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Understanding Inventory Patterns and the Impact of Proper Slotting

Understanding Inventory Patterns and the Impact of Proper Slotting

   Doug Fukushima

Understanding Inventory Patterns and the Impact of Proper Slotting

This post is part 4 in a series of 10 different approaches to addressing the common challenges faced by distribution centers (DCs) across a broad range of industries without investing in automation. 

The third blog in this 10-part series offering ways to enhance operational efficiency without investing in automation discussed why empowering your associates with knowledge about overall and individual key metrics can improve productivity. Here, I’ll explain why efficiency ebbs and flows at peak times and discuss strategies for strategic slotting (and re-slotting) inventory to increase order fulfillment speed. 

Step 4: Focus on Order Fulfillment

Change is a constant in order fulfillment and inventory management, particularly in omnichannel and e-commerce retail operations. Consumer demand for certain items can wax and wane. Sales and marketing offer special promotions. The holiday shopping season is at hand. That’s why it’s important to have a solid understanding of picking and packing metrics, the influences upon them, and how to respond.

In peak seasons, for instance, orders typically consist of fewer units per line item but more individual lines of a single quantity. While that trend may appear to increase picking productivity, it really represents more shipments of fewer units — and therefore has higher associated costs. On the other hand, peak seasons are also characterized by more single-line orders of a single item, which are more efficient to pick, pack and ship than on average days. 

To accommodate these shifts and promote greater picking efficiencies, regularly slot, run, analyze, and then re-slot to fine-tune. First, determine the velocity of every SKU (fast movers are the ones ordered most frequently and in high quantities; very slow movers are rarely ordered). Then, store the fastest-moving items in the most accessible areas and at shelf heights that require the least effort to pick (i.e., the “golden zone”). At peak, consider allocating more than one pick position to a particularly fast-moving item to reduce replenishment frequency. 

While it might seem counterintuitive, intelligently slotting the slowest-moving inventory (the 10 percent of SKUs that comprise up to 40 percent of orders) will yield better flow management and higher efficiency. Storing those items in the optimal slot location can improve overall picking efficiencies by 30 percent versus random slotting. And remember: change is a constant. That means slotting must also be continuously evaluated and maintained to optimize operational efficiency.

To learn more about the other nine steps, download the latest Honeywell Intelligrated white paper, “10 Steps to Improve Operational Efficiency: Addressing Common Order Fulfillment Challenges Without Investing in Automation.” Watch for the fifth step in this series: “Improve Customer Service.”
 

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