How to Reclaim Unused Distribution Center Space with Better Slotting

Aug 31, 2018

How to Reclaim Unused Distribution Center Space with Better Slotting

This blog is the first in a series I’m writing on ways to optimize space in your distribution center to extend its ability to support growth and potentially postpone a capital expansion project. Each blog in the series will be dedicated to one of six key space-saving strategies and techniques. Today the topic is slotting.


In the context of logistics, slotting can be defined as ensuring that each SKU is in its proper location to maximize space and labor efficiency. The concept of slotting is simple. A quantity of product the size of a bowling ball, placed in a bin location big enough to fit an entire pallet, takes up a lot of space unnecessarily. If this practice is repeated across hundreds or thousands of SKUs, the inefficiency propagates and becomes a major problem.


A proper slotting initiative generally involves a one-time, large scale “re-set” of inventory locations, followed by regular incremental re-slots as product demand changes due to seasonality, new product introductions, and obsolescence.


Industries with high demand volatility such as apparel or consumer electronics have a harder time slotting product, as the “fast-moving” SKUs in the warehouse change from month to month, or even week to week. These companies often require sophisticated slotting software programs to manage all of the complex variables at play. Conversely, other businesses may have a much more stable demand pattern and can perform slotting with more rudimentary tools, such as spreadsheets.


If the prospect of re-slotting the entire distribution center seems a daunting one, companies should keep in mind that a slotting project with the goal of reclaiming unused space can often be executed more easily than one that is driven by other factors, such as improving pick efficiency.


A space-driven slotting initiative seeks to store every product in the ideal storage medium, and does not necessarily need to place each product in the perfect location relative to the shipping dock (though this should certainly be considered). Space-driven slotting looks at cube and demand. It seeks to place a SKU in the smallest possible bin to accommodate a unit load of the product, and to move that product to an even smaller bin when product is depleted to the point where there is excess empty space in the bin. This form of slotting can often be accomplished with a spreadsheet.


The results of a slotting study may often reveal the need for different storage mediums in the distribution center. Full height pallet positions can often be cut down to half-height positions. Companies that are in a position to dictate the height of incoming pallets may find that a few inches higher or lower on average pallet height can make a big difference in terms of the number of pallets stored. In addition to single-deep pallet rack, it may be advisable to store product in carton flow rack, shelving, or even forms of deep lane storage, as discussed in the next section.


After re-assigning product to its optimal storage medium, much diligence is required to ensure that “honeycombing” does not slowly reclaim the gains made. Honeycombing occurs when product is slowly picked from a bin location, causing it to become under-utilized over time. A process must be put in place to consolidate product that has been honeycombed into smaller bins, to continue maximizing cube utilization at all times.


Now that we’ve covered the basics of slotting, stay tuned for the next blog in this series: Optimizing Storage Depth in the Distribution Center. Can’t wait? Read the Whitepaper: Six Ways to Postpone -Or Avoid- DC Expansion, or watch the recorded webinar.

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