Warehouse Slotting- What do you need to know?

Aren’t you familiar with the organization of our office desks, book shelves, cup boards ..etc? Isn’t it the human tendency to keep the most used items to place at easily accessible locations? Like the basics like stoles, jeans & cardigans on the front row of the closet; daily reads on the top shelf; your VOIP connection to your left so you can pick your phone & still able to take notes..etc?. Yes, we all must have been there, and have done that. This is an everyday task of unconscious or sub-conscious slotting that most of us do in our way. Similarly, slotting is done in warehouse also & it is the activity of determining the most appropriate storage location for each item in your warehouse. Slotting is one of the fundamental activities of warehouse operations & plays a critical role in achieving operational efficiencies; however, it is a thankless job as often it gets shadowed under many other frontline activities such as picking, packing etc.

A warehouse’s entire operations are based on the slotting & a well-defined and carefully drafted slotting offers many benefits, especially w.r.t improving storage utilization and picking efficiency. Storage utilization is by ensuring each of the warehouse locations are utilized to the maximum of their capacity and to the best of their utility and picking efficiency is by reducing the picking travel and ensuring optimized paths. Efficient slotting also ensures less congestion, reduced no. of accidents, and less material damage.

How slotting is done in a warehouse?

Warehouse processes are sequence of steps through which product moves from it’s origin towards the customer and slotting is the way that decides how this happens.  Before we begin to see, how slotting is done, a warehouse manager must follow the below guidelines.

  • Keep the product moving; avoid starts and stops, which mean extra handling and additional space requirements.
  • Avoid layouts that impede smooth flow.
  • Identify and resolve bottlenecks to flow

To understand the above points better, an illustration of fluid model of product flow can be referred from the book of ‘Warehouse & distribution Science’.

While it comes to slotting, one of the most common methods is to find out which are the most frequently traded items? Here, the question is not about which are the products that noted highest sales, but it is about the no. of transactions? This is important because we must be doing the slotting basis this. So, to arrive at this data of which SKU is trading with frequency, observe the order profile for a period of 6 months or a year or two depending on the data availability and the accuracy level. The more data you have the better to understand the patterns. The same sort of analysis needs to be done to understand the warehouse locations; what are the sizes of these locations, what kind of SKUs they can hold, how these can be reached..etc, so that we can place in the most favorable location the fast selling product. In this way, identify all the SKUs & sort them with the highest no. of transactions (fast moving) to the lowest (slow moving items) and arrange them in locations to ensure a location gets highest no. of picks. However, it isn’t this simple in real scenario as the mapping of location & SKU itself require lot of decision making, examples like keeping heaviest items in lower positions, keeping items that are related and are picked together at one place, cold storage items at one place..etc. So, ultimately from location point of view, what we really need to look at is how many picks we can get out of a specific amount of pick face & from picking point of view, to get the most picks with the least amount of traveling.

Types of slotting in a warehouse

There are many types of slotting done inside a warehouse.

  1. Macro slotting – It refers to optimizing the overall layout of a warehouse. And it includes majorly working on the warehouse racking system arrangement.

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Various pallet racking methods, such as conventional racking, Flying V model racking, and Fish bone model racking can be deployed here to achieve the required throughput and productivity rates. Also the challenges vary significantly with the warehouse size, location, nature of the business..etc and hence the slotting strategies need to be changed.

  1. Micro slotting – It refers to how individual items or pallets are placed in specific locations in the warehouse (from the zone on down to the specific shelf).

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Under micro slotting, most popular methods are

(a) Heat map analysis: Heat map is essentially a tool to help understand the concentrations of warehouse activity like picking, packing, material movement from one place to another, all in all the concentration of labour at a place over time. It also provides a powerful visual image of where efficiency opportunities may exist within a warehouse operation.

(b) ABC Analysis: Pareto Principle or the 80-20 rule where 20% of product references take up 80% of the warehouse space and 80% of the stock comes from 20% of the suppliers. ABC simply classifies skus as A (the small fraction of SKUs that account for most of the activity), B (moderately important), or C (the bulk of the SKUs but only a small portion of the activity).