This story on slotting strategy comes courtesy of Manhattan Associates. It has been selected and edited by the MHM editorial staff for clarity, content and style.
The productivity of order pickers depends largely on the location of goods, which can be determined entirely by a warehouse management system. Using software to specify the optimum warehouse slot can improve productivity, ergonomics, security and quality.
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 fast-moving products do not all end up in the same aisle. If this happens, a new problem can arise—congestion. Activity levels in one place can become so high that order pickers find themselves in each other’s way.
When determining the best location for each product, productivity, ergonomics and security all need to be taken into account. It is impossible to apply a simple rule of thumb or a formula to all operations as product characteristics, movement of goods and warehouse layout are different for each company.
All warehouses and distribution centers need to set up a slotting plan at least once in order to determine the best location for products. In reality, most warehouses have to optimize slotting layouts more than once. As new products are introduced and demand for existing products increases, fast-moving goods are added and slow-moving goods disappear. Many companies therefore carry out a yearly, monthly and even weekly slotting review. In a few cases, this may even take place on a daily basis.
Some warehouses operate a fully automated system, whereby goods are arranged automatically at night by machines and are ready to be picked the next day. A similar procedure takes place in warehouses where large volumes of orders have to be picked within a short period of time. In order to free up the maximum level of manpower for order picking, incoming goods are set aside initially and positioned later. Some systems can also support automated slotting of new items as the warehouse management system becomes aware of them. This helps avoid costly delays in receiving and put-away of new items.
Location, Location, Location
One benefit of optimized slotting is higher productivity from reduced walking distances. This is achieved not only by putting fast-moving goods to the front but also by grouping together 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 pick rate and productivity but also provides the best ergonomic solution. For the same reasons, heavy products are best placed at hip or shoulder level.
In addition to productivity and ergonomics, efficient slotting brings security benefits. For instance, in warehouses containing volatile substances, products may not be placed close to each other because of possible chemical reactions. A good slotting plan can also 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 of these factors is nearly impossible with a paper-based system. This is where a warehouse management system with a slotting optimization function comes in. Data is entered into the warehouse management system, including the measurements, location, number of products in a box, number of boxes on a pallet and storage conditions of each article. Information about the pick location is also needed; this includes its measurements, carrying capacity, walking distance and the type of products that may be put on it. 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 calculations, 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 warehouse management system will be a series of suggested re-slotting moves for layout alterations. It is up to the management of the warehouse to follow these plans. In addition, a warehouse management system can determine racking requirements for new facilities or determine if changes are required within existing facilities to ensure a fully optimized slotting layout.
Warehouse Management and Slotting Optimization: Still Work to Do
Many warehouse management system vendors have integrated a slotting system with their labor management functions, which record the distance between different locations and determine precise costs associated with picking. A simulation then shows if proposed changes are actual improvements on the existing plan. It is also possible to determine how much effort it will take to execute the proposed change. 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 ten warehouse management systems now support slotting. Most of these, however, consist of an alphabetical rearrangement of goods or of the grouping of similar goods together to create more space. Only 43% of warehouse management systems 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.
Getting the Green Light
For true warehouse optimization, an advanced slotting system is essential. Advanced systems can generally be bought as part of a warehouse management system or as a stand-alone product and will take into account demand patterns at the pallet, package and item level. For example, one item may be considered as fast-moving at the pallet level but slow-moving at the package level.
For example, Manhattan Associates’ (Atlanta) slotting optimization solution provides a score for each location in the warehouse, showing how well a product is placed. Results are indicated in colors on a screen that shows the layout of the warehouse and the product locations. Green represents a perfect placement while red stands for a poor one. Only when all stock has been arranged optimally, taking into account all the different variables, will the locations be given the green light.
The warehouse is one area where 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 a matter of minutes.
Based in Chicago, Paul R. Maurer is Senior Director, Slotting Optimization and Labor Management at Manhattan Associates. In this position, Maurer oversees the strategic direction of Manhattan Associates’ Slotting Optimization and Labor Management solutions and related marketing, customer management, product development and sales activities (773-348-3322, [email protected]).
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