Space within the four walls of the warehouse is at a premium, so it is critical to maximize all available warehouse space while ensuring orders can be fulfilled quickly. Identifying the most effective slotting patterns and the best storage solutions optimizes warehouse space and makes it easier to get products out the door faster.
"One of the biggest services we provide for any customer is slotting analysis," said Don Klug, vice president, distribution center management for Penske Logistics.
Smart Warehouse Slotting
The slotting analysis starts by identifying volumes and establishing which SKUs (products) move more or less quickly. These are categorized as A, B, or C movers. "The A's move the fastest, the B's move slower, and the C's move really slow…and sometimes there are D's which don't move at all and can be considered deadstock," Klug said. "The A movers go closer to the dock to minimize travel, so you can pick them faster and get them out the door. You store the slow movers on the floor further away from the dock — or if there is racking, you put them at the higher locations. Your goal is to make it easy to put the product away and more efficient to pick the product."
Engineers review inventory movement over time, such as multiple years, and look for seasonality and how many times a SKU moves daily, weekly, etc. "You're probably going to have 20 to 30% of SKUs that are A's and the B's are not that much further behind," Klug said.
Engineers will establish rules within the warehouse management system (WMS) to show how needs might change. "We can say, 'If this SKU moves every day or every week, it is an A, and it shows up in a planogram as green.' You might see things that are red because they're moving once a month, so they don't need a prime location," Klug said. "Over time, you take that puzzle, review the greens, yellows, and reds and move the fast movers to the locations where you can pick them more efficiently."
The Impact of E-commerce
The growth in e-commerce creates more and more warehouses with three fulfillment channels — their locations, outside retail locations and business-to-consumer. "Depending on the volume or the way they're receiving orders, you may need to design a separate pallet area, case-pick area and an each-pick area,' Klug said.
If your business supports e-commerce, well-run warehousing is a critical component of any omnichannel strategy. The way product is stored and dispatched is fundamental to the efficient operation of supply chains that span multiple buying channels.
Storage Strategies to Maximize Warehouse Space
Penske Logistics also helps shippers determine the best storage solutions, which are often based on cost. "The racking cost is about the same no matter the location in the U.S., but the cost of the geographic locations varies. Warehouse space is much more expensive in California than in the Midwest," Klug said. "It may be more cost effective to utilize the vertical space versus the square footage in a specific warehouse."
With floor storage, a standard aisle width could be 12 to 14 feet between the products so forklifts can move effectively. That can drop down to 8 to 10 feet if a reach truck is used. "If you go to VNA (very narrow aisle), around a six-foot aisle, you need a wire-guided solution, which requires wires to be installed in the floor at the center of each aisle as well as wire guidance on the MHE so MHE can safely move in a straight line and it won't hit the rack," Klug said.
Standard select racking utilizes the vertical space in the warehouse, Klug said. "We can design and install single-deep racking, double-deep racking, push-back racking or drive-in racking to add additional storage locations in the warehouse," Klug said.
However, it adds costs. "If you're in short-term storage need, it may not make sense to install racking. If the storage requirement is longer, you can look at the cost of racking and compare it to the floor storage option via a ROI (return on investment) analysis," Klug said. "The math will tell you the best option."
Review and Adjust
It isn't hard to move slotting patterns as demands change, Klug said. Adjustments should be completed at least once a year to ensure efficiency. Some industries, such as food and beverage, change slotting patterns seasonally. "Strawberries sell at specific times of the year, so you'll open up a part of the warehouse to store them for more efficient put-away and picking," Klug said.
The engineering work needed to re-slot a warehouse is straightforward, but it does take work to move the product around. "We try to bleed off locations, meaning we let the location that has the product empty out and open up for the new product coming in," Klug said.
An ever-changing economic and technological environment make it more important than ever to maximize space and reduce cost. Penske Logistics has the experience and expertise to help.