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.
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.
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.
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.
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.
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.
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.
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.
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.
"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.