Warehouse Slotting Optimization: Improving Efficiency in 3PL Warehousing

  • 09 February 2024
  • 6 Min Read

“In the successful organization, no detail is too small to escape close attention.” — Lou Holtz

Warehouse slotting is a step-by-step minute organization of inventories for processing and analyzing data for efficient inventory management. The goal of warehouse slotting is space optimization, and distribution of inventory as per demand. The whole exercise helps in cataloguing and categorizing SKUs in a manner that it complements quick order fulfillment. A holistic approach to take supply chain management of an eCommerce to the next level by integrating various operations as logistics, warehouse management etc all.

Importance of Warehouse Slotting

Slotting is maximizing space to save time, money, and labor. It is data-driven methodology, and a set of strategy is adopted for achieving desired goals. Some common strategies are:

• Better Warehouse Space Utilization: The automated warehouse management system (WMS), identifies inventory with high demand, studies frequency, inquiries, region of demand and other factors. These provide specific details, used for deciding how to segregate and slot the items while maximizing space availability.

• Efficient Utilization of Time: Since, tracing and tracking of items is convenient and faster, in less time more results can be obtained. Faster disposal of items for order completion or transferring to another warehouse.

• Improved Allocation of Storage by SKU Velocity: Warehouse slotting on the basis of SKU velocity. A product with higher market value is slotted near the exit gate to save time, energy and money. Similarly, seasonal or slow or outdated SKU units are stacked at not so frequented corner.

• Manpower Optimization: Slotting improves manpower efficiency, as each item is shelved according to its utility and velocity. This improves quality of work and even with reduced number of human resources, much can be achieved in lesser time.

• Slotting Enhances Workflow Management: Efficient slotting can only be achieved when each SKU item has bar code, is scanned and tracked. This avoids unnecessary manual intervention in searching and locating a product. Workflow is actually streamlined and goal is reached before time.

• Slotting Based on Kitting: Sometimes a SKU can be clubbed with one or two other items. This is kitting when two or more products are suggested to customers for clubbed purchase. Such items are kept at close proximity for bringing down pick-up time and increasing profit base with real-time data.

These are only a tip of the iceberg in slotting methodology. Success rate and profit margin increases as a business gets more specific with warehouse slotting by extracting maximum information from inventory data.

Deciding Factors of Warehouse Slotting

Warehouse slotting is not an independent or an isolated part of operation management. It is a small piece of puzzle in supply chain management. A well-planned, researched and profitable decision on slotting is achieved only after studying pattern of order management, logistics, and other crucial elements of supply chain management. The integrated information and analysis provides data on location, region, trend and popularity of an item. This automated synchronized data made available via warehouse management system (WMS), transportation management system (TMS) and other APIs working for order fulfillment, improves space utilization, reduces picking time and enhances overall warehouse efficiency.

Warehouse Slotting Optimization Enhances Efficiency of 3PL Providers

3PL providers or third-party logistics providers are commissioned partners for eCommerce businesses. During peak seasons or even otherwise, e-retailers require 3PLs for storing as they lack space and have limited budget to own and maintain their own warehouse. Mostly, 3PL providers handle more than one eCommerce clients and have to ensure each client is happy with the service provided. To handle a huge number of inventories of different clients, 3PL providers can improve efficiency by adopting warehouse slotting strategies.

  • • Space optimization by bracketing items of each client in different shelves.
  • • Quick access to SKUs as each has been slotted by velocity and demand.
  • • Better manpower management as items are slotted.
  • • Reduced picking time as there is information available on where to find a SKU for order management.
  • • Slotting improves inventory and accuracy.
  • • Slotting helps in cross docking, reduces logistics cost considerably for client and 3PL providers.
  • • Slotting algorithm also help in removing outdated products and how to repackage them.
  • • Slotting helps 3PL providers to prompt about products that can be used for kitting.
  • • Slotting algorithms provide information on time to replenish a SKU and avoids overstocking or understocking.

Slotting is essentially done on the basis of real-time data available through integrated supply chain management operations. With the help of machine learning and AI, information is corelated with respect to region, location, peak season, demand pattern and other external forces including political or economical that can influence demand for a SKU.

Definitely a 3PL customer would be required to review and communicate with 3PL providers for scaling up the business, but with real-time performance metrics, 3PLs bring transparency in working methodology. 3PLs customers are connected with an integrated system for visibility and transparency. This real-time interaction and exchange of data help retailers to focus on core competencies and scale up the business.

Real-time Tracking and Reporting Empower 3PLs Providers to Deliver Exceptional Services

When 3PLs providers have real-time knowledge about yard storage, carriers, routing, about containerization, these companies can better facilitate their customers. Take for instance, there is an online retailer with a brick-n-mortar store. A customer visits the store and likes a product which is not available in the right size. When there is coordination between retailers and 3PL provider, availability of SKU can be confirmed and the customer can be assured of the delivery at the earliest. So, instead of losing a business, the retailer is able to win the trust of the customer and ensured contentment. While the 3PL provider can immediately locate the next carrier with space to carry the shipment at the desired location. This not only saves money as 3PLs might have multiple orders for the same location. To bring down costs and ensure early or on-time delivery, orders are clubbed even though belong to other retailers. This clubbing brings down cost and builds trust. These are a few benefits of real-time tracking and reporting.

3PL warehousing can benefit from warehouse slotting optimization as it would contribute in better order management for their clients. eRetailing is in transitioning phase and expanding at a rapid pace, where 3PLs have a major role to play as logistics and warehouse partners for inventory management and for handling orders. When one is responsible for more than one eCommerce businesses, it helps to be organized and sorted out to avoid—

  • • Incorrect delivery
  • • Incorrect address
  • • Incomplete order
  • • Incompetent last mile delivery

To avoid all these and more, it helps to be warehouse slotted and organized!

Advatix Cloudsuite™ Empowers 3PL Providers by Warehouse Slotting Optimization

Advatix Cloudsuite™ provides cloud-based supply chain management solutions for eCommerce businesses and 3PL providers. The track and trace solution for inventory across the supply chain allows algorithm-based automated alerts for replenishment, for region or location of popularity, reason for low demand etc.

Still wondering how Advatix Cloudsuite™ can spear business towards profit curve?