Slot Smarter, Not Harder

Appropriately sizing storage positions and equipment is not the most exciting topic to the average Joe, but the material handling professionals that read this magazine are far from average. They realize that right-sizing storage equipment and slots in a warehouse can improve the corporate bottom line by reducing the facility's operating footprint and supporting more product sales.

However, optimization of storage utilization only represents a portion of the opportunities available in storage and picks areas. While optimally sized pick and storage locations will translate into increased sales support capability per square foot, once you've accomplished optimal storage-slot sizing, the next level of cost reduction — where you should position those locations within an operation or pick line to reduce variable operating costs — directly affects operational productivity and order cycle time.

By “slotting” a pick line or storage area, I refer to organizing product to be picked such that there is a reduction of effort to assemble a customer's order, hopefully in a substantial manner, when compared to the effort required to assemble that customer's order from product stored randomly. There are innumerable paradigms with which you can slot a pick line, and the best approach depends upon several factors, including your customers' order tendencies, your product's ordering affinities (what most often gets ordered with what), size, weight, fragility and other product characteristics, any order batching capabilities you may have, and head and shoulders above most item profile characteristics, the velocity ranking of each item picked — from the hottest, fastest movers to the slowest, most infrequently ordered items.

Look at velocity rankings first when seeking to understand the optimal slotting paradigm for your operation. It isn't the last place to look, but it is the best place to start.

Velocity Slotting

Every operation has its fast- and slow-moving items, and they can all be ranked A, B and C velocity movers. Although there are many approaches to stratifying or ranking the items picked in an operation, for starters, let's assume the top 5% of the items, when ranked in unit volume order, are A items, the next 15% are B items and the remaining 80% are C items. So, for a field of 1,000 items, the top 50 movers are A movers, the next 150 items would be B movers and the remaining 800 items are C movers. Because these items are ranked by velocity, however, when the unit volume sales for the items are tallied, the A and B movers combined (the top 20%) usually represent in the neighborhood of 80% of the unit volume, hence the “80/20 rule” that is so often bandied about in discussions of item volume and velocity rankings.

Now, an operation can have a steeper curve than 80/20. For example, 90/10 operations have item populations where the top 10% of the items represent 90% of the unit volume movement. Likewise, there are shallower curves where 70% of the movement may be represented by the top 30% of items.

The most important fact to take away from the velocity ranking is, however, really at the other end of the spectrum — the bottom half of the item population often represents less than 5% of the unit volume — and those are not items you want to have to walk or drive past on your way to picking your more popular items. That is the core of velocity slotting.

Simply put, velocity slotting approaches to organizing your pick area collect all the faster-moving items closer together, and closer to inbound and outbound points of your facility or pick area. This will invariably decrease the walk distance for discrete order picking, especially if your orders do not have many or any C items in them. Walking is, on average, 50% of the time involved in picking discrete orders within a pick operation, so any decrease in walking distance will result in a corresponding productivity increase and order cycle time decrease. There are a few words of caution when velocity slotting a pick line or storage area (if your ordered items are picked directly from storage):

• Be wary of the “left field line.” Some operations have order profiles which always have a slow-moving line item or two on every order. If slower moving product is velocity slotted so that it is relegated to a back corner or “left field” within a facility, and each order has one order line requiring travel out to “left field,” much of the velocity slotting pick economies are lost, since every order will still require a large amount of walk time, even if it is only to retrieve one item.