Home' MHD Supply Chain Solutions : MHD May-Jun 2016 Contents D
uring my time managing the LAA, the
number one theme consistently at the top
of everyone’s agenda was the optimisa-
tion of their supply chain.
Service providers from IT companies to
consultants have marketed on the basis of
the savings they could provide as a benefit to
their clients. And whether you were a company
looking for cost savings to meet targets, or an
employee seeking new tools and methodologies,
knowing how to cut costs out of your supply
chain - no matter what industry you were in -
was key. Nothing much has changed and the
number one commandment remains: though
shalt supply chain optimise.
Over the years there have been many
methodologies and tools that have come in
and out of favour. We have network modelled,
redesigned our warehouse, lean-six-sigmaed,
cost-to-served, lean logisticed, continuously
improved, value-stream mapped, transport
audited, and sales-and-operations planned
ourselves into supply chain heaven.
Another one of these methods that has been
around for some time, but has recently started
to gain momentum in Australia, is slotting.
Slotting in its most basic form is all about
moving the SKU around in your warehouse to
the most optimised position, i.e . deciding, based
on product and warehouse parameters and
business principles, the placement of product
that is in demand in the most easily accessible
and most cost-effective position.
How much time do we actually spend in a
warehouse, locating and picking our product?
Some estimate that over half the labour costs in a
DC are related to the order selection process. It’s
no wonder that large FMCG companies such as
Coles, Woolworths, Metcash, as well as smaller
SME, have turned to slotting methodologies
as a means of efficiency gains in warehousing
operations. We can no longer design a warehouse
and set-and-forget. Slotting is becoming
mainstream across a number of industries, from
FMCG to pharmaceutical, automotive and fashion.
Tools for use
Larger operations typically engage dedicated
software programs on a frequent basis, often
every month, as a process. And smaller com-
panies now program in and utilise service
providers, or engage consultants, to run slotting
programs - usually with some form of Excel
modelling. Some materials handling companies
also offer slotting services.
As slotting is moving SKU around in your
warehouse to the most optimised position - less
movement around the warehouse, less labour,
less cost -, the cost savings in doing so can be
huge. Where are these efficiencies?
• Reducing wasted space inside a slot and
filling the slot to capacity.
• Reducing travel distances.
• Reducing time to build stable outbound pallets.
• Freeing up the most efficient pick locations
by taking slow movers out.
• Reducing inventory damage.
All the above will reduce DC and labour
costs via the order selection process: increase
productivity, reduce employee injuries, increase
pick lines' efficiency and throughput.
Like any good supply chain program, data
is key. And for slotting, the data on your
warehouse layout and constraints, as well as
the data on SKU, need to be accurate and
include product constraints such as weight,
safety, fragility, temperature control, and other
grouping requirements as well as carton/unit
size and usage/movement measures. Seasonal
demand and promotions should also be taken
Once data is configured with profiling
complete and preference and constraints
complete, then possible scenarios on how your
DC could be structured should be considered.
These scenario models will provide a
blueprint for new stock locations with noted
efficiency gains for time, travel, pick rates,
labour costs, and other efficiencies. The larger
and more dynamic your supply chain, the
more efficiencies are to be gained with regular
As our industry changes, especially with the
advent of online retail and other disrupters,
our warehouses will need to be constantly
reconfigured to encompass the many changing
variables. Variables such as promotions, seasonal
changes, the way that consumers and businesses
shop, as well as multiple warehouse locations and
constant changes in product - these all require a
more sophisticated approach to slotting.
Sophisticated software programs provide a
dynamic solution to handling slotting. These
programs offer huge processing power to handle
hundreds and thousands of SKU and their
constraints, as well as slotting preferences and
strategies. Another great benefit is the possible
scenarios on how a DC could be structured
giving a) different efficiency and cost scenarios,
and b) the flexibility enabling constant and rapid
change to new and old product lines.
For more information contact Jo Baker
at Infowise (firstname.lastname@example.org).
“... warehouses will
need to be constantly
encompass the many
SLOTTING IS MORE THAN APPLES, ORANGES AND LEMONS.
MHD SUPPLY CHAIN SOLUTIONS — MAY / JUNE 2016
Links Archive MHD Mar-Apl 2016 MHD Jul-Aug 2016 Navigation Previous Page Next Page