Slotting in warehousing involves organizing inventory to maximize operational efficiency, most commonly in warehouses and distribution centers.
Slotting involves categorizing items within a warehouse by various factors such as item size, weight, SKU velocity (how frequently a SKU is picked) order frequency, or other factors. Depending on the frequency of item orders, item value, and item size and weight there are different types of slotting strategies to apply in a warehouse.
Consider an office where frequently used supplies like pens and paper are kept in easily accessible drawers, while rarely used items like staplers and binders are stored on higher or lower shelves. This setup allows employees to quickly find what they need & reduce clutter in the workspace. Similarly, warehouse slotting strategically places inventory to make both fulfillment and replenishment efficient.
While warehouse slotting is spoken of as one phenomenon, it can be divided into 2 processes. These terms aren’t too widely used, but it is still beneficial to be familiar with them.
The term slotting strategy refers to the systematic arrangement and organization of stock by using a certain strategy. The purpose of the slotting strategy can be to:
(1) maximize storage space: Use space efficiently to free up room for additional products.
(2) Increase warehouse productivity: Group similar items by their characteristics ( size, volume, weight, etc) to improve identification and reduce walking distances.
For example, placing items closer together based on SKU correlation—like a computer mouse and keyboard, which are often bought together—can significantly boost warehouse productivity.
(3) Reduce picking errors: Minimize mistakes by organizing items with similar characteristics together.
(4) Adapt to weekly and seasonal changes: Adjust slotting strategies to accommodate fluctuating demand.
(5) Improving inventory and accuracy: Enhance accuracy in inventory management and tracking.
(6) Minimize handling: Reduce time and effort spent on picking and replenishment by optimizing item placement.
(7) Maximize safety: Place heavy items closer to picking locations or lower on racks to prevent damage to lighter items and ensure structural stability.
In Random slotting SKUs are stored wherever space is available regardless of the frequency of how often it is used. It’s simple for workers to find space but with more SKUs in less places the more complex it becomes to find an open spot.
Warehouses with random slotting have problems dealing with seasonal SKUs → current fast movers are not stored in high throughput locations.
Random slotting can be faster since less time is spent on replenishing. However, pick zones are usually larger than fixed locations, meaning random slotting may need a bigger warehouse.
In Fixed slotting items are stored in a fixed location of the warehouse depending on the size of the SKUs and how to deal with them (fragile, flammable, perishable). So reservations and restrictions for a certain place of the warehouse need to be done for the items. Each SKU has a fixed location and new restocks of that item go to the same bin.
In comparison to random slotting, fixed slotting is more structured and every place of each SKU is listed for warehouse workers to find it.
In ABC slotting products are categorized into A, B, and C based on how quickly they move out of the warehouse.
The principle of ABC analysis includes listing all SKUs which have been ordered over a certain period of time (the longer the time period, the more accurate the data).
This technique improves the speed of picking orders by making sure that the most commonly ordered and important items are easily accessible.
Dynamic slotting involves moving products around based on factors such as how quickly they sell, the time of year, and how often they are needed. By strategically adjusting the placement of items, companies can make it easier for workers to adjust to demand. This method prioritizes items that are often bought close to where they are packed, while less popular items are kept further away. This helps workers spend less time moving around the warehouse and speeds up order fulfillment.
Dynamic slotting relies on the use of real-time data and intelligent algorithms to create the best storage plan which means regularly reviewing and adjusting slotting to keep up with changing demands.
Comparison Table of Slotting Strategies
Most warehouses already have the necessary data to optimize their slotting strategy; it’s just a matter of making that data actionable. A digital twin allows warehouses to simulate different slotting strategies and assess their impact on efficiency. It helps visualize potential bottlenecks and identify opportunities, such as high SKU velocity or walking activity, making it easier to configure facilities and deploy solutions without external consultants or engineers.
Since most warehouse management systems (WMS) lack built-in slotting tools, companies often use slotting software add-ons in the form of microservices that enhance their existing systems by analyzing inventory data and recommending optimal placements based on factors like item demand and picking frequency.
For companies without a WMS, standalone slotting software or even an Excel spreadsheet may be sufficient for simpler needs.
Learn more about slotting optimization - guide to warehouse slotting in 2024.