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The Art and Science of Warehouse Slotting Optimization The Art and Science of Warehouse Slotting Optimization Introduction This article discusses a critically important distribution center process that slot games for free play vast majority of distribution operations do not effectively manage which is warehouse slotting.
Quite simply, slotting is the process of organizing how items are physically positioned within the warehouse for order picking purposes.
The title of this article refers to slotting as part art and part science and indeed this is very much the case.
This article discusses why slotting is important, the pros and cons of random slotting versus fixed slotting, the type of productivity gains companies are experiencing due to optimized slotting, and how to think through a simple slotting exercise for your distribution operation.
This topic is truly worthy of a book so we can really just skim the surface of this topic within this article but hopefully the reader click to see more some insight on key slotting issues along the way.
Why Is Slotting Important?
A well-slotted distribution center will always outperform one which has limited effort put towards this important process.
The vast majority of distribution centers do not earmark sufficient time or resources to manage slotting and to this day it remains one of the greatest sources of low hanging fruit.
For companies that take slotting seriously, there are several off the shelf software applications dedicated to optimizing slotting.
Random Slotting Versus Fixed Slotting The first question is to answer is whether or not to pursue fixed versus random slotting.
Typically, each fixed pick slot is configured with a minimum and maximum quantity for the assigned item within the warehouse management system.
The reserve inventory is typically managed on a random basis and is usually stored close to the pick slot within overhead storage locations.
When the inventory in a pick slot is depleted, the item is picked from a new location within its assigned pick zone.
The intent is to reduce work spent performing replenishment of pick slots because incoming receipts may be putaway directly into empty pick locations within the pick zone.
Although the need for reserve inventory may still exist in this environment, the number of replenishment hours will be reduced because many putaways go directly into the pick locations.
One downside to this approach is that read article pick lone is typically longer than in a fixed pick environment because at any time many items will have more than one pick slot location assigned to them.
Whether you choose one slotting and expanding versus the other may be a function of the warehouse management system you are using within your facility.
Some WMS applications are designed around the assumption that random slotting or fixed slotting is the de facto methodology to operate the picking function.
Not many WMS applications support both approaches.
Speaking frankly, the vast majority of companies use a fixed slotting strategy because this has historically been the way to operate.
Random slotting may provide a stronger fit in certain types of operations.
Some examples follow to illustrate why this topic is a little more complicated than it may seem at first glance.
Products range from large format 1.
With random slotting slotting and expanding place, the pickers often spend time repacking the boxes during the picking process because a large format bottle does not easily fit into the box unless items that were previously picked into the box are removed to make room for the larger bottle.
Order pickers end up having to repack most of the boxes that are being picked into which adds minutes to the pick process.
The net result is a 50% picking productivity penalty that is gained when the company switches to a fixed picking environment.
Products are organized to ensure that heavy cases are positioned at the base of the pallet and light cases are positioned at the end of the pick line so that they end up on the top of the pallet.
Family groups are used to divide the pick line into store-friendly categories e.
Case heights are used to sequence taller cases through to shorter cases to ensure that solid pallets are constructed during the pick process to minimize pallet instability which results in product damage during transit.
Keeping faster velocity items based on outbound customer order frequency in the golden zone of the warehouse i.
The key to gaining productivity is to strategically slot the A and B items to be quickly accessed at floor level and close to packing and shipping.
Many of these companies are also faced with the situation whereby there is not enough pick locations at ground level for the variety of products being distributed which forces them to resort to vertical picking.
In general, it is always less expensive to pick orders at ground level versus having to rise vertically with any type of man-up vehicle.
My rule of thumb is that it costs 3 times more labor dollars to pick an item vertically versus picking the same item at ground level.
Thus random slotting may make sense for companies that need to frequently move inactive items out of the pick line such that the SKUs being selected at ground level are always the items that are truly active.
This approach ensures that the length of the pick line is perpetually minimized and that order picking is performed at ground level as much as is possible.
What Type of Productivity Gains Are Companies Experiencing Due to Optimized Slotting Efforts?
To answer this question, there are two types of companies that should be queried.
Often, the consultant will develop creative ideas that go beyond the slotting question.
Numerous companies claim to have some flavor of slotting as a module within their WMS solution offering and many of these slotting modules are quite frankly overly simplified.
The smaller boutique software firms that make their living optimizing warehouse slotting will have good experience to offer on this subject.
In other words, a company that is starting from the position of being world class due to operating in a well-engineered and highly sophisticated environment will always find it more difficult to achieve productivity gains than the company that has a highly basic operation where there has been little or no science applied to the organization of the facility.
For this reason it is difficult to generalize about the productivity gain from optimized slotting which will be different for each operation.
Having said this, as a general rule of thumb, companies that focus on managing the slotting optimization process will generally experience a 5 - 20% labor productivity increase for the order picking function at a minimum.
It is important to keep in mind that order picking typically accounts for 40 - 60% of the labor hours in a distribution operation so this is the one area where productivity gains can make a solid contribution to reducing warehouse labor expense.
How to Think Through a Slotting Exercise for Your Distribution Operation One common misperception is that an expensive slotting package is needed to manage the slotting process.
While this may be true for some companies with larger distribution operations, slotting can be performed with Microsoft Excel for many small and medium sized distribution operations.
Here we take a look at how this can be done.
If you can obtain a dump of an outbound order file at the order line level of detail then this is always a good place to start.
Obtain a representative time period of orders e.
Establish a counter to slot and wing the frequency of order lines and pieces that each item was ordered during the time period.
The same type of product velocity ranking can be assigned on the basis of cube velocity if this is a more pertinent measure to use such as in a full case operation.
Items are typically assigned to a family group on the basis of material handling characteristics such as product size, shape, weight, dimensions, handling requirements, fragility, value, etc.
A family group is intended as a way to group like items together within a common warehouse zone e.
Similarly, if some items are only ever ordered by one customer, then a family group could be created for these SKUs so that these items are logically grouped together in the warehouse.
This way, the order pickers need only pass through this zone to pick orders for this one customer.
Full case items and palletized items are generally assigned to selective racks whereby the picking elevations may be configured for one-level, two-level, or three-level picking.
It helps to have a CAD layout of the building at this point so that you have some form of geographical representation of the warehouse.
The zones established in the operation are assigned by you and they are really meant to correspond to your family groupings.
Since you now know how many items belong to each family group and storage media type, you can begin to assess the sizing slot games for free play your zones to accommodate the SKUs being slotted into each zone and therefore the number of pick facings required.
A percentage of empty slots should always be provided in each zone as a function of the number of new items that are typically introduced over a rolling 4 week period.
New item introductions should be researched before getting started on the slotting process to ensure you provide enough flexibility for the addition of new SKUs to the operation.
Within each family, try and sequence taller cases before shorter cases if order pickers are picking cases to pallets in order to build a solid pallet.
For this reason, heavier products with solid packaging that move in layer or near layer quantities are always good or position at the start of a pick line because the provide a good base to the selection pallet.
If the hit frequency in the aisle is high e.
Family groupings can and should be established within these zones to ensure like items are grouped together which could be a reflection of how customers order these products or how they are incoming by source of supply.
Be sure to keep taller cases from being placed at higher levels of shelving for flow racks because it is hard for short people to reach up and over the lip of the box to grasp at the contents.
By keeping shorter cases on the topmost picking levels the operator can achieve better pick rates because it is easier to access the carton contents.
Slower moving SKUs should be slotted outside of the sweet zone and if the slow moving SKUs are heavy then they should be slotted lower crossfire slot 1 and 3 rather than higher up i.
It should be standard procedure to study the percentage of order lines being picked from each aisle once the initial slotting is done.
Sprinkle open slots either at one end of each pick zone or evenly throughput each zone, whatever your preference is.
It may not be 100% optimized, but it will be much more productive than an operation that has had little or no science put into the slotting process.
Slotting is all about getting the details right and it usually takes a person who understands the products to do this type of work.
A good order selector understands the products but may or may not have the ability to implement a good warehouse slotting effort.
A good consultant with experience in slotting can help your firm achieve its productivity goals with an easy-to-implement and simplified slotting optimization and maintenance program.
Marc Wulfraat is the President of MWPVL International Inc.
He can be reached at + 1 514 482-3572 Extension 100 or by.
MWPVL International provides supply chain, logistics distribution consulting services including slotting optimization.
Our services include: distribution network strategy; distribution center design; material handling and automation design; supply chain technology consulting; product sourcing; 3PL Outsourcing; and purchasing; transportation consulting; and operational assessments.
All Content Copyright © 2019 MW PVL International Inc.
MW PVL International Inc.
Our consulting services include,,,,, and much more.

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The New "Slotting" Regulations: What Are They And Why Should I Care?
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Summary and implications The UK banking sector is facing a number of challenges as a result of increased regulation and supervisory control which may adversely impact commercial real estate lending.
The objective is to improve capital ratios and supervision and avoid future bank failure and systemic risk in the wider economy.
As part of the increased regulation, the Financial Conduct Authority FCAformerly known as the Financial Services Authority, has introduced new guidelines in relation to slotting which seek to standardise risk assessment models across the banking sector.
The greater the risk, the greater the capital provision and potentially this will further reduce debt in the market.
Background The UK banking sector has been a key provider of debt to the commercial property sector.
Bank exposure to property assets has increased substantially, driven by the sector's attractive marginal profitability and low equity capital requirements.
Research by De Montfort University estimated the size of the UK property loan book to be £224bn at mid-2012, a significant increase on the £50bn book of 1999.
However, lending practices have recently come under renewed focus from regulators as they seek to maintain stability in the financial system.
The introduction of the Basel reforms sought to reduce the probability and severity of future fiscal crises, including requirements to strengthen the quality and quantity of capital held by banks.
The Basel Accords are the regulatory standards on capital that banks must set aside.
The latest Basel Accord, Basel III, is in the process of being implemented with a deadline of 2018.
Alongside Basel III, the FCA has placed greater scrutiny on the internal models used by banks when calculating their risk-weighted capital in lending to "specialised" income producing assets, and this includes commercial property.
Losses on commercial real estate have at times been volatile, and therefore difficult to model, which increased concern that banks were not setting aside enough regulatory capital to cover these risks.
All current and future performing property loans are to be assigned to one of four categories "strong", "good", "satisfactory" and this web pagewith risk weights attached to each ranging from 50 per cent to 250 per cent.
These weights then determine how much capital is to be held against potential losses on each loan.
The final category slot games for free play a loan in "default" category 5.
This refers to where there has been just click for source "event of default" under the loan agreement and the bank has decided to accelerate the loan.
Once a loan is in category 5, a bank is required to make no allocation to risk-weighted assets because the FCA suggests that the expected loss calculation would have written 50 per cent off the outstanding amount on any loan in default, so slotting and expanding further contingency slot machines and casino slots necessary.
Risk weights used to determine how much capital should be held against each loan Remaining maturity Category 1 Strong Category 2 Good Category 3 Satisfactory Category 4 Weak Category 5 Default Less than 2.
The effect of higher regulation and greater reserve requirements will be increased costs for both the banks and borrowers.
Indeed, the FCA initially estimated that slotting could lead to £1bn to £3bn of additional equity capital requirements.
A report by property analysts Investment Property Databank last year warned that slotting could also have a "significant" impact on the wider economy as it would force banks to rid themselves of unsustainable property loans.
The forced property sales that would result would "further depress" the property market, creating a "vicious cycle of further losses in loans secured by commercial property".
The British Property Federation BPF has also criticised the move from internal risk-based models to enforced harmonisation and consistency brought about by "slotting".
Commenting on the reforms, the BPF stated that they see these as being "almost certain to result in new systemic risk build-up, because risks cannot safely be assessed in an entirely objective way without perfect knowledge".
The BPF's view is that "regulators should focus on encouraging better collection and management of real estate lending data to support better internal risk-based models, and not on requiring all banks which will inevitably have different experience, expertise, customer relationships and business models to assess risks — which may look "similar", but almost certainly aren't exactly what they seem to be — in the same way".
Some property companies warn that the move, which could sharply increase their cost of borrowing, will exacerbate the already wide gap in values between buildings in London and those elsewhere in the UK and hinder the chances of economic recovery.
The largest lenders to the sector are also concerned that the tougher regulation will constrain their ability to finance new development.
Calculation of default interest In addition to the new slotting requirements making real estate lending more expensive to borrowers, lenders are also looking to pass on to the borrower any increase in slotting costs during the life of the loan.
This is being done by introducing slotting and expanding margin ratchet in the loan documentation where there is an event of default under the loan but the bank has not decided to accelerate and therefore the loan does not fall into category 5 and thereby increasing the interest payments which the borrower is obliged to make.
The rationale for check this out being, that where there is an event of default and the bank have not accelerated the loan this could change the loan from being in categories 1 to 3 and move it into category 4, thereby requiring banks to attribute a greater amount of capital against the loan than envisaged at the outset.
This provision goes further than the standard Loan Market Association documentation, which only provides for default interest on unpaid sums.
Furthermore there is no direct correlation between the additional amount of capital the banks are required to attribute to the loan and the increase in margin passed on to the borrower if default interest is applied.
Borrowers should be careful when negotiating new loan documents or amending existing deals and if in doubt should speak with an advisor.
Conclusion The new slotting requirements will make banks review their lending exposure to commercial property.
Given the difficulty of finding the additional equity required and the lower returns on capital, slotting may further restrict banks' ability to lend.
But this is to be balanced against other developments such as the slotting and expanding for lending scheme and other efforts by the government to encourage banks to stay open for business.
One should also not forget new entrants to the real estate loan market, such as insurance companies and senior debt funds, to whom the slotting requirements will not apply.
The content of this article is intended to provide a general guide to the subject matter.
Specialist advice should be sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.
Click to as an existing user or so you can print this article.
A recent decision by the Court of Appeal has over turned a High Court decision holding that a covenant to "maintain and forever after keep in good repair… The Supreme Court has decided that a rateable value of £370,000 should be entered into the ratings list for an office block in Blackpool despite.
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A disgruntled tenant challenged an "expert" surveyor's slot games for free play review decision on the basis that it erred in law.
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Original sense is rare or obsolete in Modern English; sense of "narrow opening into which something else can be fitted" is first recorded 1520s.
Meaning "middle of the semi-circular copy desk at a newspaper," the slot games for free play occupied by the chief sub-editor, is recorded from 1917.
The sense of "opening in a machine for a coin to be inserted" is from 1888 slot machine first attested 1891.
The sense of "position slot games for free play a list" is first recorded 1942; verb sense of "designate, appoint" is from 1960s.
Slot car first attested 1966.
Greek kleis "key;" Latin claudere "to shut, close," clavis "key," clavus "nail;" see v.
Wooden pegs seem to have been the original keys.
Word Origin and History for slotting 2 of 4 v.
Word Origin and History for slotting 3 of 4 v.
Meaning "drop a coin in a slot" is from slot games for free play />Sense of "take a position in a slot" is from 1940; that of "fit https://money-casino-spin.website/and-slots/d-and-s-slots.html into a slot" is from 1966.
Oldest sense is obsolete: "stab in the base of the throat" c.

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This article possibly contains.
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August 2015 A slotting fee, slotting allowance, pay-to-stay, or fixed trade spending is a fee charged to produce companies or manufacturers by distributors retailers in order to have their product placed on their shelves.
The fee varies greatly depending on the product, manufacturer, and market https://money-casino-spin.website/and-slots/slot-machines-and-casino-slots.html />For a new product, the initial slotting fee may be approximately 25,000 per item in a regional cluster of stores, but may be as high slot games for free play 250,000 in high-demand markets.
In addition to slotting fees, retailers may also charge promotional, advertising and stocking fees.
According to an FTC study, the practice is "widespread" in the supermarket industry.
According to retailers, fees serve to efficiently allocate scarce retail shelf space, help balance the risk of new product failure between manufacturers and retailers, help manufacturers signal private information about potential success of new products, and serve to widen retail distribution for manufacturers by mitigating retail competition.
The use of slotting fees can, in some instances, lead to abuse by retailers such as in the case where a bakery firm was asked for a six figure fee to carry its items for a specific period with no guarantee its products would be carried in future periods.
The same practice is common in as well, as far back as the mid-nineties.
In some countries, e.
Retrieved on August 1, 2006.
Retrieved on August slot games for free play, 2012.
By using this site, you agree to the and.
Wikipedia® is a registered trademark of thea non-profit organization.

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Are Slotting Allowances Efficiency-Enhancing or Anti-Competitive? Abstract Slotting allowances are lump-sum payments by manufacturers to retailers for stocking new products. The economic rationale for slotting allowances is controversial. Some argue that slotting allowances are efficiency-enhancing; others argue that they are anti-competitive.


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