Slot-LE An Expert Warehouse Slotting System
Slotting a warehouse properly with warehouse optimization software can reduce costs in a number of operational areas. Some of the areas of cost savings can conflict with other areas of savings making it difficult to determine the proper balance to maximize savings. Slot-LE is a revolutionary warehouse slotting software that concentrates on maximizing savings in all areas affected by slotting. Slot-LE is categorized as an ‘expert system’ in that it is parameter / data driven and it’s answers are based upon the actual circumstances surrounding the slotting. These ‘circumstances’ include the order database, cost of labor, types of technology available etc. The majority of warehouse operations contain numerous technologies aimed at cost effective order fulfillment. In order to be effective at your warehouse slotting optimization and to maximize center savings, the following costs must be considered:
Storage Cost – Most often you are paying an annual square footage cost for the building. Depending on the effectiveness of your storage medium, you will experience various levels of cost to store parts in your technologies. An example of this might be high-rise racking narrow aisle vs. say 7 foot static shelving. The high-rise racking would be far more efficient in its ability to store product.
Picking Cost – Order fulfillment comes in many different flavors. You may pick certain products by eaches, cases, or event pallet loads. Depending on the technology used, you will experience a wide variance in labor and costs. It may cost only 7 cents to pick a line from light directed flow rack, but it may cost 35 cents to pick that same line from a distant rack location. When you make the decision to pick eaches in a separate pick area, you need to make certain the gains you receive outweigh the additional costs (such as replenishment and storage). Even within a zone of technology it may be more efficient to pick an item in an easy to find location rather than one that is further away. This would hold true for shelf levels as well.
Replenishment Cost – Whenever we elect to move an SKU to a separate pick area to pick eaches or cases, we need to make sure that the separate pick area is kept populated with product. We bear costs to accomplish this, no matter how efficient we make that operation.
Capital Cost – Any technology comes with cost. It may be a new light directed pod of carousels, or narrow aisle wire guided man up picking. You may have completely paid for a technology in which case from a slotting standpoint; the capital cost is considered ‘sunk cost’ and therefore treated as zero capital. You also may be spending $7000 per month on a new each pick picking technology. Wouldn’t it be interesting if the maximum savings reported by slotting would result from returning that technology and save the $7000 per month and use an alternate technology?
Primary Pick Inventory Levels – Anytime we elect to have a primary pick area, we need to decide how much inventory is the ‘right’ amount to stock. As we insert more days of inventory in the primary areas, we lessen the cost of replenishment, but we increase our total primary picking costs because there are fewer parts that can fit in the primary pick area. This is a difficult point to balance. There are competing costs. The truth only becomes apparent when ‘all’ of the costs are carefully weighed. Only then can we find that optimal point for our operation to maximize savings.
Zone Visits per Order – One additional direct savings made possible by a slotting is to reduce the average number of Zones that our orders must visit to be picked. Whenever an order goes to a zone for picking, there is overhead required to initiate the order in the zone, pick the order, and prepare the order for exit.
New Capital Evaluation – Because Slot-LE warehouse slotting software is armed with understanding of the above costs, it is easy to substitute a new technology and based on our expectations of efficiency of that new technology, determine if it is the best technology to purchase. If the slotting does not use any of the new technology, we can question its effectiveness. If, on the other hand Slot-LE uses the technology and shows the savings we can realize, we are in a position to understand the center’s ROI for that technology and further evaluate the appropriateness of its purchase.
If you are considering slotting your warehouse and you want to go beyond just frequency based slotting methods, contact the warehouse slotting optimization software professionals at Outsource Equipment Company at 1-877-741-6711.