Pick Area Slotting Optimizing Slotting Smarter, Not Working Harder

A few months ago, I was fortunate to contribute to HARDI's magazine and share my insights into appropriately sizing storage positions and equipment. Not the most exciting topic to your average Joe, but HARDI readers are far from average, and most realize that right-sizing the storage equipment and slots in any distributor's warehouse will allow the facility to support more product sales or allow for a smaller operating footprint, either of which improves the bottom line of any distribution operation. And so it is a topic of interest to anyone with a distribution operation.

The optimization of storage utilization, however, only really encompasses a portion of the opportunity you can mine within a distribution operation's storage and pick areas. While optimally sized pick and storage locations are important and will translate into increased sales support capability per square foot of warehouse, once you've accomplished that optimal storage slot sizing, the next level of cost-reduction can be more easily attacked — where you should position those locations within an operation or a pick line to further reduce variable operating costs — and that optimization directly affects operational productivity and order cycle time.

By “slotting” a pick line or storage area, I mean organizing product to be picked so 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 by which you can slot a pick line, and the best approach depends upon several factors, including your customers' order tendencies; your products' 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.

Every operation has its fast- and slow-moving items, and they can all be ranked from No. 1 to the last item — A, B and C velocity movers. Though there are many approaches to stratifying or ranking the items picked in an operation, for starters, let us assume the top five percent of the items, when ranked in unit volume order, are A items, the next 15 percent of the items are B items, and the remaining 80 percent are C items. So for a field of 1,000 items, the top 50 items are A movers, the next 150 items would be B movers, and the remaining 800 itemsare 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 percent) usually represent in the neighborhood of 80 percent 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 percent of the items represent 90 percent of the unit volume movement. Likewise, there are shallower curves where 70 percent of the movement may be represented by the top 30 per-cent of the 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 five percent of the unit volume — and those are not items you want to constantly 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 on them. Walking is, on average, 50 percent 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).