Warehouse leaders continue to face increasing pressures that include rising operational costs, decreasing labor availability, storage capacity constraints, throughput capacity limitations and increasing service level commitments. All of these challenges have at least one thing in common – they can be helped with an effective warehouse slotting program.

Warehouse slotting is the practice of arranging inventory by product characteristics to improve efficiency, reduce costs and optimize storage space. This process involves analyzing product data like SKU number, product type, outbound volume, item size and weight and other key characteristics.

The State of Slotting In Warehousing

Because slotting is an effective strategy for alleviating warehouse challenges, companies often jump in without the appropriate planning. There are varying slotting approaches, tools and strategies, and rushing into a slotting initiative without first considering all options and laying the necessary foundation is likely to lead to a less-than-successful program.

It is also common for companies to begin a slotting program but not follow through with all of the necessary steps to ensure success. Slotting is a vital aspect of a successful warehouse operation, but it is important to approach the project strategically to ensure it provides the most value to your organization.

Why Invest in Slotting?

An effective slotting strategy can favorably impact many of the warehouse leader’s most pressing challenges.

For warehouses struggling with labor constraints, effective slotting can reduce overall labor requirements, reduce safety incidents and replenishment frequency and improve ergonomics – as well as increase ROI. These factors contribute to a happier and more productive workforce.

For warehouses wanting to improve throughput, slotting can increase pick productivity by five to 15 percent, reduce cycle time and increase pick throughput capacity. This will allow more picking to be done and more orders to be fulfilled within a given amount of time.

For warehouses struggling with space constraints, slotting will improve space utilization, freeing space for more inventory and allowing associates to move in a more streamlined manner through the building.

Finally, for facilities looking to improve service levels, slotting can decrease pick errors, which will decrease customer frustrations and associated product returns.

Obstacles to Slotting Success

There are some common obstacles that may be getting in the way of a warehouse experiencing the true value of slotting. These obstacles typically fall under three buckets – people, process and technology.

The people in an organization can become an obstacle to slotting success when the proper change management is not implemented during a slotting program. This could look like:

• Having a team without the right skillsets
• Having inadequate training to prepare team members to generate slotting recommendations and take the appropriate actions
• Having inadequate process documentation, which can lead to a longer learning curve and challenges maintaining the program
• Lacking key metrics to track performance, which hinders management’s ability to understand the true value of the slotting program
• Lacking appropriate resourcing for the project

Mismanaged processes can also be obstacles to slotting success. There are several ways that mismanaged processes can manifest themselves in a slotting project:

• Not having a formally defined slotting program or strategy, which would lead to reduced benefits across labor, throughput and capacity
• Lacking appropriate follow-through in bringing the project to a steady-state to realize the full benefits
• Having competing priorities across the organization that distract from the process and importance of on-going slotting refreshes

Technology and material handling equipment are also critical aspects of a slotting program in the warehouse. This could look like:

• Having inadequate resources for the slotting program
• Having the wrong tools to support your slotting processes
• Not understanding all of the ways to leverage each tool to receive the maximum value

10 Actions for Successful Warehouse Slotting

1. Define a slotting strategy. Slotting looks different in every warehouse, so it is important to start with this step to ensure you are tailoring your program around your warehouse’s unique capabilities and needs. Your slotting strategy will be based on your warehouse’s data requirements, SKU velocity assignments, bin configurations, slotting zones and logic methodology and re-slot cost and benefit tradeoffs.
2. Create a formal slotting program. A slotting program is a significant undertaking, so it is important to ensure a formal program is established and resources are provided to make it successful. The slotting program should include specific goals you are seeking to achieve, who will own specific activities of the project, re-slot frequency requirements, guidelines on new item slotting, key metrics that will need to be tracked, how those metrics will be monitored and when program reviews and updates will take place.
3. Develop a team with the right skillsets. Having a qualified project team is critical. The project team needs to have the right operational knowledge, strong analytical skills and a problem-solving mindset. It is important not to underestimate these requirements of the team and the importance of selecting the right people. Often, the slotting project team can be part of the broader inventory control team to cross-leverage with other activities
4. Invest in the appropriate slotting tool(s). It is important that your tools have the proper balance between functionality and complexity. You must also establish the best approach for data cleansing and the connections into your tool. Whether you leverage a warehouse management system module, stand-alone commercial package or a home-grown tool, ensure that you are making the decision based on your warehouse’s unique needs.
5. Provide adequate training. Key warehouse associates that will take part in the slotting program need to be properly trained on their new processes to accommodate the new slotting requirements. Start with an initial training on the program, processes and tools they should know. Ensure that every associate has a solid understanding of how to fully leverage the key tools and reports within their role. Consider retraining associates on any new functionality within previous versions of the slotting tools. Finally, create a legacy plan for when individuals leave the organization to avoid relying on tribal knowledge down the road.
6. Optimize process documentation. It is important to document all processes to ensure easy onboarding of new associates. Create detailed instructions for using any new tools and for generating the desired slotting results. Provide as much additional detail as appropriate to give users the necessary context. Also create a process and assign ownership for maintaining that documentation moving forward.
7. Create key metrics to track performance. Tracking your key performance indicators is the best way to determine if your slotting project is producing the desired results. Create metrics to identify the size of the opportunity and slotting performance improvements. Some examples of good metrics to track are productivity improvement and reduced travel distance, replenishment tasks and safety incidents.
8. Engage leadership and follow through. Having engaged leadership is critical to ensure your slotting program gets the resources and follow through it needs. Gain leadership attention by presenting ROI metrics and opportunities. Instill good change management practices and complete regular monitoring and check-ins to improve project follow-through.
9. Maintain slotting as a priority. Make sure you maintain slotting as a priority by allocating the necessary time and resources to the project. Recognize the value of the program and communicate that value with the broader organization by establishing checkpoints and regular check-ins to keep the project moving forward incrementally and deliberately.
10. Evaluate resourcing. It is common, especially among warehouses, to lack the necessary resources for a slotting program. Consider evaluating partners who could supplement your team to make sure you have the right resources without overextending your existing team. Third-party slotting-as-a-service can be an effective alternative to relying fully on your own internal team, and third-party support can be helpful in establishing the overall program.

Slotting is a very effective mean of improving operational excellence in the warehouse. For your slotting program to be effective, it needs to be planned, deliberate, managed and maintained. Follow these ten guidelines to achieve your desired objectives. Contact enVista to learn more about optimizing your operations through warehouse slotting.