Product Slotting in a Warehouse: Complete Guide

Product slotting is one of the few cost-saving ideas that you can implement in your current facility whilst making no changes to infrastructure (although there may be further benefits to doing that).

You can achieve the benefits by simply rearranging products — within existing storage media — to reduce travel distance for pickers in your warehouse.

Let’s look at the basics: what slotting is, scenarios where it may prove useful, the key benefits of slotting, and then some tips from decades of experience in the industry.

What is Slotting?

Product slotting is a warehouse term that involves placing products in optimal locations within a warehouse to enhance operational efficiency.

Essentially, it’s about organising products so that frequently picked items are easily accessible, reducing the travel time for pickers.

You can think of it like arranging your refrigerator: everyday items like milk and butter are in the door for easy access, whilst less frequently used items are stored in the back. It’s the same reason you place your umbrella close to your front door at home, so it’s easy to pick it up and run when it’s raining and you’re late for work.

Product slotting is a concept that’s every bit as simple as it sounds, but it can be a little more complex in practice.

It seems like basic logic or common sense, but as warehouse consultants with decades of experience, we’ve found that many companies neglect this practice.

And we’ve also found that by implementing a sound warehouse slotting strategy, we’ve helped clients reduce their labour costs by up to 30%.

Slotting is normally restricted to the picking face or online locations only; however, it can impose some general rules for stock location in the bulk areas in order to increase replenishment efficiency.

High-level slotting is a minimum requirement for the implementation of a new facility. In comparison, detailed slotting is relatively rare in either new or existing operations.

Common Scenarios Where You Should Be Considering Slotting in Your Business

Now you know what slotting is, how do you know whether it’s something that would be worthwhile for your company? After helping many clients with their warehouse slotting process, we find that the same scenarios keep cropping up.

Slotting is usually worth considering if:

• You are rearranging your current warehouse or distribution centre layout.
• You are building a new facility.
• You are attempting to reduce your warehouse operational costs.
• You operate in a seasonal industry which drives different product demand cycles during the year.
• You want to decrease the movement of warehouse staff around the warehouse.
• You want to reduce product damage within the warehouse.

Slotting can help you maximise efficiency and make the most of your storage space, which is extremely important if you have limited storage capacity.

The Benefits of Efficient Warehouse Slotting

As mentioned, slotting is all about optimising the placement of warehouse SKUs to gain efficiency, increase productivity, and reduce operational costs.

Beyond these benefits, when slotting is done correctly, it’s also advantageous from health, safety, and service perspectives. The main benefits we see are:

• Improved order picking efficiency.
• Reduced product damage.
• Increased replenishment and put-away efficiency.
• “Health check” of the design of the pick face.

Often, the direct benefits that you see from warehouse slotting optimisation will have a knock-on effect on other aspects of your warehouse processes too. Let’s look at them in more detail.

Improving Order Picking Efficiency

Picking is the activity that consumes the most labour hours in the warehouse, perhaps constituting 50% (or even more) of total person-hours.

That’s why slotting is such a worthwhile initiative, because picking productivity can be improved by slotting product according to movement characteristics. Fast movers can be located closer to conveyors and aisles to reduce travel, and in easy-to-access locations (we call them sweet spots).

Items that are regularly picked together can be located in adjacent locations. In larger pick-to-conveyor systems, picking activity can be balanced by zone, ensuring there is even product concentration and reduced congestion in the pick zone.

Slotting strategies often involve placing the fastest-moving SKUs close to the warehouse dispatch zones, which helps to minimise picking operatives’ travel distances and times. This is the key benefit to maintaining a proper slotting strategy.

Reduced Product Damage

This benefit is probably more of a side effect rather than a primary goal of product slotting, but one that nonetheless highlights why slotting is such a critical facet of effective warehouse management.

Product damage can be reduced by allocating locations according to SKU characteristics (e.g. keeping fragile items away from carton live storage, ensuring that heavy items are located in a sweet zone, etc.).

Heavy items can be placed at the beginning of pick runs, ensuring that they are placed on a pallet or in a tote/carton first to eliminate crushing of other products.

When implemented correctly, slotting ensures that each product is stored appropriately for its throughput and characteristics. That means reduced exposure to risks of injury caused by lifting, bending, or working at height.

Increase in Replenishment and Put-Away Efficiency

If warehouse product slotting increases productivity and efficiency in picking, thereby reducing warehouse costs, it stands to reason that it does the same for replenishment and put-away activities.

Rules on the quantity to be held at each SKU’s location can be set — e.g. “There must be a minimum of one week’s stock and the location capacity and replenishment point must allow the minimum replenishment quantity to be a carton lot.”

This will reduce the replenishment frequency and ensure that stock does not need to be held in an interim location because of lack of location storage capacity.

Operations with a large number of SKUs usually have product or family groups that are supplied by a single or few suppliers. Slotting can allow the grouping of these products within areas of the pick face, reducing the travel required to replenish directly from receipt.

Although the bulk stock may be kept in random locations, these can also be split into areas, with particular suppliers’ SKUs located randomly but in areas close to their pick-face locations.

Health Check of the Pick Face Design

Continual slotting will highlight any mismatch between the pick-face configuration and the requirements of the SKU range, throughputs, and slotting rules.

Change is inevitable, and what was required when the pick face was designed and installed is more than likely unsuitable for the business profile years ahead.

Slotting can allow companies to recognise the mismatch and balance the costs of the resulting inefficiencies against the capital required to re-configure.

Here at Logistics Bureau, we’ve helped countless warehouse operators to implement slotting strategies and we get a great deal of satisfaction from seeing our clients’ surprise at the gains in picking productivity.

Honestly though, the most outstanding visual satisfaction comes from the noticeable difference in how a warehouse looks after the slotting results have been implemented and all the SKUs are in their defined locations.

If you’d like to implement an effective slotting strategy and process in your warehouse without diverting your resources from the day-to-day operation, our inventory management consultants will be pleased to take on the task and help you achieve the above benefits.

Best Practices: Warehouse Slotting Strategies and Tips from an Expert

John Monck is Logistics Bureau’s warehouse expert and a specialist in slotting, so we asked him to further explain the concept of product slotting.

Where to Start with a Product Slotting Analysis

To start with, find out which products are picked the most and place them as close as possible to what we call the centre of gravity of the warehouse, where dispatch is situated. You look at where the picker starts and place it as close as possible to that point — that’s the golden zone.

Warehouse managers should identify the 20% of their products that account for 80% of warehouse activity and place them in what he calls the golden zone.

He warns, however, that you could cause congestion in the warehouse if you put all your fast-moving products near the dispatch — something that would negate the benefits of product slotting. So take that into account when doing your planning.

To do a proper analysis, though, we need to go a bit more in-depth. Considerations of product characteristics such as product velocity, dimensions, cube, crushability, and toxicity need to be factored into the constraints, along with specific picking strategies that will be unique to your warehouse.

Examples include discrete pick (an assignment per order) and consolidated orders, often used when discrete picking happens at the customer venue, and so on. The storage medium and its specific relationship to the rally point — often a staging area prior to dispatch — and finally developing the rules by which to slot specific products to specific locations.

So placing faster-moving products closer to the rally point results in less distance travelled, less labour time, and hence cost savings. Using ABC analysis, we would then place the A products close to the rally point and progressively the B and C products further away, thus reducing travel distance. Figure 1 illustrates this product placement.

Accommodating Special Storage Needs

Apart from the technical aspects of special storage, slotting products with specific storage requirements is relatively straightforward. In most cases, you will keep all products with shared special storage needs together in a zone with the appropriate equipment and environment.

Naturally, if your company specialises in such products, your entire warehouse might be devoted to special storage. If so, your approach to slotting will be the same as for a regular dry storage warehouse.

Products with special storage needs might include:

• Items of very high value (they will need a secure storage zone).
• Hazardous products (they will need storage that isolates and protects them).
• Temperature-sensitive or frozen products (they will need cold storage facilities within the warehouse).

Grouping Product Families

Tactics for product family grouping are simple enough. If your business supplies a mix of products that sell randomly and others that often ship together, you should try to locate those that ship together in adjacent slots to speed up the picking process.

However, things get somewhat more complicated when you have conflicting objectives, such as slotting by velocity and slotting in product groups.

Fortunately, it’s common for product families to share similar velocity metrics. Still, this might not always be the case, and sometimes there are trade-offs to evaluate as part of the slotting process.

Using Throughput Velocity as a Basis for Slotting

The pace at which products move out of the warehouse is the metric that logistics managers typically prioritise in a slotting project.

The most common way to determine the velocity is through ABC analysis, using order lines as the velocity indicator. The idea is to get the products picked most often stored at the front of the warehouse, closest to the dispatch zone.

Note that this means an item picked 100 times over a given period — regardless of how many units are picked — would have priority over an item picked just ten times in that same period, even if this latter product was picked in far larger quantities than the former.

That’s because it’s all about picking frequency rather than sales volume, so the product with more picks is the one that gets the most accessible slot.

Beware the Fast-Mover Bottleneck

Whilst determining slots based on picking frequency sounds simple, it can be less straightforward in practice. For example, what if you have a lot of fast-moving products?

Placing them all in one aisle or all at the dispatch-zone end of the aisles could introduce congestion, leading to a slotting strategy that causes more problems than it solves. Therefore, you should consider spreading those fast movers out around the warehouse, or using a secondary metric as a basis for prioritisation.

The entire decision-making process also depends on the picking methodology you employ in your warehouse.

Given that many warehouses combine full-pallet picking by forklift with manual pallet building for smaller orders and perhaps some other methods, it’s easy to see how slotting optimisation can become quite a conundrum. That’s why it can pay to get help from a consulting team that works with slotting strategies all the time.

Think Vertically as well as Horizontally

You want to get those fast-moving products nearer to dispatch, so it’s important not only to think horizontally but vertically as well.

In other words, slow-moving products go up on the top shelves because it takes longer to get them, whilst faster-moving products come down to the bottom shelves.

If you have a large, complex warehouse accommodating hundreds of products and employing dozens of workers, trying to work out an efficient product slotting system on a whiteboard would be a long-winded process.

You need sophisticated software to manage this — if there is any degree of complexity, you’ve got to do it properly, so the use of digital technology is invaluable.

But if you have a smaller warehouse with a limited amount of product, you can try to do this yourself. It’s as simple as:

1. Analysing your different products’ input.
2. Identifying your faster-moving products — the A-lines — getting them closer to dispatch, and putting them lower down so they’re easier to reach for picking.
3. Placing the B-lines, followed by the C-lines, further back and higher up.

Generally, the less warehouse inventory you have to deal with, the easier it is. But as mentioned, with larger warehouse operations you can soon find yourself running into issues. However, with warehouse slotting best practices, you can reorganise your entire warehouse to make the picking process easier.

Slotting for the Future

Before we move on, here’s one last tip that you might find helpful. When you analyse the picking velocity of your products, you will naturally want to use your order history. However, we recommend that you incorporate forecast velocity if possible.

After all, once you have completed your slotting project, the last thing you want is to find that some SKUs placed in the most accessible slots start to decline in popularity and that others overtake them.

Whilst regular re-slotting is a recommended practice, you don’t want to have to do it within a few months of the original exercise. And remember that you don’t have to slot everything.

In fact, determining individual slot locations for every SKU in a warehouse is rarely necessary and can even be unhelpful. This is because most warehouse operations handle some products that have minimal impacts on workload, efficiency, or cost.

You should be able to identify such items during your data evaluation, so you can set them aside and exclude them from your slotting strategy.

Most Common Slotting Questions: Answered

Micro Slotting vs Macro Slotting: What’s the Difference?

There are various forms of slotting approaches: macro slotting or profiling is about overall warehouse layout, whereas micro slotting is the detailed placement of product along the pick path relative to the final destination or rally point.

In our experience, it rarely makes too much sense to dwell on any distinction between micro and macro slotting. The terms merely relate to the level of detail you assign to your slotting strategy.

Whether using a fixed or dynamic strategy, the only pure application of slotting takes place at the micro level. When you hear a reference to macro slotting, it merely means a looser approach involving the division of the warehouse space into zones.

If It’s So Important, Why Is Product Slotting So Often Neglected?

Slotting is not a panacea, and to be effective it needs the support and input from areas other than the warehouse operation.

Slotting requires the analysis of accurate SKU and transaction data. The SKU data — usually the Product Master File (PMF) — must be maintained, and changes in packaging, dimensions, and units of sale captured before the product hits the floor.

This in turn requires the implementation and enforcement of supplier standards and protocols for the introduction of new products. Buyers and marketing should supply estimates of likely demand for all new products. S&OP must be on the ball so there are no surprise promotions, etc.

Accurate data on the configuration of the pick face, with location dimensions, types, and numbering systems, is essential.

Slotting is a valuable tool; however, with the exception of facilities that support campaign sales, it is not a constant requirement.

Normally slotting can be done at seasonal changes or every quarter. This irregularity of requirement generally makes it easy to put slotting on the back burner until there are no fires to fight — and not surprisingly, this never happens.

The re-slotting of an entire pick face is an expensive, time-consuming business. The approach should be that only those SKUs that are the most badly located are identified and re-slotted in each slotting exercise.

Seasonal changes — e.g. out with the sun cream products, in with the cold and flu SKUs — should be planned in advance and the requirements factored into the initial pick-face configuration.

What Warehouse Slotting Software is Available?

There are many slotting software tools available. The major Warehouse Management System (WMS) suppliers normally have a slotting module in their software suite.

There are standalone programmes of varying capability available. If you’d like an impartial analysis of your slotting needs and assistance in selecting an appropriate software solution, our warehouse management consultants will be happy to get involved.

Regardless of which tool you use, you’re going to need the correct information to run the calculations, which means that typically you will want to feed the following data into your software:

• Throughput velocity for each SKU.
• Warehouse dimensions (aisle lengths, rack heights, and others).
• Slot dimensions (cubic capacity of each slot).
• SKU dimensions (weight and cubic size).
• SKU families (groups of SKUs that are typically ordered or sold together).
• Picking level (are products picked by the single unit, case, or pallet?).
• Any special storage requirements.

The above list of data types is not exhaustive, and additional data requirements may exist depending on the nature of your business and its warehousing characteristics.

One of the key things you can do in your warehouse to improve the productivity of your staff — as far as picking and packing go — is to institute a system of product slotting.

What Can We Do for Your Business?

Slotting applications can be expensive to purchase and require highly technical skills to operate. But the rewards are available for those that persevere.

At Logistics Bureau, we can provide a fully outsourced service to provide you with slotting recommendations depending on the type of operation you are running.

Our other inventory and warehouse management services include:

• Warehouse process reviews and audits.
• WMS selection and procurement.
• Inventory management improvement projects.
• Warehouse layout design and redesign.

If you would like us to audit a new warehouse design, undertake a one-off slotting review of your current setup, or assist on a seasonal basis to cope with your business changes, we can help you.

For more information, why not get in touch with us to discuss your warehouse and inventory management improvement plans?