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SAP Distribution Blog

Step 2: Optimizing Your Warehouse Floor

Posted by Gary Feldman on November 16, 2016

When I meet a new prospective customer, one of the first things I like to do is walk their warehouse floor. The organization, cleanliness, and structure tell me a great deal about how the business will be as a client.

Space Utilization and Slotting

Some people believe that optimizing the warehouse floor begins with receiving – getting goods put away into a designated spot as quickly as possible. And while this does eliminate a great deal of problems, optimizing the warehouse floor really starts with space utilization and slotting. 

At its most basic level, slotting is the series of tasks that precedes the decision of where to put inventory based on the space available in your warehouse. Truly, though, it’s far more than available space.

 

Optimal Location

Optimal location is based on several factors:

  • Inventory turns – most frequently used inventory should be in the most accessible places.
  • Picking efficiency – items frequently picked together should be located close together to limit the amount of picker travel. You may also slot bulk and individual goods differently for picking efficiency.
  • Value – high-value items are placed in more secure areas. (Not that we’re assuming you have shrinkage!)
  • Physical space – a warehouse has a certain capacity in certain areas, and you must take those physical constraints into consideration. Conversely, you can slot based upon maximizing the space you have in relation to cube utilization.
  • Special requirements – whether it’s storage temperature, expiration dates, seasonal sales, or other factors, some inventory has special requirements that influence how you place it in the warehouse.

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These factors are typically moving, making warehouse optimization more complicated than it may initially seem. Accordingly, you should plan to continuously tweak your slotting strategy in response to changes in your product usage and other factors. As you grow your business, for example, you may hire additional staff for pick, pack, and put away; this might cause you to change your slotting strategy to segregate your warehouse into zones and assign pickers by zone to minimize picker travel.

An Inventory Tracking System

One thing that will unquestioningly help you optimize your warehouse is a good system for tracking and analyzing information. Components you should look for in a system include:SAPDisty - Bin Location Master Data form.jpg

  • Ability to track historical usage and forecast future demand based on usage patterns and/or projected sales
  • Ability to manage bin locations, including their attributes
  • Ability to identify slow-moving and obsolete inventory
  • Ability to highlight fast-moving inventory

With this type of inventory system, you can do much more than just shorten the pick path – for one, you can also ensure that the fast-moving inventory is in the fast turnover area and the slow movers are removed or eliminated!

Inventory optimization is not a simple activity; nor is it one you can only do once. The use of regular slotting analysis will not only improve your warehouse flow, it will also provide a tangible monetary return on your time. 

To learn more on improving your operational efficiency, please contact us.

PS - You can read last week's blog, Step 1: Accuracy in Your Warehouse and Information Systems, here.

Topics: Grow Your Business

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