Any facility manager responsible for a facility that must assemble orders has needed to slot their product offerings to facility picking orders within their warehouse, simply by the act of consciously deciding where items are stored with the facility to allow for order assembly. The slotting of the simplest manual stock room usually focuses on either similar product together, or placed on shelving set up to accommodate the product stored within it by common size or other characteristic. With the advent of electronic locator systems, product could easily be found based on the computer system knowing what pallet location, bin, shelf or flow rack position each particular item was placed in when received and put away. Now items are stored and retrieved not with an overarching manual system (i.e., alphabetically or by product type) but by any definable storage strategy able to increase the productivity, throughput or storage density of a facility. One of the most prevalent slotting strategies to facilitate productive order assembly became velocity sensitive slotting, and for very good reason.
Velocity slotting, in its simplest form, is slotting those items most frequently accessed in the warehouse in the most accessible locations in the warehouse. In a conventional order picking operation, this usually reduces the distance a warehouse picker must travel to assemble an order and increases their productivity by reducing the nonvalue-added distance traveled between picks. Velocity slotting aims to increase the number of orders assembled per labor hour spent in the warehouse. Understanding what items are in the greatest demand and positioning them in a common pick area (as well as positioning items rarely accessed further away from the most accessible areas of the distribution center) will achieve just that.
There are some pitfalls to velocity slotting. An operation can velocity slot too effectively. This drives too much picking activity into too small an area. Instead of resulting in pick efficiencies, this creates multiple issues for the operation's effectiveness. First is a loss of productivity as pickers vie to reach the same location and literally get in each other's way. The inevitable waiting drives productivity down.
Second, the delay not only reduces the picking productivity but increases the cycle time for any order requiring product from the now too-dense picking area. The increase in cycle time (the time it takes to complete an order) diminishes the responsiveness of a picking operation to customer demands and can reduce competitive advantage if rapid cycle time differentiates suppliers within the business' customer base.
Finally, velocity slotting product based on how rapidly items move may result in no real picking efficiency at all. If an operation utilizes discrete order picking and has a large number of line items on their typical order, velocity slotting may not yield any real savings in travel distance over the course of the order's pick path. If an average order has at least one item from the slowest moving group of products, it will drive a picker to travel far afield to where the slower moving items have been slotted in a velocity slotted environment. This is the case in many operations with a large line count per order - at least one line item on many orders is a slow moving item, driving a picker to travel all of the distance velocity slotting is intended to reduce. If this is the case in a given operation, velocity slotting is still effective if the order pick process allows for parallel picking and consolidation. This approach allows for picking all of the slower moving items for a group of orders in one pass and then consolidating them with the faster moving orders that have been discretely picked. You must compare the extra handling entailed in the consolidation process to complete the orders with the extra distance otherwise traveled, and pursue the least costly approach.
While velocity slotting is very effective, provided an operation avoids the potential pitfalls for embracing it, there are other slotting considerations that an operation ignores at its own peril. Some of these considerations enhance productivity further, while others offer value to the operation in entirely different areas.
One slotting characteristic that can offer significant productivity and order cycle time value is product affinity. Affinity refers to the tendency of one ordering one particular item with another specific item. For example, when peanut butter is on a customer order, jelly may be on that same order nine out of 10 times. There is tremendous value in understanding this phenomenon in an operation's order characteristics and then slotting the items within that operation accordingly. If items with this type of affinity can be slotted within close proximity to each other, it will have a very similar effect to velocity slotting — it will reduce travel and order cycle time and increase productivity.
Customer order commonality slotting is an approach similar to slotting by affinity, albeit on a much broader and sometimes, though not always, less restrictive basis. Customer order commonality slots product based on an analysis of customer orders, which identifies major customers or groups of customers who tend to order the same items. For operations with sharply defined customer tendencies, you may subdivide the pick area by customer type. Manufacturers who distribute private label product for retailers are an extreme example of this sharp division. By definition, if I manufacture a group of products only for Walmart and slot all of those products in one area of my warehouse, then I will only need to travel that smaller footprint of my facility to assemble my Walmart order. Even operations without such perfectly defined customer order differentiation may be able to make use of customer order commonality analysis, with, for example, one pick area facing up products for customers who order foreign car parts and accessories, and another area set up for domestic makes. Done well, the dual areas can also serve as an optimized larger pick area for customers who order both foreign and domestic parts.
While these additional slotting approaches are not pure velocity slotting, they still drive toward direct productivity improvement. There are other slotting considerations you should not overlook.
If an operation picking cartons to pallets must service a wide array of carton sizes, shapes and weights, slotting consideration needs to support stable pallet building through the picking sequence entailed in the pick path. If velocity zoning drives picking smaller cartons before larger cartons, the resulting mixed carton order pallet may be very unstable. This can require rehandling and restacking the pallet after picking is complete, or even during the pick process to ensure the pallet can be moved along the pick path without falling apart, adding labor to the effort and robbing the operation of the productivity improvement realized through velocity slotting. In the best case scenario, the pallet may require more effort and materials to stabilize it for shipping in the form of stretch wrap or banding, which also adds material cost to the order and robs the operation of productivity. The same concerns apply to effectively utilizing the cube of a shipping carton if an operation is picking small units into a shipping container. Consideration given while slotting the pick line to ensuring a stable pallet is built through the order in which product can be picked, or to optimizing the shipping carton cube utilization without having to rehandle or repack the product, will protect the productivity gained through velocity slotting, without sacrificing it to rehandling labor after the picking process.
Building a stable pallet or full shipping case is not the only end to which slotting needs to be sensitive. Many operations must consider weight and fragility during the slotting process. Picking light bulbs and crowbars with the shortest pick path and greatest productivity possible doesn't mean much if the light bulbs arrive at the customer crushed to glass shards under the crowbars. Such damages are costs that would also eat away at productivity increases won at the expense of a stable unit load or well-packed carton. While that is clearly an application of a smattering of common sense, we often accomplish slotting with item numbers and volume movement as the key drivers in a large spreadsheet or data base applications slotting tens of thousands of items. It is not usually feasible to evaluate this aspect of slotting through a review of item descriptions, so pay attention to the exceptionally fragile or heavy items. You can add fragility or sequencing hierarchy indicators to a master item file to ensure the accounting for these characteristics during slotting exercises.
A last slotting characteristic for discussion that could drive a competitive advantage to a business is customer-requested, customer-demanded or customer-friendly slotting. Notice that “customer” is featured prominently in all of the descriptors for this slotting consideration. The aim of customer friendly slotting (we'll use the most positively connotative term here) is to provide an additional service or value to a customer. For a retail distribution center servicing its own stores, that may mean slotting a pick area so that you base the picking of the product on how the store stocks it. This results in pallets or mixed item cartons that are “store aisle specific” and that are completely exhausted in one aisle or small section of a store, making the shelf stocking at the store level very productive and disturbing the sales floor for a shorter period of time. For a convenience store wholesaler, this would mean picking candy all together and separating it from nonfoods product, as these are usually in different areas of their convenience store customers' shops (not to mention that I don't want my candy shipped to me in the same carton as my window cleaner!). These customer-centric slotting approaches allow for productivity at the receiving end of the order and can support a lower overall supply chain cost or a competitive advantage by proving to be a better service provider to an operation's customers.
Finally, though we have highlighted several slotting factors outside pure velocity slotting, every operation may have a singularly unique slotting consideration to account for outside of simple velocity. Evaluate any and all of those considerations when developing any operation's slotting strategy, and the result will inevitably benefit from that evaluation. Ignoring those factors and slotting only by overall velocity can yield surprisingly suboptimal results.
Bryan Jensen has 29 years of experience in retail and wholesale distribution, transportation and logistics and is a vice president and principal with St. Onge Co. in York, PA, assisting clients in developing and maintaining world class distribution operations. St. Onge Co. is a material handling and manufacturing design consulting firm specializing in the planning, engineering and implementation of advanced material handling, information and control systems supporting logistics, manufacturing and distribution since 1983 (www.stonge.com). Contact Bryan at 717/840-8181 or by email at email@example.com. © 2012 Bryan Jensen