Warehouse slotting strategy is an essential part of optimizing warehouse operations. Yet, warehouse managers often overlook their importance in favor of more visible operations like picking and packing. Slots in the warehouse are where items are stored while waiting to be picked, packed, or shipped. Imagine a library with books organized by genres and then by author. A librarian who is smart about slotting will group similar books together to make the most of the shelf space, and for ease of access when patrons come looking for specific titles.
Slotting strategy in a warehouse setting is the same, except warehouse managers are organizing items based on size, weight, packing requirements, and seasonal trends among other factors. The goal is to make the most of the available space while making it easy for workers to access the items they need.
When done right, smart slotting strategies allow for faster order picking, better use of storage space, and improved safety – all without requiring additional staffing or any large capital expenditures. With order picking operations accounting for over 50% of warehouse labor costs, a well-planned slotting strategy can have a major impact on profitability.
While there is no one-size-fits-all approach, there are universal principles that apply across all warehouse operations, regardless of their size and scale. Here are five steps to help you make the most out of your warehouse slotting efforts.
Step 1: Analyze Your Inventory
Accurate data is the key to success in warehouse slotting. Before making any changes, it’s crucial to have a clear understanding of your inventory. To begin, conduct a thorough inventory analysis to identify what items you have, their quantity, and their location in the warehouse. This step is foundational to any successful slotting strategy.
Not all inventory items carry equal demand weight. Certain items will be more popular than others and may need to be placed in more accessible locations. Evaluating the historical sales data of each item can help you determine which items should be placed in more convenient locations, and which products can be stored further away.
Seasonal trends and peak periods should also be taken into account when slotting. Items that are in high demand during certain times of the year can have their storage locations adjusted accordingly. For example, winter gear tends to be in high demand during colder months while swimming apparel will be popular in the summer. By understanding these patterns, you can arrange your inventory to align with anticipated demand. This will improve your order fulfillment efficiency and minimize unnecessary movements.
Similarly, certain items may experience a surge in popularity around specific events or holidays. Anticipating these peaks allows you to position these items in easily accessible areas during those times. Always remember to revert to your standard slotting arrangement once the peak period has passed to maintain overall efficiency. Lastly, keep a close eye on market trends and customer buying habits. These insights can help you predict unexpected peaks and adjust your storage locations accordingly.
By the end of this step, the following inventory characteristics should be available:
- SKU quantities
- SKU sizes and weights
- SKU velocities
- SKU seasonal demand patterns
- SKU locations in the warehouse
- SKUs with high affinities
After analyzing your current inventory and sales data, it’s time to take a look at your warehouse layout and slotting arrangement.
Step 2: Review Your Warehouse Layout
Your slotting plan should be tailored to the layout and design of your warehouse. Begin by mapping out each aisle, shelf, bin, or container in which items are stored. Record the size of each storage unit as this will inform how you arrange your inventory. Consider any existing obstacles like pillars and walls that may impact the movement of materials in the warehouse.
Make sure to pay attention to the pick paths within your warehouse, as this is where a majority of labor hours will be spent retrieving items for picking. Identify any inefficient routes that could be causing unnecessary movement or increasing worker fatigue.
Take into account safety considerations like forklift traffic routes and emergency exits. Keeping these in mind while slotting will help maximize space utilization without compromising worker safety or increasing risk of accidents.
By the end of this step, the following warehouse characteristics should be documented:
- Size of each storage unit
- Obstacles in the warehouse
- Pick paths within the warehouse
- Safety considerations like forklift routes and emergency exits
Once you have an understanding of the dimensions of your warehouse, it’s time to create a slotting matrix.
Step 3: Create Your Slotting Strategies
With the information gathered from steps one and two, a slotting strategy should be created that takes into account both your inventory and warehouse layout. The key is to balance accessibility and storage capacity. While randomly slotting items may increase storage capacity, it will also require more time and resources to locate items. And while slotting based on velocity (turnover) may improve pick rates, storage capacity and space utilization may suffer.
The optimal slotting strategy will therefore vary from warehouse to warehouse and will depend on its unique characteristics. For space constrained warehouses, random slotting may be the best option to take advantage of every inch of storage space available. Random slotting also works well for warehouses with a high percentage of unsalable items or slow-moving SKUs.
For larger warehouses, velocity based slotting or combining random and velocity based approaches may be more suitable. In hybrid slotting strategies, fast-moving SKUs should be placed in the most accessible locations for faster pick rates, while slower movers can be stored further away in random slots. This allows you to maintain storage capacity while improving accessibility for the most popular items.
Affinity-based slotting has emerged as another popular strategy for slotting inventory items in a recent years. This strategy is based on the idea that certain items are frequently purchased together or in close succession, and placing them in the same vicinity can reduce travel time for pickers. To take advantage of this approach, identify SKUs or item groups with high affinities and ensure they are placed near each other in the warehouse. For example, if a customer orders a television and a television stand, having these two items located nearby each other can streamline the picking process.
By the end of this step, your slotting strategy should be finalized. It should include the following characteristics:
- Slotting pattern (e.g., random, velocity-based, hybrid or affinity-based)
- SKUs that should be randomly slotted
- Fast moving SKUs that should be placed in easily accessible locations
- SKUs with high affinities and their optimal location in the warehouse
Once your slotting plan is finalized, it’s time to put your strategy into action.
Step 4: Implement Your Slotting Plan
With your slotting strategy in hand, it’s time to start mapping each SKU to its optimal location within the warehouse. To make the workload manageable, start by sectioning off specific areas of the warehouse and assign a team to each section. It’s often easiest to begin by slotting the items that have the highest velocity first to ensure they are placed in the most accessible locations. Then work your way down the list until all SKUs have been slotted in their assigned location.
Give each worker clear instructions on what they should be slotting and provide them with the necessary resources (forklifts, pallet jacks, ladders, etc.). Make sure to encourage them to ask questions if they have any and double-check all slots against the slotting plan following the completion of each section. Keep track of your progress and be sure to cross-check locations against the slotting sheet regularly. And remember to test out the plan by having workers complete mock picking activities.
During implementation, make sure to document any issues that arise and adjustments that were made. This will help inform future slotting strategies and ensure a higher level of accuracy with future slotting plans. Regular cycle counting can also help spot any discrepancies between the slotting plan and what is actually being stored in the warehouse.
Baseline pick rates and replenishment rates should be established before implementation for comparison following the completion of the slotting project. This will help track the effectiveness of the slotting strategy and provide a benchmark for future slotting projects. For space constrained sites, warehouse utilization should also be tracked to ensure the most efficient use of space.
While not an exhaustive list, the following tips can help ensure a smooth implementation of your slotting plan:
- Create a timeline and set realistic expectations for completion
- Schedule a stand-down meeting to review the slotting plan with warehouse staff
- Allocate a dedicated team and assign a lead to manage the implementation
- Hold regular check-in meetings to track progress and address any issues
- Test the slotting plan with mock picking activities
- Double check all slots against the slotting plan following completion of each section
If labels, signs, and color coding systems are not already in place, now is the time to implement them. Having clear and visible labels for each slot will help ensure that everything stays organized in the future and make it easier to locate items within the warehouse. By the end of this step, your slotting plan should be completely implemented and integrated into your warehouse operations.
Step 5: Monitor, Measure and Adjust
Now that your strategy is in place, it’s important to track the performance of your slotting plan and make adjustments as needed. Baseline pick and replenishment rates should be compared to results following implementation, and if necessary, adjustments should be made. Keep in mind that if the warehouse layout was changed, pickers may need to acclimate to the new locations and processes. Creating an A3 document to measure performance over time while keeping record of any changes that were implemented can be a great way to track progress.
Regular cycle counting can also help identify any discrepancies between the slotting plan and what is actually being stored in the warehouse. If any slots are found to be empty, make sure to reassign the inventory and adjust the slotting plan. To ensure a smooth transition, review the slotting strategy with warehouse staff as often as needed and encourage them to provide feedback.
For space constrained sites, space utilization should also be tracked to ensure the most efficient use of space. If storage capacity is still an issue, a warehouse redesign may be necessary.
The goal of this step is not only to measure outcomes but also to inform future strategies. Slotting is an ongoing process – new items may be added at a later point and SKUs may move from slow moving to fast moving categories. Keep an eye out for any changes in demand or turnover rates that necessitate a re-slotting and adjust the slotting plan as needed.
The process of slotting items will need to be repeated periodically as inventory levels change, sales patterns shift, and new SKUs are introduced. Most warehouse management systems (WMS) allow you to store and track this information digitally, simplifying the process and making it easier to make adjustments in the future. More advanced WMS solutions can even suggest optimal locations for items based on the slotting plan and other factors such as pick rates, replenishment rates, and SKU affinities.
Warehouse Optimization Without the High Price Tag
A well-executed slotting plan can help save time, money, and resources – all at a fraction of the cost of a full-scale warehouse redesign. Compared to automation or technology solutions that offer similar results, slotting can provide a great return on investment without the high price tag. By following the five steps outlined above, you can create a slotting plan tailored to the needs of your warehouse and iterate as needed to ensure the most efficient use of space and resources.
Have any questions? Contact our team of experts to learn how you can leverage slotting strategies to optimize your warehouse. With decades of experience in the fulfillment industry, our team can help you create a customized slotting plan tailored to the needs of your warehouse.
