Executive Briefings

Slotting Optimization in DCs Works-But Most Companies Aren't Bothering With It

Less than one-quarter of distribution centers recently surveyed by the Supply Chain Consortium use slotting optimization software, even though the technology can boost labor efficiency and lower operating costs. That, at least, is the conclusion of Tom Singer, principal of Tompkins Associates and author of the DC Slotting survey. "Few operations can afford to ignore slotting," he says. "Product location is the key to optimizing warehouse operations. Furthermore, participants who use slotting software packages report an average 16 percent reduction in labor hours by using an automated tool over a manual approach." Singer said the typical warehouse spends half its operating budget on direct labor. Proper slotting can cut down on the time it takes to move from one location to the next, for picking and putaway. Singer outlined four basic approaches to slotting: fixed assignment, where items are assigned to locations without any attempt to minimize labor or improve flow; manual assignment, incorporating knowledge of the impact of slotting an SKU in a given location; manual assignment assisted by spreadsheet or other database tool; and slotting software, which produces an optimal plan based on user-defined objectives. According to the survey, only 31 percent of companies had a slotting plan that minimized picking travel times. The majority did not use sales-forecast data to support slotting plans, SCC said.

Visit www.tompkinsinc.com.

Less than one-quarter of distribution centers recently surveyed by the Supply Chain Consortium use slotting optimization software, even though the technology can boost labor efficiency and lower operating costs. That, at least, is the conclusion of Tom Singer, principal of Tompkins Associates and author of the DC Slotting survey. "Few operations can afford to ignore slotting," he says. "Product location is the key to optimizing warehouse operations. Furthermore, participants who use slotting software packages report an average 16 percent reduction in labor hours by using an automated tool over a manual approach." Singer said the typical warehouse spends half its operating budget on direct labor. Proper slotting can cut down on the time it takes to move from one location to the next, for picking and putaway. Singer outlined four basic approaches to slotting: fixed assignment, where items are assigned to locations without any attempt to minimize labor or improve flow; manual assignment, incorporating knowledge of the impact of slotting an SKU in a given location; manual assignment assisted by spreadsheet or other database tool; and slotting software, which produces an optimal plan based on user-defined objectives. According to the survey, only 31 percent of companies had a slotting plan that minimized picking travel times. The majority did not use sales-forecast data to support slotting plans, SCC said.

Visit www.tompkinsinc.com.