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Mark Fralick

GetUsROI has deep expertise in Warehouse Management System (WMS) design, development, modifications, integrations and implementations, with a special focus on RedPrairie/JDA solutions.

Supply Chain Comment

By Mark Fralick , President, GetUsROI

May 1, 2014

Logistics News: Slotting in the DC is Often More of a Journey than a Destination

Getting the Right Data at the Right Level of Granularity is Key

Often when I am touring a customer warehouse, the words "we could have better slotting", in one form or another, is stated. Everyone shakes their head in agreement, understanding that something is just not quite right.

Interestingly, the term slotting has different meanings to different people. Sometimes distribution managers equate it to a product they have to buy, others to a process that must be performed in the warehouse. So, let's start with a definition. I think of slotting as: the process by which product migrates to its optimal position given picking volume, item characteristics, and warehouse constraints. In other words, it's about having the product in or getting the product to the best possible position to pick it considering all the other things going on in the facility.

Govind Says:

In nearly every engagement of this kind, as we navigate the operational improvements, it is the visibility to the changing profiles of orders and picking that usually yields the biggest reward.
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In reality, that sounds like a pretty tall order. Maybe this is why a lot of companies don't even attempt to address the problem - the job seems just too hard. Instead, they wrestle with replenishment issues and too many movements (or not enough), and classify their situation as "We have a lot of problems with replens."

Let's first break the problem into two pieces: ( 1) understanding what to do and (2) executing those decisions. My feeling is that the first task is more difficult most of the time, by an order of magnitude, than the second one is. The second is all about making the moves. But what actions - and when? That is the really hard part.

This conversation eventually leads us to forecasts. Often, inventory operations managers drive their positioning (slotting) decisions based on forecasts. However, the forecasts, even if they are roughly correct in numerical terms, do not by themselves provide all the information needed to optimally position inventory.

That is because a lot of these forecasting tools are too locked into old-fashioned metrics and reporting mechanisms. These often do not reflect the constantly changing order profiles in a modern logistics organization.

Additionally, in order to get the product properly positioned, we need to understand how it is typically picked, not just how much of an item is ordered in a month.

Do we move items in mostly pallet quantities, case quantities, inner packs or eaches? We may have very high case volumes and small quantities of eaches, as an example. So, when the forecasting system says your velocity for this item is an "A" - what does that mean? Pallets? Cases? Inner Packs? What? That makes all the difference in the world in terms of slotting decisions.

Thus begins a journey of discovery. Whenever you see a company that is battling slotting challenges -usually meaning it has replenishment problem - the process usually should begin with an information gathering exercise that is often eye-opening. We like to start using a simple tool that provides a basic analysis of picking percentiles for items at the pallet, case and each level. That is a good starting point, but often you need to perform an even more sophisticated analysis to make the right decisions.

Do we have big product introduction or close-out order that create temporary irregularities in the picking patterns? Or, do we have specific customers whose ordering patterns create periodic spikes that could be addressed by operational accommodations?

In nearly every engagement of this kind, as we navigate the operational improvements, it is the visibility to the changing profiles of orders and picking that usually yields the biggest reward. This information, often best available within the WMS itself, becomes the key to unlocking the replenishment or slotting problems. And once unlocked, it allows the WMS administrators to quickly and accurately react to changes in profiles and placement.

Before worrying about what actions to execute, first start looking in your WMS for the trends at different units of measure (or packaging types). The WMS may be the only place to get this sort of information. Then, start to classify products as much by unit of measure as by SKU. Without this level of information, you will be hamstrung when trying to make slotting decisions.

So, when considering replenishment problems or slotting generally, don't be afraid of the journey. Usually, the journey is the destination. The analysis, at the right level of granularity, almost always will point the way.


The Bottom Line: Don't let perfect be the enemy of the good. No company has perfect slotting. That doesn't mean you should not try to drive as much improvement as you can by getting your arms (and head) around the data.


Agree or disagree with out expert columnist? Let us know your thoughts at the Feedback section below.

Recent Feedback

What's to agree or disagree with? A lot of generalities but no specific "how-tos." If you want to minimize (reduce) travel time, then start with finding out how many times the order pickers must travel to a specific item - that's not the same as information that reveals pallet, case, or each figures.

Adjunct Instructor
Columbus State Community College
May, 01 2014

As always, Mark is spot on.  It is easy to throw your hands up and point towards replenishments as the issue, but there are so many opportunities for improvement lurking under the surface just waiting to be discovered.

One could also argue that, it is fiscally irresponsible not to take the time to better understand the situation and find insights into the operation that were unknown and potentially counterintuitive beforehand.  This could be an untapped source of innovation just waiting to be exploited.

Casey J. Winans
Managing Partner
MacGregor Partners, LLC
May, 13 2014

Fully agree! Slotting is a key point for an efficient DC order fulfillment. We very often help our customer in defining the right SKU slotting and maintaining it using simple tools taking into account a product's varaibility.

Engineering Director
SAVOYE - France
May, 14 2014