Labor is the second leading cost of operation after inventory costs in the warehouse industry. Typically, labor makes up 60–65% of most warehouse facilities’ operating budgets. The hourly labor rates have increased by between 10-16% in the recent past. One effective way to bring down your labor costs is through warehouse slotting.
What Is Warehouse Slotting?
Warehouse slotting is the storage of products in relation to their volume and velocity. It involves organizing inventory in a way that maximizes space and reduces travel time. Notably, the slotting efforts help fewer workers to pick more orders quickly and efficiently.
Cost-Saving Benefits That Come With Warehouse Slotting
It helps determine the appropriate storage location
Slotting technology helps optimize where to put products in a warehouse. Proper organization in your warehouse is an ideal way to promote productivity and utilize space to keep costs low. Warehouse slotting enables you to match the fastest moving items to the best locations to maximize efficiency and increase productivity.
Reduces travel time
Travel time when picking orders is a huge labor cost. Warehouse slotting helps you manage how your team picks products to decrease labor costs and improve labor productivity. When you set up labor forecasting and real-time order determining metrics, you can analyze travel time and establish better performance techniques for your team.
It helps the zone better pick up paths
A warehouse that is not set up appropriately to provide efficient pick up paths forces the staff to waste a lot of time picking orders. The longer it takes for orders to be picked, the higher the labor costs. Efficient pick-up paths ensure that orders are fulfilled more quickly so that labor costs are reduced.
How To Slot Your Warehouse
The following is a step to step guide for slotting your warehouse:
Set goals: Your first step is to set clear goals and objectives for the project. Your goals should identify the desired outcomes to be achieved.
Review current warehouse arrangements: A detailed analysis of your warehouse’s current state will help in coming up with the right changes. Examine the storage place of the items and the duration it takes to pick and replenish stock.
Conduct demand segmentations: Determine where a product should be stored going forward based on demand. You should also find out if the warehouse needs adjustment based on the physical characteristics of the product.
Develop future state slotting: When developing a future state slotting plan, the following factors should be considered:
- Order frequency
- The type of storage location, e.g., forward or reverse pick
- The kind of pc keg single pick, a pallet pick, or carton pick
- The travel distances
- Which items often ship together
- Product characteristics, e.g., weight and size
- Seasonality by SKU
- Product family grouping
- Product damage potential
Finalize the implementation plan and test it. If it is working optimally, you can begin the re-slotting efforts. When re-slotting, avoid congestions that can lead to accidents and product damage. Remember to leave enough room for future product expansion.
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