What Is Slotting in a Warehouse? SOP’s and Benefits to Merchants

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What is Slotting in a Warehouse?

Slotting is the process of determining the best location within a warehouse to store inventory. The best warehouse slotting strategies use data about not only a product’s size, weight, and storage requirements, but also take into account the sku velocity compared to other products in the warehouse and the pick path that warehouse employees will take to get to the item.

Why Is Proper Slotting Important?

My experience implementing Warehouse Management Systems (WMS), educating users, and optimizing internal processes has taught me one invaluable lesson about how data and physical operations go hand in hand. Any WMS is only as effective as the data you feed it. The most advanced system will fail if it’s given improper data, and the most capable labor force will make mistakes if the system fails.

That’s why warehouse slotting, which may seem at first glance like nothing more than a game of Tetris, is actually the key efficiency, fulfillment speed, and order accuracy. It is the very first step in creating data integrity, from the moment a piece of inventory hits the loading dock. If the first step is deliberate and the right data is gathered and logged from the beginning, it feeds efficiency downstream through the entire process, and warehouse automation can actually do its job.

The other element is the human one. No matter how far automation advances, the work of picking and packing will always need some element of human touch. A properly slotted warehouse enables staff to do their job as efficiently and accurately as possible and. The benefits of proper slotting to pickers on the floor are:

Benefits of Proper Warehouse Slotting

1. Economy of Movement:

When high velocity sku’s are stored closest to the packing station, pickers are not taking extra steps back and forth to pull the same sku off the shelf hundreds of times per day. Their highest velocity sku’s are right at hand.

2. Efficient use of equipment:

Slotting popular skus near to each other that require different pieces of equipment (ie: a piece that requires a forklift next to a piece that requires a cherry pick) is a recipe for traffic jams and time-wasting extra movements.

3. Decrease in damages:

Pickers should be able to do their jobs quickly, without giving extra thought to configuring items in the box and playing Tetris. Slotting lightweight or delicate inventory at the end of the line will give them a natural progression in picking these items last leaving lightweight items at the top so they aren’t damaged in transit and keep from users rearranging the entire box.

4. As few touches as possible

This piece relies heavily on upfront data. If sku velocity is taken into consideration the first time an item is put away, that item won’t likely need to be moved later when the warehouse realizes that it should be closer to the pack station. That means labor is focused on the most important part of their job: picking and packing, not re-organizing and relocating inventory.

The key to finding the most effective slotting system is in the data. It needs to be as accurate as possible, and it needs to be gathered upfront. If it is, slotting is a job that can be done once, and it will continue to feed efficiency downstream until the end of time.

Getting the Data Right the First Time

At Ware2Go, we’ve built data collection into every merchant onboarding program, and we’ve optimized our communication with our warehouse partners to make sure that data gets into the hands of those who need it most. The most important data sets we collect are:

• ADV and Velocity: We get this data at the sku level. And sometimes merchants may be surprised to find that a single sku within a product category is driving volume for that entire category. We also look at the entire sku catalogue to compare the velocity of one sku to another when building a hierarchy.
• Product Profile: The practical data that determines what kind of storage space (shelving, bins, racking, etc.) and how much is needed: size, weight, transit type, storage requirements. In our facilities with temperature and environmental controls, those storage needs are the first consideration.
• Kitting Requirements: This is essential to gather from the start. Items that are commonly purchased together should be within close proximity of each other to cut down on unnecessary steps.
• Promotion Schedule: Communicating promotion schedules, whether they be around major shopping events like Prime Day or demand spikes specific to that merchant’s product line, helps set warehouses up for success. Often, in the case of short-term promotions, a special project pick station is set up to get a high volume out in a short period of time.

All of these data sets are important to understand on a merchant-by-merchant basis, but we also have to consider them within the entire ecosystem of the warehouse. Ultimately, all merchants within the warehouse benefit when the entire space is being used efficiently.

Ware2Go’s Slotting SOP’s

Ware2Go is committed to feeding efficiency downstream with our warehouse slotting strategy. That’s why we’ve built out a few SOP’s that prioritize data integrity and proper forecasting and planning:

1. Appointment required for inbounding: Our merchants schedule appointments for their inbound shipments so the warehouse knows exactly when and where the truck will arrive, and exactly what will be in the shipment. This way the warehouse knows the size, quantity, and storage requirements of products before they arrive and has the appropriate space prepped for them. This is key to getting inventory off the dock quickly and meeting our 48-hour dock to stock time SLA. 
2. Data collected at onboarding: We make sure we have good data from the start to understand exactly how a new merchant’s inventory will fit into our current warehouse slotting systems. We make sure we have sku profiles, ADV, and velocity. Some merchants may come to us with very little historical sales data, or they may be launching a brand new product. We work closely with these merchants to create as accurate of a forecast as possible, and then we re-asses once we’ve begun processing sales.
3. Putaway Configuration: We use the sku profile (including height, weight, and volume of the product) to determine the space requirements. Then our WMS determines the best placement within the warehouse based on velocity and finds the putaway path with the least amount of travel time for the warehouse employee.
4. Decision Tree: We have standardized slotting decisions across our warehouses with a decision tree that prioritizes warehouse place by parcel vs. freight, ADV by sku velocity, and sku weight.

Why Warehouse Slotting Matters for Merchants

At the end of the day, we don’t expect our merchants to have a deep understanding of our WMS or our warehouse slotting SOP’s. What matters to our merchants is that their customers have the best experience possible with their brand, and that’s exactly what our slotting system enables. Getting it right the first time and setting up long-term efficiencies can mean the difference between picking and packing 100 orders/day and 150 orders/day. Ultimately, these efficiencies are what make our services truly scalable for some of our fastest growing merchants.

Looking for a fulfillment partner that can guarantee on-time and accurate delivery to your customers? Reach out to one of our fulfillment experts.

Warehouse Slotting FAQ’s

If you are new to a distributor network, you must have a two-year plan that targets mutual goals and drives outcome. Often manufacturers elect to distribute through more than one distributor to ensure marketplace coverage and healthy competition. If you are engaged with the distributor leadership, sales, and operations team and mutual goals are not being achieved, it may be time to consider alternative options. I have always had faith in the distribution platform and work hard to protect our mutual su

• What are some of the most important data needed for slotting?

Proper warehouse slotting requires data around the product’s storage needs including quantity, size, weight, and environmental requirements. This data determines the type of storage and how much space is required. To determine where in the warehouse a product should be stored, the data required is average daily volume (ADV), relative sku velocity, and kitting combinations.

• What is a pick slot?

A pick slot is a designated location within a warehouse that systemically maps a location to a SKU. This combination can be dynamic or static with attributes such as minimum and maximum quantities for replenishment, reorder levels, and best method to replenishment inventory to. A pick slot serves as a home for an item at all times physically and systemically within a warehouse.

• What is a slotting strategy?

A slotting strategy is the method that a fulfillment center uses for determining their warehouse layout for ideal product storage. An effective slotting strategy will reduce travel time for pickers, reduce mis-picks, and improve fulfillment speeds.