Redirecting Energy – Resilient Warehouse Slotting for Destabilizing and Disruptive Events

by Lindsay Olla  |  June 9, 2020
Resilient-Warehouse-Slotting

Optimal slotting benefits from performing sustainable slotting on a periodic basis, often times in line with or in preparation for a destabilizing event, or as a reaction to an unforeseen disruptive event. The frequency and timing of sustainable slotting efforts depend on the factors within and external to warehousing environment.

What is sustainable slotting?

Sustainable slotting is the follow up approach after a full reslot. Sustainable slotting moves, based on new and timely velocity changes from actual or forecast data, are a collection of prioritized moves that are performed to retain the benefits achieved from a reslotting initiative.

Optimized-Warehouse

What is a destabilizing event?

A destabilizing event is an event that causes a loss of equilibrium. In terms of warehousing, destabilizing events are foreseeable occurrences that cause demand fluctuations and promote the need to adjust different elements of an operation in order to continue to perform efficiently and effectively.

What are some examples of destabilizing events in the warehouse?

  • Product volume changes
  • Product mix changes
  • Seasonal demands
  • Promotions

What causes destabilizing events?

  • The introduction of new items
  • Popularity and trending items
  • Current events
  • Seasonal changes
Disruptive-Event-Storm

What is a disruptive event?

Much like a destabilizing event, a disruptive event disturbs and interrupts routine operations and causes the need for adjustments to perform effectively. Unlike a destabilizing event, a disruptive event is often unforeseen and unpredictable. In addition to causing demand fluctuations, other factors internal and external to the warehouse can contribute to operations not performing as anticipated.

What causes disruptive events?

  • Natural disasters
  • Pandemics

What are the effects of disruptive events to the warehousing environment?

  • Product volume changes
  • Demand fluctuations, sometimes unprecedented in nature
  • Loss of efficiency and productivity
  • Interruptions to daily workflows

Responding opportunistically to destabilizing events allows slotting optimization benefits achieved from previous reslotting initiatives to continue to be realized with less labor than performing a full reslot of the warehouse. Adapting and adjusting to disruptive events with targeted slotting adjustments can work to reduce loss of efficiency, productivity and interruption to daily operations.

How often should a reslot or sustainable slotting moves take place?

Like many questions in life, the answer is: it depends…

Many factors come into play. Relatively stable (i.e. warehouses low to mid-range SKU count with lower SKU turnover) environments generally require less frequent sustainable slotting efforts while less stable environments (i.e. warehouses with high volume and high SKU turnover) will require more attention to retain benefits as time passes.

In most warehousing environments, there is time between destabilizing events, which offers the ability to perform a selection of most impactful sustainable slotting moves. Often times just a small selection of sustainable slotting moves can make a significant impact to retaining or enhancing benefits like reduced selection and replenishment costs. Typically, these benefits will remain until the next destabilizing event, in which case, another set selection of sustainable slotting moves will need to be implemented in order for the solution to avoid degradation.

Reslotting Before a Destabilizing Event

Often times companies can anticipate destabilizing events as they occur historically within their operations. Destabilizing events that routinely reappear, like seasonality fluctuations, offer the ability to make slotting adjustments prior to the event using a forecast, ensuring that operations remain effective as various products become more or less in demand. Tracking historical data and analyzing the data over the course of time is key to prepare and time sustainable slotting moves or, in some cases, a reslot of the majority of forward picking locations. By performing moves prior to these types of events, items can be moved to locations that best fit based on the forecasted demand in order to reduce stockouts and minimize replenishments.

The demand for an item and each picking unit is also necessary to begin a slotting optimization initiative. Forecasted demand is often helpful as well, especially if you have good forecasted data for seasonal or promotional items as a better slotting decision can be made for those items using a forecast, which is likely going to be more helpful that historical data in some cases.

Reslotting at the Conclusion of a Destabilizing Event

Following a destabilizing event is also an opportune time to perform sustainable slotting moves or a reslot. At the close of a destabilizing event, many items that were once in high demand will no longer be following the end of the event. It is essential to make changes at this point as items that were in high demand are likely taking up prime locations when other items are now a better fit for such locations. This will be harder to identify over time if not performed in a timely manner after the destabilizing event as selectors will simply continue to not stock out on those items and replenishers will not visit the slot as frequently, resulting in a slow moving items taking up a valuable location. Luckily, sophisticated slotting software can identify this with ease.

Reslotting During a Disruptive Event

Unlike with seasonality and demand fluctuations that follow historical trends and can be forecast with some certainty, there are times when unexpected destabilizing events, or disruptive events, occur which can cause unpredictable outcomes. These unforeseen demand fluctuations and interruptions to typical operations can make daily operations fall off kilter swiftly. Noting that often times in these scenarios, different products will become high in demand while other products will plummet in demand, the strategy and product placement in place will likely not be efficient in ensuring peak performance when it is essential to deliver.

In these scenarios it becomes necessary to analyze, adjust, adapt, and act quickly. Visualization tools available in many slotting software solutions, like heatmaps tracking item velocities, can work to help quickly identify the biggest pain points in order to adjust on the fly. Additionally, a productivity improvement technique can be deployed to identify the worst offenders, offering the top, ‘best bang for your buck’, moves to be made in order to get the most benefit from each move made and get your operations back on track.

Heatmap-Before-Slotting-Optimization

OptiSlot Users can color code by any item or slot attribute for better visualization of the facility, pictured above is the overhead view of a facility. This heatmap is before an optimization, items are color coded by Unit Movement, note that items in red are the fastest-movers and are located throughout the facility. The heatmap below shows the facility after performing an optimization.
Heatmap-Optimized-Slotting

Improve Productivity by Making Only the Highest Value Sustainable Slotting Moves

How to perform a productivity repairing slotting strategy in the warehouse

  • First, identify the easiest to pick locations and the most difficult to pick locations, in terms of bend-and-reach and travel distance
  • Then, identify fast-moving items in difficult to pick locations, and slow movers in easy to pick locations
  • And finally, redistribute these worst offenders to improve overall picking productivity while keeping the overall slotting strategy intact

"Disruptive changes to supply chains are more common than ever, and globalization has magnified the impact and visibility of these disruptions. According to Gartner’s 2019 Responding to Disruptive Changes Quantitative Initiative, more than three-quarters (76%) of supply chain professionals say disruptive changes have increased compared to three years ago. In addition, 72% agree that disruptions have become more impactful. Furthermore, disruptive changes are coming from new sources and at a more rapid pace, with coronavirus representing a prime example."

- Gartner, Coronavirus Requires Supply Chain Leaders to Adopt Enhanced Decision-Making Abilities, Sarah Watt, John Johnson, 14 February 2020.

Going forward, it will be essential to take into consideration the probability of disruptive events and note it is a critical responsibility to any organization to ensure operations have prepared for the occurrence of such event(s). Establishing processes and techniques both internal and external to the four walls of the warehouse will be key.

2 comments on “Redirecting Energy – Resilient Warehouse Slotting for Destabilizing and Disruptive Events”

  1. This was a great article. I really enjoyed the framing of the problem. But, it is an easy sell to me because I have been talking about resiliency in warehousing for a long time.

    I would suggest a future topic for you: performance drift. Same problem different pile. But this is more about the stealthy decay of the operation because we aren't monitoring how the warehouse team is introducing new items into the pick line.

    1. Kent, thank you for your kind words and for the suggestion! Performance drift is definitely a worthwhile topic; our team sees operations struggling with this on a regular basis. When warehouse teams get busy keeping up with the daily urgent tasks or do not have routine processes in place to catch the 'drift,' the health of the warehouse can decline rapidly.

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