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How Slotting Optimization Technology Fosters Strategic Improvement for Distribution Centers

The days of re-slotting and warehouse at the time of its creation have ended. Today, warehouse managers face an endless battle with a growing number of products and limited storage capacity, and among distribution center managers, the challenge of warehouse slotting is even more difficult. According to Bill Ciervo of Conveyco, up to 60 percent of a picker’s time is spent moving between product locations, also known as slots or bins. So, distribution center managers who leverage strategic slotting optimization technology could cut picking costs by up to 50 percent. However, the true benefits of slotting optimization technology go back to the development of strategic improvements in distribution centers in these key ways.

Strategic Slotting Optimization Technology and Practices Reduce Carrying Costs

The revenue of a given distribution center is directly related to its carrying costs. Seasonal changes, changes in the pace of product ordering and products that tend to be purchased together mean a static slotting plan will eventually fail.

Slotting optimization technology that captures product-specific data, including stock keeping unit (SKU) and item ordering data, like intended destination, can help your company figure out which products are going to be in demand for specific distribution center locations. As a result, the warehouse can reduce the amount of inventory necessary if similar inventory control can be achieved closer to consumers.

Reduced Order Cycle Times Lead to Happier Customers

Customers now expect free, fast shipping from retailers, and regardless of where your distribution center is located, your customers want what they order as soon as possible. If your competitor can get products to them faster, the shopping cart and purchase will be abandoned in favor of your competitor. Therefore, your warehouse needs to effectively reduce order cycle times, and slotting optimization technology does just that, reports enVista Thought Leadership.

Optimized slots allow pickers to move faster and complete pick tickets with greater accuracy. As a result, time-sensitive discounted shipping options can be accessed, such as next-day or same-day delivery, which may have strict cutoff times occurring in the middle of the day, depending on your carrier. A reduced order cycle time results in faster product delivery and happier customers.

Data-Based Slotting Optimization Tech Lends Itself to Better Performance Measurement

One of the keys to effective slotting optimization technology is data. Data-based slotting optimization practices mean data is being collected, cleansed, analyzed and acted upon to improve product slots, and the same information can be paired with pick accuracy, time to complete pick tickets, number of on-time shipments completed, internal cycle times, total order cycle times, warehouse capacity used versus available and other metrics to provide a better picture of operational efficiency in your distribution center, asserts Mick McCormick of Material Handling and Logistics. In other words, strategic slotting optimization tech uses data that can be used again to further drive productivity and eliminate inefficiency.

Innovative Slotting Optimization Practices Enable Waveless Picking Too

Distribution center strategy should focus on bringing the per-order associated costs as close to zero as possible, but traditional peaks and lulls among ticket releases, also known as “waves,” mean traditional distribution centers face added costs, even when not receiving orders. However, technology-based slotting facilitates waveless picking strategies, such as order streaming.

Put Strategy First in Your Distribution Center Today

Consumers are only going to demand faster and faster delivery options with the growing realm of e-commerce, and your distribution centers need to focus on strategy and quality. Slotting optimization is also moving from a seasonal practice to a daily or weekly practice for distribution centers managing millions of individual SKUs. To unlock the potential of your distribution centers with a redefined strategy through warehouse slotting technology, contact Veridian online today.