13. Products not slotted according to pick frequency
Traditionally, before
computerised stock systems people stored products in warehouses in logical
groups so that they were easy to find.
For example if you were a hardware wholesaler you would keep all the
hand tools together with hammers, chisels, screwdrivers etc. all grouped
together. Lots of small warehouses still
do this, even if they have a location system.
This strategy soon starts to fall apart when the business grows and becomes
more dynamic.
Changes in product
stocking levels and turnover of products will require constant rearranging of
stock to maintain the logical stock arrangements in the warehouse. Because this is too much work, the system
breaks down and stock gets stored wherever it fits and stock gets randomised
and increasingly hard to find. Does this
describe your warehouse?
The simple antidote to
this problem is to store products according to pick frequency. Picking is the highest labour activity in the
warehouse and as such is the process to be optimised beyond all others, which is why so much attention
is focussed on it.
Product slotting is
the calculation of the best place to store a product to minimise subsequent
travel associated with moving of that product through the warehouse during put-away,
replenishment and picking operations.
At its most basic this
is the casual observation by the warehouse staff that it makes sense to keep a
particular product down low because they pick it all the time. The next level of sophistication is perform a
Pareto* analysis of your order history to determine the fastest moving products
in your business and apply this information to where you store your products
and what goes in the fast zone or the slow zone of your warehouse. Over time your business and product profile
change so this must be periodically revised to keep your slotting current.
*Pareto
analysis is the application of the 80/20 rule where 80% of the picking is from
only 20% of the items in the warehouse.
Keep this 20% in the fast zone and you make a huge gain in productivity.
A basic Pareto
analysis can be done on a spreadsheet with minimal effort. We will be publishing a how to guide and
spreadsheet template for members of the Warehouse Performance Initiative in the
future.
Awareness of
promotions and new products with a rapidly growing demand, and items that are
dying or obsolete is also helpful to maintain the warehouse efficiency. A product slotting review should be done at
least twice per year if your business changes only slowly and monthly to quarterly
if changes are more rapid and you want to keep your warehouse movements
optimised.
The ultimate sophistication is to use
product slotting software. Optislot is the only standalone product
in this market at the moment and is now available in Australia through Synermatic. With typical improvements
in replenishment and picking productivity of 10-15% this is a must have
investment for large DCs running on thin margins.
According to the website:
“OptiSlot DC
addresses the complexities of slotting by utilizing advanced mathematical
algorithms which consider a product's dimensions like weight and velocity,
physical characteristics of your environment including slot configurations,
pick path and material handling equipment, and operational goals like pallet
building, seasonality requirements and retail groupings.”
It's probably worth noting that this is only possible when you have the data. If you don't have a modern WMS with an accurate data set of your warehouse and product dimensions then this tool will not be any use to you.
Synermatic are also developing a
subscription service for organisations that need more than a basic Pareto
analysis, but do not wish to invest in purchasing the software, contact them
for more details.
Some Warehouse Management Systems also have
a product slotting package available.
Most notably Manhattan which was designed by the same person who
developed Optislot.
The big hurdle with slotting your warehouse
is not getting the information; it is acting on it. What do you do when you find out that 75% of
your stock is in the wrong place? This
is a huge and seemingly wasteful task if all you do is move it from bin to
bin. The answer is to:
- Understand that the effort required to move the product to the right place will pay you back in productivity gains (reduced labour)
- Let natural turnover drive the process over time.
- Change the home bin or pick location or put-away zone etc. (depending on what systems you have available) so that as new products come in, they are put-away where they should be and the wrongly located items are picked out.
- After a month or two bite the bullet and move out anything left behind.
- If natural turnover hasn’t moved it then it is a slow item that may take too long or never pick out. You do not want slow moving items in fast moving areas!!!!! I cannot emphasize this enough.
- Perform a more regular slotting review so that you do not get yourself in such a mess in future.
Finally, some personal experience of what
having a jumbled warehouse is like. When
I was Logistics Manager at Clifford Hallam I had to re-layout my warehouse to
install a lot of new racking (more than doubling the storage by using the height
of the building). I did this whilst
continuing to operate the business.
This
process took several months and the entire stock got jumbled due to all of the
relocations required during the installation.
My overtime costs for normal operations went through the roof! I finally sorted it out by re-slotting and
working even more overtime (that went down well with my boss, as you can
imagine!) to move product around to where it needed to be. My excess labour fell back to even better
than before the re-design and everyone was happy in the end. So if your warehouse has never been slotted
properly then imagine what productivity treasures are waiting to be revealed!
This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).
The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals. Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.
You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.
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