Warehouse Slotting in the E-commerce Industry

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What is Warehouse Slotting?

Simply put, warehouse slotting is the practice of arranging inventory at a warehouse or distribution center. The ultimate objective is to make selecting and refilling faster, more efficient, and effortless. Slotting can also help enhance inventory management and save on overall storage expenses.

Warehouse slotting takes into account item velocities, dimensions, weights, product groups, and other factors to establish the best warehouse layout. Of course, when we consider an entire warehouse rather than a workshop, things become more complex. 

Warehouse slotting is more than just locating empty shelves or floor space for new products. It must be integrated into your whole warehouse management strategy and aimed at uncovering hidden efficiencies.

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The Two Kinds of Warehouse Slots

1. Fixed Slotting 

The slotting procedure in which a product has a fixed or defined picking place. This type of slotting is done with the expected minimum and the maximum number of items to be placed in an area.

Fixed slotting, as the name suggests, indicates that an item has a precise, fixed spot for selection. These are established with the projected minimum and the maximum number of objects to be placed in mind.

Fixed slotting is a conventional method of operating in the warehouse sector, but it may be losing favor. Replenishing item slots from reserve storage can be time-consuming, and rising shipping quantities necessitate faster turnaround times.

2. Random Slotting 

Random slotting is a slotting procedure that stores items in different warehouse zones. This method is ideal for massive warehouses that hold significant amounts of merchandise.

Random slotting can be faster because there is less time spent restocking, although pick zones can be considerably bigger than permanent bin sites. To summarize, random slotting may necessitate an enormous warehouse.

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How to Develop a Winning Slotting Strategy for Your Warehouse or Distribution Center

The ideal slotting approach for your e-commerce business is determined by the number of products you offer, the sorts of things in your product line, and whether you predominantly sell single items or in greater numbers.

Here are some strategies for your warehouse:

Slotting based on sales volume

One of the most often used warehouse management optimization techniques is to place the products with the highest turnover in the slots nearest to the packing station. Prioritizing hot-selling items reduces travel time for workers as they draw the most popular things throughout the selection process. Products that move the slowest are assigned to the least accessible warehouse zones.

However, warehouse slotting based on sales volume or velocity has one disadvantage. Clustering too many workers in the same place in a busy warehouse can lead to bottlenecks. To boost picking efficiency, use a hybrid technique like zone or wave picking.

Set distinct borders for each zone

Larger warehouses have the luxury of being a bit more flexible with zone utilization, committing more space to sections, or even having a little unoccupied space. Smaller warehouses, on the other hand, don’t have that choice. When organizing or rebuilding your warehouse, make sure to define firm and fast limits for each zone to make the most of your space and avoid crowding out any necessary processes.

Considerations for product weight and type in warehouse layout

The type of merchandise is another essential aspect of warehouse planning. Heavy goods will most likely require a room on or near the ground level. Workers may then simply put boxes into picking carts designed to carry hefty loads securely.

Fragile item storage should be at a level that allows for careful handling when selecting. Keep delicate items in a spot where they are unlikely to be shattered or damaged, as other items are placed on and off the shelves.

Consider redesigning your racks to make more room

Racking is the first consideration for optimizing warehouse space. But before you go on a rack redesign, consider the following notion, which will decide whether your effort will be worthwhile enough to gain the extra space you desire.

Examine your storage capacity

This is critical, and if done correctly, may be advantageous to your warehouse. Examine your warehouse’s storage capacity and determine how to improve it to simplify packing and shipping. Evaluate and build your warehouse carefully to improve efficiency and guarantee that your inventory is never out of stock or overstocked.

Warehouse Management System 

Warehouse inventory is continuously altered to match sales and market demand, and maintaining an up-to-date slotting plan can be time-consuming. A warehouse management system automates the processing of SKU (stock keeping unit) data, real-time inventory levels, optimal resupply dates, and other valuable features.
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Why is Warehouse Slotting Essential for E-commerce Companies?

Slotting is one of the most effective methods for keeping a warehouse orderly and working smoothly. It forces a corporation to think about both the overall warehouse structure and the ideal location for each SKU.

Rather than leaving inventory to accumulate until it is sold, slotting anticipates warehouse operations and develops a strategy to optimize it as much as possible. Slotting can decrease inefficiencies such as typical bottlenecks or difficulty identifying an SKU.

Pickers can also find SKUs and fulfill requests more easily. Slotting successfully increases productivity and throughput by keeping everything in its rightful position.

What is Macro Slotting vs. Micro Slotting?

Macro slotting takes into account the overall layout and space of the warehouse or distribution facility. The facility manager must examine the placement of their pick zones during macro slotting. This architecture is crucial in an environment where customers expect two-day shipping — warehouses must offer high throughput designs with low congestion at the receiving or loading sections.

Micro slotting focuses on the precise arrangement of individual products, from the specified SKU region to the storage medium itself. 

Its purpose is to arrange each SKU at the most optimal spot along the pick path, which is the path pickers travel when doing warehouse operations. The positioning of goods and pallets within picking zones is referred to as micro slotting.

Micro slotting may have a tremendous impact on the warehouse ecology, particularly in terms of worker health and safety. 

The fundamental goal of both forms of slotting is to increase efficiency and space while minimizing the amount of time and mistakes involved in locating an item’s position.

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The Benefits of Efficient Warehouse Slotting

Efficient warehouse slotting has a significant influence on your facilities and is discussed in this guide. Slotting should result in an effective use of space, reduced levels of handling, and shorter travel times for your pickers.

Replenishment Efficiency

As a result of good slotting, the majority of product measures supplied for selection are standardized. As a result, the work required to replace product storage sites is greatly decreased.

Improved storage capacity

Slotting can aid in identifying chances to expand storage capacity. If you believe your warehouse is at capacity, revisiting how inventory is currently housed is an excellent way to reclaim much-needed inventory space. By making an effort to optimize existing warehouses, you can postpone expanding and/or incurring additional fees for a new warehouse.

Picking faster and with fewer mistakes

Proper slotting can enhance picking accuracy by minimizing any potential picker misunderstanding. Placing things in the order that makes the most sense for the picker (for example, by kind, size, weight, and so on) enables speedier selection by eliminating the guessing of where particular items are stored. Pickers can thus concentrate on speed rather than wasting time looking for the proper item.

Workload Balancing

Knowing the high, medium, and low-moving products, as well as their appropriate bin placements, allows production and operations managers to distribute the workload evenly across warehouse personnel.

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Warehouse Slotting Best Practices

1. Items that move quickly vs. slowly

Fast-moving products are exactly what they sound like: they enter the warehouse swiftly and leave just as quickly. It is frequently preferable to store these things at the entrance of the warehouse. Slow-moving goods, on the other hand, take weeks or months to turn around instead of days. It may make sense to store them in the rear of the warehouse unless they are quite heavy, in which case they can be picked first and form the pallet’s base.

2. Slot inventory by SKU velocity

SKU velocity refers to how frequently each SKU is picked over a certain period of time. You’ll have to determine which things move the fastest. It displays which goods enter and exit the facility the fastest — and which ones move the slowest. Picking speed can be increased by grouping fast-moving and slow-moving objects together.

3. Technology or zone

Permanent bin positions do not exist in warehouses organized by zone. Instead, perishable items are placed in refrigerated zones and so on. When slotting items within these zones, take care to position them for easy access. This includes accounting for the technologies utilized to reach these goods, such as by hand, ladder, forklift, and others.

4. Storage medium and item level

A slotting method should consider whether an item is picked at the pallet, case, or single piece level. Moving a pallet or a case may necessitate using a forklift or a cart. Because of these movements, other workers in the region must maneuver around a temporary obstruction, slowing them down. A wise method places high-level objects where they won’t hinder other pickers.

5. Changes in warehouse arrangement according to the seasons

A slotting method should consider whether an item is picked at the pallet, case, or single piece level. Moving a pallet or a case may necessitate using a forklift or a cart. Because of these movements, other workers in the region must maneuver around a temporary obstruction, slowing them down. A wise method places high-level objects where they won’t hinder other pickers.

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Warehouse Slotting Algorithms

Administrators must consider various criteria in managing warehouses, and managing altering priorities is tricky due to a large number of things under supervision. Many facilities managers are increasingly seeking direction from software.

The “ABC” approach is one simple slotting algorithm. To estimate item velocity, this technique simply depends on order history data. It typically gathers the SKUs of all things ordered in the previous 30 days. These things are then classified as follows: 50% of the items with the highest line orders are classified as group A, 25% as group B, and 25% as group C. Group A items are placed closest to the door.

The ABC technique is useful when warehouses handle increasing SKU numbers, and more inventory turns. Speed isn’t the only factor to consider while choosing one thing over another.

As facility managers cope with rising complexity, warehouse slotting software is the best and only option. Facility managers may set the dimensions of their storage bins, construct user-defined putaway/pick sequences, and integrate this information with demand projections to programmatically optimize the warehouse. This implies warehouse managers may delegate responsibility for warehouse slotting and concentrate on their primary strengths.

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Warehouse Slotting Optimization

It is critical to optimize your warehouse to get the most out of it. Therefore, slotting is essential for making your warehouse as efficient and structured as feasible. Here are some tips on warehouse slot optimization:

Maintain a clean and well-organized warehouse

Slotting requires structure at the slot level, but it is more than that. Slotting works significantly better when bins have labels, things stack properly, and there is no leftover packaging material blocking up aisles.

Inventory should be reorganized

Speed is not the primary purpose of the slotting procedure. It should be simple to get to a particular shelf and to locate an item on that shelf. This implies that elements like labeling and organization must also be considered.

Determine storage capacity

Warehouse slotting will not operate successfully unless managers consider macro-slotting in addition to micro-slotting. That implies the warehouse’s organization must make the most of the available space. This guarantees that concerns such as over- or under-stocking do not disrupt the slotting process.

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What are the Disadvantages of Slotting?

Tiresome process

Manual slotting is a difficult process when done correctly. This is the solution if your users need to access data from different systems, cross-reference it, complete the necessary computations, and then make judgments for thousands of items. In these circumstances, the proper approach is frequently abandoned in favor of assumptions. In a distribution center, like in life, assumptions rarely provide the desired results.

A slotting optimization system’s job automatically includes several complicated activities in the background, such as recommending new pallet designs and corresponding workforce requirements based on actual data.

The system, if not flexible, gives rise to several issues 

While the operational issues that executives and operators face are often similar, no two operations are the same. If your warehouse slotting optimization system is not adaptable enough to your individual operation’s complexities, it will impact overall performance. A system designed for simple, single-item transfers, for example, will not suffice if your operation involves multi-variate slotting.

Obsolete technology

We are all aware of how swiftly technology advances enormously in many circumstances. It is critical to use modern technology to your advantage when developing any type of system. 

Most businesses are opting for cloud-based technology not just to reduce IT resource requirements, but also because cloud systems provide a level of flexibility that on-premises systems do not. Cloud technology also enables service providers to offer always-updated solutions and to collaborate as partners rather than vendors.

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Elements to Examine as Part of a Warehouse Slotting Strategy

Calculate warehouse storage capacity and availability

If your warehouse reaches 90 to 95 percent capacity, it is recommended that you check your slotting criteria to determine if space is being used efficiently. You must also consider the precise type of industrial racks employed, especially in high-density or direct-access systems. In general, a high-density system is more suited for inventories with a large number of pallets per SKU, and a direct-access system is more adaptable when managing a small number of pallets per SKU.

Stock turnover

Stock turnover allows you to organize items based on how frequently they are taken from the installation. It is closely tied to demand throughout the year. Based on the ABC technique, the basic warehouse slotting rule consists of locating higher-turnover items closer to the receiving or shipping docks, and placing goods in farther away positions as SKU turnover diminishes.

The size, dimensions, and weight of items

When creating and assigning slots, consider object properties such as size, dimensions, weight, durability, and material utilized to create the slots.

For example, if you intend to store heavy objects in the slot, you need to know whether the material used to make the slot is strong enough to support the weight of the items. If not, it has the potential to shatter and harm other lighter-weight objects in the slot. The same is true for the slot’s size and kind. Separate spaces should also be provided for potentially dangerous objects and other heavy or bulky items.

Warehouse Safety

Operating a safe warehouse reduces the chance of occupational, on-the-job accidents, as well as the never-ending list of hazards and expenses involved.

It would also result in fewer impediments and obstacles throughout the workflow pipeline, reduced equipment downtime owing to improper operations and a lack of understanding, and a good work atmosphere that takes employee safety and well-being seriously.

Slotting in a 3PL Environment

Third-party logistics, or 3PL, refers to services that a company outsources to a supplier, such as logistical operations, storage, order preparation, and/or transportation. 3PLs often have a network of storage facilities, allowing you to transport items closer to end consumers and facilitate faster delivery.

Outsourcing your logistics services allows you to provide more competitive shipping rates. 3PL firms have relatively low delivery rates while working with several clients and managing large quantities of items.

Using Warehouse Slotting to Improve Customer Happiness

Understanding warehouse slotting entails balancing multiple features and priorities. A successful conclusion offers several advantages, including increased speed, safety, and customer satisfaction.

Effective slotting systems may save your supply chain logistics labor costs for selecting, replenishing, and storing items. Modern pallet racking solutions stack up as the verified solution and a cornerstone of a streamlined logistical operation. 

Modern racking solutions have been created and tested to meet the highest industry standards and to increase garage density to dispatch a single large SKU rapidly. 

Placing orders in deep racking structures that are clean enough to pass through a dual pantograph or sliding fork is ideal for small businesses that supply large quantities, as this can  enhance customer satisfaction.

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What is Reslotting in a Warehouse?

Many unfavorable situations compel facility managers to reslot the warehouse frequently. But a destabilizing event is a chance to optimize the warehouse even more.

New SKUs enter and leave the product’s life cycle on a regular basis. As new items enter or exit the market, warehouse managers must constantly reslot the warehouse to accommodate this.

Many times, seasonality can affect product velocity, but that’s not all. A corporation may decide to put an item on sale, causing a surge in demand. To anticipate these developments, facility managers should collaborate with marketers and keep their options of reslotting open.

If a warehouse reslots efficiently, it can realize benefits such as decreased selection and replenishment of labor until the next destabilizing event. At this point, “Sustainable SlottingTM,” also known as maintenance slotting, or another reslot will be required.

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The terms “fulfillment warehouse” and “fulfillment center” are frequently used interchangeably. A standalone warehouse is very different from this. A warehouse is often used to store merchandise. However, a fulfillment warehouse performs many additional functions in addition to storage.

Fulfillment is the process of transporting products to the end client. Warehousing refers to the storage and preservation of inventory while it is being transported between the manufacturer, wholesaler, retailer, and, eventually, the client. 

A smart warehouse is a big structure that stores raw materials and processed items and employs machines and computers to fulfill routine warehouse functions that were previously handled by people. Smart warehousing includes tasks like detecting and receiving orders, counting objects, storing products and remembering where they are later, and dispatching orders to the appropriate location.

Here are some of the most important data we need before slotting:

  • The number of pallets, cartons, and damaged cases for each SKU.
  • SKUs and their descriptions
  • SKUs that are commonly combined
  • SKU dimensions and weights
  • Total number of SKUs, reorder point and reorder quantity

3PL warehouses (third-party warehouses) are based on hiring a third-party company to outsource any aspect of your distribution, warehousing, and fulfillment services. Third-party warehousing is one of the most commonly utilized services in this category. A third-party warehouse can store, outsource, and transport everything you require, saving you money.

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