Slotting is the process of determining the most efficient arrangement of items in a warehouse, which promotes easy access to items that are frequently used. Most examples of slotting have been drawn from kitchen arrangement: We naturally place items we use the most in a close vicinity to where we stand while cooking. This helps to reduce the time and trouble of digging for these items from the back of kitchen cabinets.
The same logic applies to warehouse arrangement. You want high-selling products nearest to the access point in order to minimize travel distance. High travel distance in a warehouse means low picking efficiency, and low picking efficiency means added time in your order fulfillment cycle. Adding too much time on your order fulfillment can affect your customers, especially if it leads to late deliveries.
However, in most cases, poor slotting adds small windows of time to an individual order. Because the added time is short, it usually goes unnoticed. But over extended periods, those small windows of unnecessary time due to poor slotting can quickly add up to a lot of hours. For example, if a warehouse processes 900 fast-moving orders a day, and poor slotting adds a minute to each order processing time, that adds up to 900 minutes spent on unnecessary labor — in a single day. In a year, that translates to about $90,000 in unnecessary labor expenses, and that’s just one of the several expenses you incur due to poor slotting. You also incur the opportunity cost of unnecessary travel time and extra machine usage, further eating away at your profitability.
Below is an illustration which shows how a slotted warehouse looks like.
In the slotted warehouse, all fast-moving products are close to the warehouse access point. This allows pickers to quickly access the products and complete their orders. In the poorly slotted warehouse, pickers frequently travel to the back of the warehouse to access fast-selling products. This adds unnecessary travel time and increases the order fulfillment cycle.
Most warehouses skip on slotting optimization because they don't realize the benefits. Others skip on slotting because they think it is complicated and requires expensive specialty software. But slotting optimization can be done in Microsoft Excel, a common and simple program. The initial set-up might take a couple of hours, but soon after, you can optimize slotting with a click of a button.