kozenski, "a company might see that it can take three hours to make the moves in slotting, yet save 27 hours in picking over the next couple of days."

With slotting embedded into the WMS process, slotting can be done more frequently in large and small sets. It's less labor intensive when it's built into the process flow, adds Kozenski.

While it's possible to benchmark slotting plans of other companies, using company-specific data and movement presents the most reliable picture. Modeling current conditions, then adding in forecasts can show what needs to be moved forward or back in the distribution center. The best indicator, of whether slotting will pay off, is to look at the labor or traveltime savings that any new plan offers.

The answer, to the "How often?" question, can depend on the velocity of the company's industry. Weekly slotting might be required for a grocery distribution center, less often for automobile parts. Frequency of slotting might also depend on the availability of labor, not predicated on the sales movement of items.

While slotting plans are often associated with automation—practices such as pick-to-light or voice-directed programs—they can also be developed for manual picking operations. The same principles apply: fast movers to the most efficient area as defined by ergonomics and ease of replenishment; slow movers to the back and higher in the racks. Those principles will vary, however, depending on industry.

"We were looking for an efficient, automated way to measure and improve workflow in our distribution centers," says Carey Caile, manager of technology services, TNT Logistics North America (Jacksonville, Fla.) a logistics service provider. A labor and slotting product from Manhattan Associates allows TNT to apply labor standards to slotting recommendations. TNT measures work performed using employees work schedules and activities. It can analyze the information against various standards and initiatives, facilitating the deployment and tracking of value-added programs such as incentive-based pay.

A slotting program determines the most beneficial and ergonomic placement of pick line items using algorithms. Tied in with WMS and labor management programs, slotting plans are excellent ways to reach the next level of efficiency and optimize the resources of a company. Return on investment can be expected in 18 months to two years. Since these plans are not always viewed as mission critical, getting buy-in from top management is essential to success.