White Paper. Dynamic Slotting (Capabilities of Exacta Profile)

Transcription

1 White Paper On Dynamic Slotting (Capabilities of Exacta Profile) Software and Automation Technology for Supply Chain Logistics Louisville, Kentucky This paper contains information considered proprietary to ASAP Automation, LLC. It may not be duplicated, used or disclosed outside the organization, and it may not be duplicated in whole or in part, for any purpose other than to evaluate this document. ASAP Automation reserves the right to modify this document as necessary.

2 Table of Contents INTRODUCTION... 3 SLOTTING GOALS... 4 Productivity Improvement... 4 Identify the optimum storage modes required for a given order profile... 4 Identify how the products should be stocked into different zones Identify what products should be stocked in each of those storage modes... 5 Identify where should the product be stocked in storage mode Inventory Control... 6 WAREHOUSE TYPES... 7 EXACTA PROFILE SLOTTING METHODOLOGY... 8 Data Collection... 8 Product Velocity... 8 Slotting Rules... 8 ADVANTAGES OF SLOTTING... 9

3 DYNAMIC SLOTTING INTRODUCTION In most of the traditional warehouses, productive work such as actual loading, unloading, stocking, and picking account for only 35 to 40 percent of all direct labor activities. Travel time accounts for the other 60 to 65 percent (as shown in figure1). This in particular is significant if one considers that in a typical warehouse, direct labor can account for up to 40 to 50 percent of the total budget. Inventory is another aspect of slotting that has a significant effect on the total budget. Interest, insurance, taxes and storage cost adds up to the Total Inventory Cost. Controlling inventory at the product level is one of the quickest ways to decrease working capital needs and thus becomes a significant target for reducing warehouse expense. Figure - 1 Thus Slotting is defined as the process of identifying the most efficient placement for each item in a distribution center with efficient quantities. Since each warehouse is different, proper slotting depends on a facility s unique product, movement, and storage characteristics. An optimal profile allows workers to pick items more quickly and accurately and reduces the risk of injuries. Figure - 2 Typical storage alternatives (figure2) for stocking an SKU are ASRS Carousels Carton flow Shelving Racks etc Keeping this in mind, ones needs to ask questions about warehouse operations like has the productivity in distribution center been stagnant or even declining? Have you tried worker incentives, mechanization/automation, and new procedures with limited success? If so, it may be time to investigate slotting. ASAP Automation's ExactaProfile application uses complex algorithms to give you the best possible location for every product in your warehouse. We combines industry leading profiling/slotting techniques with over 20-years of warehousing and distribution experience. Some of the methodologies and benefits of analysis using the profiler tool will be discussed here. ASAP Automation LLC Page 3

4 SLOTTING GOALS Slotting can serve several goals depending on the usage. Some of the primary goals expected from slotting are Productivity Improvement and Inventory Control. Productivity Improvement Productivity improvement depends on various functional aspects of slotting. Improving productivity could mean ergonomic locations for all the high moving products. It can also mean to stock products into optimal storage equipment. Broadly classifying, slotting is suppose to: Identify the optimum storage modes required for a given order profile This process involves cost based analysis of a warehouse based on picking activity/rates and order profiles to identify which storage equipment is most suitable for stocking. Different storage equipments have different kind of requirements. Some of them are mentioned below. Case Flow Rack - They normally have Pick-to-Light interface (figure - 3) and are used to stocking high moving SKUs. Specifications: Pick Rate lines/hr Restock Rate - 60 lines/hr Horizontal Carousel They are used to stock medium movers (figure - 4). Specifications: Pick Rate lines/hr Restock Rate - 40 lines/hr Figure 3 Figure - 4 Vertical Carousels They are used to stock small items which have relatively lower velocity (figure 5) Specifications: Pick Rate - 80 lines/hr Restock Rate - 35 lines/hr Figure - 5 ASAP Automation LLC Page 4

5 Bin Shelving These are normally used for slow movers (figure 6). Operators can use handhelds or list for picking and stocking operations. Specifications: Pick Rate - 90 lines/hr Restock Rate - 45 lines/hr Figure - 6 Identify how the products should be stocked into different zones. To identify this we first consider the order completion distribution. This distribution identifies small group of items that can fulfill large group of orders. For example, as shown in figure-7, approximately 25% of items can fill 80% of orders. Figure - 7 Those small group of items can often be assigned to a small order completion zones in which the productivity, processing rate, and processing quality are 2-5 times better than that found in the general warehouse. Identify what products should be stocked in each of those storage modes. In forward pick areas, high velocity SKUs should be slotted to storage equipment which has higher pick rates. The velocities for each SKU can be identified through order profiles. The volume of product is also critical in deciding the storage mode. Bulkier items would need to be handled separately. Pick Density is defined as the velocity of product per unit cube. It takes into account the velocity and volume of products in tandem and is a fairly good indicator of what storage mode should the product be stocked (figure -8). ASAP Automation LLC Page 5

6 Figure - 8 Identify where (in which location) should the product be stocked in storage mode. There can be several criteria to decide this. High moving SKU should be stocked at the most ergonomic location called Golden Zone (figure 9). Also heavier products should be slotted at lower levels and ahead in the picking paths. Inventory Control Figure - 9 Inventory control depends on the user to identify stock level to be maintained for the operations. Number of inventory days can be specified at the zone level or at the product level. This will identify the number of locations that each SKU would need to be stocked. As the demand for product keeps changing with time, inventory control will eliminate any excess inventory to be replenished into the area or prevent the stock run out situation. ASAP Automation LLC Page 6

7 WAREHOUSE TYPES In smaller warehouses, slotting is often done manually or using standard computer spreadsheet or database programs. Also in some warehouses, slotting is not done periodically to sustain picking efficiencies, as a result the productivity goes down with time. The misconception that only huge Distribution Centers can benefit from or afford a slotting system is a thing of a past. ASAP Automation s Exacta Profile software has brought this optimization process within the reach of even small facilities. All the warehouse systems have been found to practice the following three types of operations: Warehouse systems that never do any slotting analysis on periodic basis. Such warehouses may have done a manual evaluation at their initial start-up. But there after they never invested time and money to study the change in their order pattern which affects the product velocity. Regardless of how well the product is slotted initially, changing business environments will eventually lead to disorganization and improperly slotted product which will affect the pick rates for different storage medias (figure 10). Thus a periodic study of order profiles for optimum product placement is recommended for such systems to provide a great enhancement to productivity at a low capital cost. Pick Rate vs Period without slotting Pick Rate (Lines/hrs) Period without slotting (years) Figure - 10 Warehouse systems that do manual slotting on yearly or bi-annual basis. Such systems may do the slotting on yearly basis but since the process is manual, it becomes time and cost intensive. If an external consultant is chosen to do this study, it even adds up to total cost due to consulting fees that has to be paid each time. Hence each periodic study results in cost, making slotting to be done less frequently, thus affecting the productivity. Warehouse systems with slotting software. Such warehouse systems do the slotting analysis more frequently, sometimes even on weekly basis. Software involves one time investment and the ROIs based on tangible and intangible cost could be as low as 6 months. Frequent slotting creates a productive and cost efficient warehouse environment. ASAP Automation LLC Page 7

8 EXACTA PROFILE SLOTTING METHODOLOGY On a broad level we have three main steps for slotting. Data Collection The first step in any inventory slotting exercise is gathering the necessary information about the items, locations in the warehouse and product sales. Item dimensional data may already be stored in the WMS (warehouse management system) or ERP (enterprise resource planning) system, or items and cases may need to be physically measured. The following information is typically needed for each SKU: Item length, width, height, and weight Active picking location(s) for the item Case quantity and dimensions (length, width, height, and weight) for items stored by the case Pallet quantity (or cases/tier and tiers/pallet) for items stored by the pallet Vendor if items are to be stored in vendor groupings Family group if items are to be stored by product groupings Special storage conditions, if applicable (flammable, refrigeration, etc.) Maximum stacking height or crushability factor, if applicable Items that are often sold together, if applicable. They can be identified by analysis of the order files and/or conversations with the pickers Each picking location in the warehouse needs to be defined. The information typically required for each slot is its: Location number Usable size (length, width, height) Proximity to material handling equipment and shipping Position within the pick path Types of items eligible to be stored here (hazard code, vendor or family group) Product Velocity Product velocity can be captured as Popularity or Turnover. Popularity is defined in terms of number of time an operator has to visit a location to pick this item from a specific zone. Turnover is defined in terms of the number of units shipped over a specific time period. For large volume (units/line) orders, Popularity is most typically used because a single pick may fulfill all the requirements for an order. High velocity items should be placed in the most desirable locations and the optimal size location can be established using the quantity sold and the dimensions. If items change frequently and do not have any historical movement figures, sales forecasts may be used instead of history.. Slotting Rules Once the necessary data has been collected, the slotting rules must be established by setting up constraints (rules which cannot be broken) and objectives (goals). Constraints include weight limits, hazardous material areas and vendor/family group areas. Objectives define factors like the desired stocking level, where faster moving items are placed, and how activity will be balanced. Examples of some typical rules include: For non-conveyable stored on pallets, put the fast moving items close to the shipping dock and on the lower pallet rack levels. Store slower moving items on higher levels and further away from the dock. ASAP Automation LLC Page 8

9 In the case pick area, locate taller cases and heavier cases at the beginning of the pick path. Put faster moving cases on floor/lower levels. In the horizontal carousels, balance the activity among carousels in pod. Spread faster moving items among the carousels and put them on the center shelves. Place fast-moving items into carton flow rack, with the very fastest on the center levels. Balance the workload among the flow rack units. Put slower-moving items into shelving, with the faster moving ones placed closer to the take-away conveyor. Locate heavier items on the center levels. ADVANTAGES OF SLOTTING Product slotting maintains or establishes the warehouse layout to an optimum condition. The advantages of proper product slotting are: Improved Picking Productivity: Studies show that travel time can often account for up to 60% of a picker s daily activity. A good product slotting strategy can reduce travel time thereby reducing picking labor by up to 20%. Efficient Replenishment: By sizing the pick face location based upon a standard unit of measure (case, pallet) for the product in question you can significantly reduce the labor required to replenish the location. Work Balancing: Balancing activity across multiple pick zones reduces congestion in the zones, improve material flow and reduce the total response time for a given order or batch of orders. Figure shows lines picked per day from different zones. The picks are closed to being balanced amongst different zones. Efficient Load Building: To minimize product damage, heavy product is located at the beginning of the pick path ahead of crushable product. Product may also be located based on case size to facilitate pallet building. Improved Accuracy: Similar products are separated to minimize the opportunity for picking errors. Improved Ergonomics: High velocity products are placed in a golden zone to reduce bending and reaching activity. Heavy or oversized items are placed on lower levels in the pick zone or placed in a separate zone where material handling equipment can be utilized. Family Grouping: By storing and picking product by family group you may be able reduce downstream sorting and consolidation activity. This is particularly important in a retail environment to facilitate efficient restocking at the stores. Capital Investment: Deferred capital expansion by maintaining the optimum warehouse layout and cube utilization, reducing the need for the building expansion. ASAP Automation LLC Page 9