Warehouse Optimization 10 Aspects that Hurt Your Inventory Slotting Efforts

Effective inventory slotting is essential, for improving efficiency, boosting picking speed and throughput. Slotting entails assigning items in designated stock locations to streamline picking restocking and storing procedures. By organizing products based on factors such as demand frequency, size and weight companies can improve operations.

Risks Of Not Slotting Inventory in a Warehouse

Neglecting inventory slotting in a warehouse can result in operational hurdles and inefficiencies. The primary challenge is the increased time and cost associated with picking tasks. This occurs because employees have to walk longer distances to pick inventory. This slows down the order fulfillment process and drives up costs.

This inefficiency can also cause delays in order processing. Such inefficiencies may cause shipping delays resulting in unhappy customers. Additionally, inadequate slotting practices will drive up labor costs as well as equipment wear and tear. Poor inventory slotting also increases the risk of injuries.

Advantages of Inventory Slotting

Warehouse slotting offers range of benefits that considerably improve operations. Notably it reduces picking durations by placing high demand items, in the most easily accessible pick slots. This minimizes the distance traveled by workers during picking processes. This streamlined approach boosts productivity and cuts down on labor expenses.

Furthermore, effective slotting improves inventory accuracy, reducing the chances of and mistakes, in fulfilling orders. It also maximizes storage utilization. Slotting results in quicker order processing, better customer service and a well-structured warehouse setting.

Consider these 8 aspects that erode slotting effectiveness.

When slotting inventory, the primary drivers is the Pareto Principle. The Pareto Principle is also known as the 80/20 rule. It states that roughly 80% of the effects come from 20% of the causes. In simpler terms, 20% of the SKUs will drive 80% of the unit movement in a distribution center.

You might ask why this matters, or why you should care. In slotting, we want to deal with those items that have the potential to cause the most problems from a picking perspective. With this in mind, we ultimately care about the top 20% of SKUs in the distribution center.

For most companies, if the top 20% of SKUs are well managed, the rest should sort themselves out accordingly. This doesn’t mean ignore the other 80%, but your efforts shouldn’t be on trying to perfect the slotting for 100% of SKUs. This is especially true if you have been unfocused on your slotting efforts for quite some time.

If your efforts have not been on slotting, begin by identifying the top 20% from a velocity perspective. Next break it down into smaller digestible chunks of say, 25 to 50 items at a time. This is the only real way for some operations to tackle the top 20% of SKUs.

2. Creating Too Much Congestion 

Once companies determine the fastest moving SKUs, the mistake they often make is slotting one right the other in sequential stock locations.  This creates considerable congestion in your pick path.  When pickers begin their pick batches, they will most all likely start in the same aisle or bays.  This congestion will slow everyone down and work against you. 

Operations have to distribute the fastest moving SKUs across the most optimal stock locations to keep from creating this bottleneck.  This is where a little patience and some analytical thinking will help to avoid this problem. It's a balancing act that can be managed with good data, and optimized storage. 

For starters, if you haven’t done slotting, it’s not a simple effort where you just sit down, and magic happens. It’s a task that is best suited for someone with an analytical mindset, etc. with patience. But it’s a task that certainly be accomplished with the right data by every warehouse.

When you take the road of thinking it’s too big of a task, you are stating that you are willing to let the operations be inefficient. This mindset is not one that sits well with any executive team. Tackle it head on, small segment of SKUs by small segment. What becomes a simple effort is maintaining your slotting efforts once it’s complete. This needs to be a part of your warehouse optimization routine. 

This goes right along with the point above. Not beginning because you believe it’s too big of an effort generally leads to this stage – Just not doing it because now there is no hope. This is what defeat looks like. For some operations this occurs due to a lack of good management and oversight.

For others it’s due to a lack of available stock locations. This is a far bigger management challenge than just slotting and happens more frequently than most think.

Regardless, once you have waited until there is no hope, it becomes an enormous effort that will take significant time and resources. This doesn’t mean it shouldn’t be implemented – the ROI will still be tremendous. But it means the resources that need to be devoted become larger.

You cannot let your operations reach this stage.

One aspect that makes slotting easier is when companies can take the cubic dimensions and quantities to determine which size bin to utilize. For example, when taking hundreds of SKUs, it can be easier to determine how many small bins versus medium sized bins are needed. This makes it easier to determine how to utilize the racking and shelving in the distribution center.

When every bin size is random and has different dimensions, it almost makes it impossible to optimize the utilization of storage. Standardized bin sizes should be done in a way that maximizes a shelf or rack level.

An example of what not to do is to take a size foot beam and create bins that are 16” wide. This leaves too much wasted space on each level. The same is true with the depth and the height. Maximize every square inch with your bin sizes.

Slotting becomes much easier and efficient when a company has the cubic dimensions and the weight for items. However, when companies don’t have this, they will often let slotting begin to slide because the efforts become “too difficult”. And then it reaches a point of you waited too long and now there is no hope.

If you currently do not slot and do not have cubic dimensions, start with just the top SKUs as previously stated. Once you have identified the top SKUs, go measure the cubic dimensions of those same SKUs. Don’t try and get the cubic dimension of every SKU before beginning to slot. This is especially true if you have thousands of SKUs.

The weight becomes important to ensure that the weight of all SKUs slotted on a given level do not exceed the weight capacity of that shelf.

Much of your slotting efforts can be handled in Excel. If you need some help getting started, let’s talk, we can help jump start your slotting efforts and make it easier.

Once items are slotted, these should be reviewed on a weekly basis. This doesn’t mean evaluating every SKU but looking at it on an exception basis. The goal would be to quickly identify the SKUs that are moving faster than anticipated. Additionally, identify those SKUs moving slower than anticipated.

By managing these SKUs on an exception basis, companies can identify potential problems much faster and proactively fix them. You should be looking at the max inventory on hand in the bin from a replenishment perspective, versus the average daily velocity (exclude weekends if you don’t pick weekends).

If you are replenishing once or twice per day, that’s a significant issue. If you are replenishing once every two to three days, you need make sure it doesn’t become more frequent.

The same is true at the bottom of the list, if items have more than a 30 day supply, and they are not slotted in a relatively small bin location, or one that isn’t out of the way, consider moving it and reducing the quantity in the pick bin.

If your pickers are the ones constantly telling you about problems, then you need to change the way you manage the operations.

The "golden zone" in picking is a concept used to make the process of picking items from shelves more efficient and less physically demanding. Think of it as the sweet spot where items are easiest to reach – no bending or reaching.

Think about standing in front of a shelf in a warehouse. The golden zone is roughly the area between your knees and shoulders. It’s those locations that are easiest and fastest to pick from. By slotting the most frequently picked items in this zone, warehouses can speed up the picking process.

This becomes even more important when you are slotting heavy and bulky items. These are very important when thinking about the golden zone. These items must be placed in the safest locations.

Most importantly it reduces workplace injuries associated with frequent bending and reaching. Additionally, this leads to high productivity and throughput rates.

Some of you have no control over what happens with dead inventory, but at a minimum you need to ensure the reporting finds it way upward. However, you can certainly control where this inventory is slotted in the warehouse.

So, what is considered dead inventory? This varies by company and types of products. However, many companies consider inventory to be dead if there are three to five units or less picked in a six to twelve month period. But this must be inline with your type of business.

When there are minimal inventory movements, consider various options, such as:

• Reducing the inventory in a pick location to be in line with picking needs.
• Utilize the lowest shelf level and the highest shelf levels available so that prime locations aren’t used for the slowest moving inventory.
• Consider consolidating inventory into bulk pallet locations. This keeps it up and out of the way.
  • But do not place too many SKUs on the same pallet, this will cause a picker to lose way too much time searching the pallet when an item is eventually needed.

10. Placing Fastest Items too far from Packing and Shipping

The goal of slotting is efficiency and reducing walking distances.  One of the biggest mistakes companies make is not placing the fastest moving items too far away from the packing and shipping lines.  This increased walking distance is an efficiency killer. 

It's not just enough to consider the golden zone, but operations must look at proximity to the packing lines.  Operations should try to keep the top 20% of SKUs in the closest one third of the available stock locations.  This may mean changes in your layout and design, the type of storage you are using and changes to the pick path.