The Hidden Gains from Effective Warehouse Slotting

As labor standards experts, we often see the same issues across all distribution centers that impact the benefit of the labor standard we are building. For example: order selectors having to rebuild their pallets because, halfway through the order, they are trying to find room for several 30 pound buckets. Or one aisle in the produce department is always a traffic jam as every order selector is trying to pick the item. And we often see forklift operators travel halfway down every aisle in the freezer department looking for an open reserve location for the pallet they are trying to put away.

Operations managers can combat these issues by implementing methods training. This includes training selectors on how to properly build a pallet by targeting certain items, such as large bags or buckets, and building around them to increase the integrity of the pallet. Or properly parking the pallet jack to minimize their steps when carrying cases, which can save several thousand steps per night.

We can build the labor standard (using FLEXdls, our proprietary discrete labor standard software) to account for each of these activities and develop accurate cases per hour and pallets per hour for the company’s operations; but, for distributors to truly maximize their potential, they need to look at a more fundamental aspect of distribution: product slotting.

Slotting is often a reactionary response of finding an available location for new products. Although the slotting coordinator is aware that 30 pound buckets would work better at the beginning of the pick path for the order selectors, the only available location was in the middle of the department, and so that’s where the buckets went. A full warehouse might install double or triple deep racking for fast moving products, but when all of the selectors are going after that same bag of onions in the same location, significant delays will occur. And, because a product is slotted in a home slot that can only fit one tier, six pallets of one tier are ordered per week taking up valuable reserve space.

Product slotting is only improved if the facility is continuously managing it. The data is there, in terms of product velocity (high quantities being sold per week or during a designated time period), product cubic feet and weight, the item’s stackability (crushable items, bags, buckets), etc. Daily reports or slotting software (such as Slot3D or OptiSlot DC) show all of this information, and operations managers can then dig into this information to target the issues in their facilities.

If we look at the examples mentioned earlier, we can begin to develop solutions to these slotting issues:

  • Large buckets work best when at the base of the pallet, since they are dense and heavy and have the potential to damage any product they are placed upon. If there is no clear item to swap with the buckets in order to move them up in the pick path, then slotting coordinators have to think outside of the box: “6 #10s” (50 lbs. boxes of cans) are also heavy, but have a much better stackability since their weight is distributed over a much larger area. Therefore, swapping a low velocity “6 #10” item with the buckets in the pick path will help to reduce rehandling by order selectors.
  • For very high velocity items, the first step many operations take to account for this is multi-deep reserve and pick slots, which decreases the amount of replenishments of that product throughout the shift. However, when developing labor standards for operations like this, we see them becoming the bottlenecks of the pick path, since all of the selectors are attempting to access the same product. Some labor management systems are able to slot the same product in multiple locations spaced throughout the aisle, and then direct the order selectors to select these products in sequential order. In this scenario, order selectors are now spaced down the aisle rather than waiting in line to select the same item.
  • In the case of one tier pallets taking up valuable space in reserve locations, open communication needs to occur between operations and the purchasing department. Focus on the top 10% of items in terms of velocity with the lowest purchase quantities. These items can then be addressed with the purchasing department to determine if they can be received in larger quantities. If this is a feasible solution, then the products can be slotted in a rack with a larger slot opening, which will free up reserve locations, in addition to reducing the number of times the item needs to be replenished.

It is commonly thought that physical constraints of a distribution center are impacting the throughput of operations, and that an accurate labor standard is the only solution to increase efficiency. However, with a systematic approach to slot the warehouse in the most effective way, warehouses can optimize their operations without spending the capital on an expensive expansion or re-racking project. Re-slotting can be a slippery slope however, resulting in excessive re-slotting, which requires too much labor to offset the benefit of an ideal slotted warehouse. Therefore, the operations management team must maintain a thorough approach to slotting in order to receive the highest gain.

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Chicago, IL 60606
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