Thursday, February 11, 2010

A Place for Everything, Everything in its Place

Being absolutely fastidious about where things go, labeling everything clearly, and getting upset when they are missing from their allotted space will quickly get you an obsessive-compulsive disorder diagnosis. But in a warehouse, all this is good, in fact, very good.

Warehouses thrive on order. They must have defined locations for the items they stock and it makes their operations productive. Such locations are picked after careful consideration and depend on various factors such as:

  • Item’s physical attributes (length, width, weight, volume, orientation, and co-location constraints). Physical dimensions determine feasibility of the location for stocking the item and co-location constraints determine if the item’s neighbors will play well with it.
  • Item’s handling attributes determine how this item will be moved to this location and later picked for shipping. Does it need a forklift, a hand-truck, or simply a cart? Can a person handle it without physical strain or does it require some kind of lifting assistance? These attributes also limit the number of locations that are suitable for the item under consideration and help determine where it will stay in the warehouse.
  • Item’s demand attributes, like the volume and velocity of demand also affect the best storage locations for the item. High velocity items are desirable to be kept in most accessible locations and so on.

But having a location defined for all items in the warehouse is simply a start. Change in item demand from season to season, discontinuation of old items and introduction of new items, changes in item packaging, changes in their handling attributes or their co-location constraints, inclusion in promotions or store clearance, and other similar changes affect the optimal item locations. These changes require can result in less-than-optimized item locations over time. As the item locations become suboptimal, they start affecting warehouse operations and efficiency.

Slotting applications ensure that item-locations in a warehouse are always optimized for their operations. Slotting is the science of placing the products inside the warehouse. In all warehouses, there are bound to be locations that are closer to the receiving or shipping docks, convenient to access or easier to reach. As the number of such locations is relatively fixed, it would make sense to utilize them for products with the highest velocities or manual touch points. Slotting applications determine the best placement of products in the warehouse based on different product attributes mentioned earlier.

Slotting applications can continuously slot the warehouse so that the routine warehouse activities of receiving, putting-away, picking, and shipping continuously result into an optimally slotted warehouse as the demand patterns change. Alternately, slotting can be run at pre-determined intervals or when seasons or demand patterns change. These slotting runs will then produce a new set of optimized item locations and a set of warehouse move tasks to execute. Some of the applications are capable of doing a cost-analysis to suggest if the cost of moves is more or less than the expected efficiency gains.

Slotting not only helps maintain operational efficiency in the warehouse, it also helps in maximizing the warehouse cube for storage. With emphasis on online retail channels that must cater to individual order fulfillment, slotting provides a substantial opportunity to retailers of all sizes to enhance their warehousing efficiency. For a more complete discussion on warehouse efficiencies, you can read this article.

© Vivek Sehgal, 2010, All Rights Reserved.

Want to know more about supply chain processes? How they work and what they afford? Check out my book on Enterprise Supply Chain Management at Amazon. You will find every supply chain function described in simple language that makes sense, as well as see its relationship to other functions.

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