Solving the Warehouse Slotting Puzzle

by Lindsay Olla  |  December 30, 2019
Pallet Positions

While warehouse slotting sounds like a simple problem when described at a high level, it can be quite challenging to solve.

What is slotting in a warehouse?

Simply explained, warehouse slotting is when you arrange items within a distribution center into specific slot designations with the intention to increase productivity. In general, items (i.e. SKUs) and slots (i.e. locations) are prioritized by some defined criteria, then married or paired up per those criteria, while also taking into account any constraints the items and slots are subject to.

Items might be prioritized by:

  • Velocity
  • Case weight, etc.

While slots might be prioritized by:

  • Vicinity to the shipping dock
  • Size
  • Ability to support ergonomically correct picking, etc.

The way items and slots are prioritized are limitless and completely up to the person taking on the initiative and building the slotting strategy.

Balancing warehouse slotting goals and constraints

Noting that item and slot prioritization combinations and desired goals are almost limitless, warehouse slotting optimization becomes an increasingly complex challenge to conquer. Many companies desire to achieve numerous goals while also ensuring they adhere to necessary restrictions for safety as well as SKU-specific attributes like product fragility, flammability or value. When building a slotting strategy, competing goals and necessary restrictions inevitably require trade-offs.

A common example of competing goals that many companies face is the desire to slot for item/SKU velocity while also putting heavier items first within the pick sequence. Why would you want to create slotting rules to include both of these scenarios? How are these two goals competing with each other?

Let’s start with SKU velocity.

What is SKU velocity?

SKU velocity describes how frequently and quickly an item (or SKU) is being picked over a designated period of time. A common warehouse slotting rule included in many strategies is to take the highest velocity items, aka fast-movers, and place those items in prime locations that are easy to pick or are in prime locations near the loading dock.

Why place heavy items at the beginning of a pick sequence in the warehouse?

Placing heavier items early in the pick sequence or pick path helps selectors pick items within the warehouse such that a more structurally sound pallet can be built. With heavier items placed on the bottom of the pallet, a solid foundation is created.

Why would you want to create slotting rules to include slotting for SKU velocity while also placing heavy items early in the pick sequence? How are these two goals competing with each other?

Both goals are important: putting fast movers near the loading dock reduces travel time for pickers which contributes to increasing selector productivity and helps minimize travel time and associated costs, while putting heavier items at the beginning of the pick sequence works to support building more stable pallets, reducing product damages that happen during transport. These two objectives may not necessarily align; for example, putting heavy items first might mean placing a slow-moving, heavy item in a choice slot near the shipping dock instead of a fast mover. The art of building a slotting strategy is balancing the competing goals to achieve the most benefit.

What is needed to get the most out of your warehouse slotting strategy?

Let’s start at the beginning: Data is key.

First, let’s discuss item data. If you intend to consider item orientations when placing your items, which can greatly help in warehouse space management, you will need all three dimensions of the slotting units:

  • Length
  • Width
  • Height
Length, width and height for various orientations.

If you do not have these dimensions, using the volume of the product is possible, but not advisable. Utilizing liquid cube analysis commonly causes SKU assignments to slots that are not compatible in size. Considering all three item dimensions and the slotted orientation is a much better approach to ensure the SKU will fit appropriately and that full space utilization for the slot is achieved. Note that if an item is allowed to slot in different units (cases, inners, eaches), you will need all packing unit type measurements as well.

Items with dimensions that aren't square-like in shape will often not fit into locations if using liquid cube measurements.

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.

Item and slot dimensions, as well as demand data, are required to complete a successful slotting initiative.

Depending on the goals and objectives for the project at hand, additional data may be helpful and/or necessary as well.

Below are some commonly used item attributes that are helpful when it comes to warehouse slotting:

  • Pick Unit Weight - Knowing the weight of the picking unit can help with several slotting strategies. Two common strategies that this attribute would help support are pallet building, which entails putting heavy items early in the pick sequence, and ergonomic picking, which restricts heavy items to slots between shoulder and waist heights, reducing the likely hood of injury and product damage.
  • Slotting unit weight - Slotting unit weight can be helpful in supporting ergonomics as well.  For instance, a replenisher may have to handle each unit when stocking items, like when replenishing cases. Taking this unit of measure into account, this repeated activity can be set as to not require consistent lifting above the head or below the knees. Knowing the slotting unit weight also ensures you won’t overload a racking beam, or case flow lane.
  • Lines or Frequency - Often slotting on the demand or unit movement of an item can be problematic. Instead, you should consider using the lines, or number of visits, an item receives in the demand period.  Let’s consider two items with equal demand numbers, both move 100 cases per week.  One is picked one case at a time, the other 20 cases at a time.  One item requires selectors to visit the slot 100 times a week and the other only 5.  Although they have equal demands, one should likely be in a prime slot while the other does not need to be.
  • Groups - If a group of items needs to be slotted together you will need to have a way to tag or signify the items accordingly within the data so that they can be slotted together in your strategy.

For locations you will want to capture all three opening dimensions, as opposed to just the volume, for the same reasons you want them for items: to support space utilization. Some additional attributes that are also helpful include:

  • Location - A location number or name corresponding to the location name in your WMS system. This allows the new slot assignments to be uploaded to the WMS in some instances. Locations are also helpful when generating moves.
  • Allowable Slotting Unit - A list of which units can slot in each slot.  For example, some slots may allow pallets to slot, and others cases.  Some slots might allow multiple units to slot in them, such as cases and eaches in a carton flow location.
  • Pick Path Number - The sequence in which the WMS would direct a selector to the slots.
  • X, Y, and Z Coordinates - XYZ coordinates are helpful if the slotting tool you are using supports an overhead view of the warehouse.  XYZ coordinates can also be useful for calculating travel distances if order analysis is part of your slotting strategy.

Other location attributes to keep in mind are:

  • Temperature zones
  • Hazmat areas
  • Sprinkler racking
  • Weight restrictions of the storage media

Finally, worth noting is order data.  You likely will want to know the expected improvements from a reslot or measure potential slotting scenarios against one another in terms of KPIs like lines per hour and total travel distance, to do this a simulation must be run, and, using actual order history, is a great way to calculate expected returns.

What causes the need to perform a reslot in your warehouse?

The need to reslot items is driven by two factors: changes in demand and changes in product mix. Your operations’ variability on each of those factors will determine the magnitude of moves needed to keep your slotting solution sustainable. Changes in demand can be caused by promotions, seasonality, and product life cycles to name a few.  Changes in product mix can include seasonal items, new item introductions, item deletions, and promotional items.  These changes can be referred to as destabilizing events. If a warehouse reslots efficiently, benefits such as reduced selection and replenishment labor can be achieved until the next destabilizing event, at which point sustainable slotting, also known as maintenance moves, or another reslot will need to take place.

The amount of moves you should make between destabilizing events will depend on the payback associated with the moves.  In order to get the most value out of your moves, it makes sense to prioritize them and to not consider making moves that don’t meet certain minimum criteria such as:

  • Not moving a minimum (defined) distance
  • Not switching aisles
  • Not switching slot groups
  • Not changing levels

For more information regarding the timing of a reslot versus when to perform sustainable slotting moves, check out our Warehouse Slotting: Moving Product With Purpose in the Distribution Center whitepaper which highlights the benefits, mechanics and timing of a reslot versus slot maintenance/sustainable slotting.

Is your warehouse in need of a reslot?

One common way poor slotting is misdiagnosed is thinking you are out of space.  Often a walk down the aisles reveals that many slots are half or less full, indicating the space is underutilizedThe warehouse is not out of space, just out of slots.  Exploring the use of smaller slots for slower items makes sense when in this situation. 

When operators indicate that replenishments are too high there may be opportunity for better slotting.  Often this means there is opportunity to swap fast moving items in small slots with slow moving items in larger slots.  This example is illustrated below.

In this example making a few clever swaps can greatly reduce replenishment efforts.

Also, keep an eye on dust levels.  An item covered in dust in a premium slot is likely mis-slotted. For more visual cues signifying a need for a warehouse reslot, check out the Solutions at WERC webinar, Slotting Optimization: Identifying Needs and Sustaining Benefit, here.

When is slotting optimization software the answer?

A general technique for measuring whether a slotting opportunity will likely require slotting optimization software to be addressed efficiently is to consider the SKU count and number of inventory turns.  Warehouses with large SKU counts and a high number of inventory turns are obvious good candidates for slotting and advanced slotting software as these operations will be more complex and attempting warehouse slotting with excel will prove to be difficult and not be able to provide as much benefit.  Here’s a list of SKU count & inventory turns and the associated opportunity for advanced slotting software:

  • High SKU count & high turns (example industry: grocery and food service):  Good candidate
  • High SKU count & low turns (example industry: aftermarket auto parts):  Good candidate
  • Low SKU count & high turns (example industry: consumer packaged goods):  Good candidate
  • Low SKU count & low turns (example industry: specialty items, under 200 SKUs): In this scenario it would depend on the complexity of the operation. More complex operations with low SKU count and low turns can likely benefit from the use of slotting software: Low to Medium candidate.

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