What Is Slotting and How To Choose the Best Method
by Jaidyn Farar
When they’re getting dressed in the morning, most people know exactly where to look to find each component of the perfect ensemble. Belt? Top drawer. Pants? Middle drawer. Shirt? Hanging in the closet. Voila!
Knowing where everything goes in your own home is easy. But what happens when, instead of needing to store and locate a few items of clothing, you need to store and locate hundreds or thousands of distinct products in a warehouse?
That’s where warehouse slotting comes in. But what is slotting, and how does it work? In this article, we’ll explain what slotting is, what options you have for organizing your inventory, and how to develop the right strategy for your business.
What is slotting?
Slotting is the way inventory is organized in a logistics facility. With optimized slotting, stock is easy to access, and picking is faster and more accurate. A good slotting strategy also maximizes the use of storage space, potentially decreasing warehousing costs. The central goal of slotting is to improve both receiving and order fulfillment.
Slotting isn’t as simple as scooting over products on a shelf to make room for new inventory. For truly efficient slotting, businesses must rely on data. You’ll need to take various factors into account, including an item’s weight and size, picking frequency, and more. Technology such as a warehouse management system (WMS) can help by analyzing data and suggesting ideal warehouse storage layouts.
Why slotting is essential
Slotting is an essential part of your larger warehouse management strategy. It allows pickers to move through the facility more quickly and efficiently, and it reduces the number of mistakes they make. A warehouse that uses slotting effectively will operate effectively and be able to cut costs. On the other hand, sloppy slotting may lead to wasted time, incorrect orders, and shipping delays.
Benefits of slotting optimization
Let’s dive a little deeper into the benefits of slotting optimization: increased efficiency, better use of space, fewer errors, and enhanced customer satisfaction.
- Increased picking efficiency. Slotting improves efficiency by reducing travel time for warehouse workers, ultimately speeding up order fulfillment. This is because high-demand items are placed in easily accessible areas, usually closer to packing and shipping zones.
- Better use of storage space. Slotting takes into account the size and shape of items, using vertical space and appropriately sized shelves or bins to store items more compactly. By optimizing where and how products are stored, slotting reduces overcrowding in high-traffic areas and ensures that every inch of space is used efficiently.
- Fewer errors. Although technology helps workers locate and pick the right products, mistakes can still happen. And picking errors are even more likely when similar items are stored right next to each other. Slotting allows you to keep products with similar barcodes or appearances in distinct locations, which prevents confusion during the picking process.
- Enhanced customer satisfaction. Slotting improves order fulfillment accuracy and speed, which directly benefits customers! The faster an order is picked, the sooner it arrives at the buyer’s doorstep. And when they open the package, they’ll find exactly what they ordered—no more and no less.
Key considerations when building a slotting strategy
Slotting looks different for every business. To determine the right strategy for your organization, you’ll need to take a variety of factors into account.
SKU velocity (Demand)
SKU velocity is a measurement of how fast a stock keeping unit (SKU) is picked during a set period of time. It reflects how high the demand is for certain products and shows how quickly they move through the warehouse.
Items that sell more frequently (high-velocity SKUs) should be stored in easily accessible areas near the picking and packing stations to minimize travel time for workers and speed up order fulfillment. On the other hand, slower-moving products (low-velocity SKUs) can be stored in more remote or higher locations. This frees up prime warehouse real estate for more popular items.
While demand-based slotting speeds up picking, it has a downside too. If all your most popular items are stored in the same area, you might encounter bottlenecks as pickers cross paths and get in each other’s way. To avoid this issue, try using zone or wave picking.
Product affinity
In addition to considering each individual item’s demand, think about product affinity. The term simply refers to products that are frequently purchased together. For example, customers might often purchase new socks when they buy a pair of shoes. Another common example of two things often bought together is shampoo and conditioner.
When your data reveals product affinity, it may be helpful to store those products close together in your fulfillment centers so pickers can quickly access both without needing to walk too far.
ABC slotting
One way to implement demand-based slotting is to sort inventory by value using ABC analysis. This is an inventory classification system that categorizes stock as class A (high-value), B (medium-value), or C (low-value). As a general rule, class A items make up the smallest portion of inventory but drive the most value because they’re best-sellers. These would be the high-velocity items that you’ll want to store in the most accessible locations. Class B and C items, on the other hand, could be stored further away from packing stations.
Class | Percentage of inventory | Value |
|---|---|---|
A | 10%-20% | 70%-80% |
B | 30% | 15%-20% |
C | 50% | 5% |
Seasonality
Seasonality refers to fluctuations in demand for certain products at different times of the year, and it should be accounted for in your slotting strategy. Items with seasonal spikes, such as holiday decorations or summer clothing, should be relocated to prime slots during their peak season and moved to less accessible areas during off-peak periods. This adjustment ensures the right products are prioritized when they are in highest demand.
Item characteristics
Item characteristics play a big role in your slotting decisions. Let’s look at a few characteristics that help determine where and how a product should be stored.
- Size and weight. Larger or heavier items should be placed on lower shelves to prevent worker injury, while smaller, lighter items might be slotted on higher shelves or in bins to save space.
- Specialized storage requirements. Some products require special storage conditions; for example, temperature-sensitive goods should be slotted in climate-controlled zones. Fragile items should be stored in areas that minimize the risk of damage.
- Similarities. Storing similar items right next to each other can lead to confusion and picking mistakes. For example, if all sizes of blue sweaters are stored side-by-side, a picker could easily grab a medium instead of a large. Though it may seem counterintuitive, scattering similar items throughout the warehouse can improve picking accuracy.
Handling unit
The unit of handling describes how inventory will be picked: as pallets, cases, or single items. If products are typically picked in bulk (like pallets or cases), they should be stored in areas designed for easy access to larger quantities, such as bulk storage zones. For items that are frequently picked individually, place them closer to picking stations or in areas designed for piece-picking.
How does this look in real life? Let’s say you sell metal water bottles. When large retailers place an order, you’ll most likely pick by the pallet. If a business buys bottles for all of its employees, you might pick a few cases. And when an individual orders a bottle online, you’ll only need to pick a single item. In each case, the location of the inventory plays a large role in how fast you can pick and ship the order.
Using automation to improve slotting
Slotting can be accomplished without the use of high-tech solutions. Smaller warehouses may get by with manual slotting strategies, depending on the staff’s knowledge to arrange products based on simple guidelines. Another low-tech option is using basic spreadsheet programs to track item location and movement, with regular reviews by warehouse managers to adjust the slotting as inventory changes.
While these approaches can work for smaller operations, they’re generally more time-consuming and error-prone than tech-driven solutions. As your business expands, you’ll come to a point where automating slotting is a necessity.
You can use dedicated slotting technology to develop and maintain a slotting strategy. These solutions analyze inventory data, demand patterns, and product characteristics, using algorithms to determine the most efficient locations for items within a warehouse. They take into account all the factors mentioned above: size, weight, demand, and more.
Most slotting systems also integrate with warehouse management systems (WMS), providing real-time data and insights that help automate re-slotting when needed. Additionally, many warehouse management systems come with built-in slotting capabilities.
Improve your order fulfillment with EasyPost
As you can see, slotting is an essential part of warehouse management. When done correctly, it leads to faster, more accurate order fulfillment—and ultimately, much happier customers. But slotting is just one piece of the puzzle. To truly streamline the delivery process, you also need shipping software that can keep up with your volume, work reliably during the busiest times, and minimize shipping mishaps.
EasyPost is your one-stop shop for shipping, providing solutions for carrier integration, package tracking, address verification, and more. It’s helped businesses like Casper and Radio Flyer improve their shipping process and save money, and it can drive similar results for your company.