What is Slotting and How Can Your Business Use It?

A businessman has to always make sufficient arrangements for the inventory right from the start of his organization. Also, if he is an industrialist who has an online business, then there should be a large warehouse for the storage of the different types of products. Having all the inventory items in one place and properly arranged ensures that the orders are placed quickly and ensures the product reaches the end customer within the deadline.

In the U.S., it has mostly been observed that an employer or even a small businessman involved in this product marketing business uses the slotting technique for maximum sale of his products and to get good customer reviews. In businesses, there often comes a time when you need better warehouse organization for faster and more accurate processing of the pickup and delivery of the orders.

This blog covers the following topics -

• What is slotting?
• Types of slotting
• How is slotting carried out?
• Why consider slotting in business?
• Benefits of warehouse slotting
• How to start slotting in your business?
• How to get efficiency in warehouse slotting?
• Conclusion
• Key takeaways

What is slotting?

As per the standard definition, slotting refers to the process of organizing a warehouse and its inventory for maximum efficiency in the organization's warehouse. According to the available data, many established and popular organisations involved in product supply chain management are using this technique to improve the picking performance, optimize the company’s warehouse space and even for cost-reduction related to warehousing and inventory management.

It is considered to be a perfect technique for businessmen who want to improve their warehouse operations and reduce the costs involved in inventory It has been found that irrespective of the size of the warehouse, every business owner can benefit from this method if it is properly done.

Slotting can be classified as -

1. Macro slotting
2. Micro slotting

In macro slotting, the business owner has to check the entire warehouse and consider the distribution centre’s big picture. It means that he is required to consider the overall layout and complete area of the space. In opposition to this, in micro slotting, the business owner has to concentrate only on the placement of individual items. This is typically related to the designated SKU area to the concerned storage medium. Here SKU means stock keeping unit and is an alphanumeric code assigned to the product inventory by the small business owners to measure product sales, identify the category of the products, design the store layout and even enhance the shopping experiences of the customers.

Types of slotting

In the businesses that maintain a warehouse for their products, the slotting is classified into two types, namely, fixed slotting and random slotting

1. Fixed slotting - In this process, the product has a pre-fixed location from where the pickup is done. This is done by the business owner by deciding an estimated number of products to be placed in a particular area.
2. Random slotting = In this type, the entrepreneur uses multiple zones in his warehouse for the proper storage of the products. It can be used by companies that have large warehouses for storing a huge quantity of the product’s stock.

How is slotting carried out?

When a business owner uses this technique, it involves multiple steps. In this process, there is a complete analysis and understanding of the company’s products in the inventory. It makes the business owner understand the types of products, product size and which of them are brought together by the customer. It helps the industrialist know which items are purchased together by the customers and even helps him get to predict the seasonal forecasts based on customer behaviour. All this accumulated data is used for the creation of a slotting strategy that is tailored to the business owner’s warehouse inventory and sales.

If you as an employer what is the use of this method, then understand that the whole purpose of using it is to ensure that the organization’s warehouse is well-optimized which is necessary for proper space utilization and high levels of productivity. As this term is common in many industries, it can have a different meaning. For instance, slotting refers to the placement of products at the right location of the rack in retail stores. This is applicable for businesses such as boutiques, supermarkets, and bookstores and usually, has a fee charged for the stocking of a product.

Why consider slotting in business?

If you are an entrepreneur who has just entered the industry and are still understanding the rules of how business functions, then it is possible that you have less idea about why slotting is considered necessary in business. Here are reasons why this method is considered to be necessary for the industry which is involved in supply chain management -

1. It helps the business owner to rearrange his current warehouse layout.
2. A small business owner who has just entered the market can build a new facility for the segregation of various products.
3. IT reduces the warehouse operational costs for the employer.
4. He can function his business for seasonal products based on demand cycles from the customers.
5. If required, the businessman can lay off the employees in the warehouse staff as per the time.
6. He can also keep limited products within the warehouse to limit damage among them.

Benefits of warehouse slotting

Slotting is considered to be a common practice in the business that is involved optimizing inventory space. Reorganizing the entire inventory can seem like a daunting task for the employees of your company and look at it as a time-consuming project. However, when an employer has a proper plan of arranging the products in the warehouse, he can have a positive impact on his business and even notice an increase in sales. Here are a few benefits of slotting -

1. There is improved order pickup efficiency.
2. The business owner shall witness a reduction in the percentage of product damage.
3. An entrepreneur can see an increase in replenishment and a substantial rise in put-away efficiency.
4. The salesperson can do a check on the design of the pick face. ‘
5. It optimizes overall sales and can get good income to the organization.
6. This technique maximizes resources while reducing the cost which is a good beneficiary for the company

It opens new opportunities for business growth without putting extra pressure for change on existing infrastructure

How to start Slotting in your business?

A business owner who is just stepping into the industry and wants to have a warehouse for the proper keep of his products must first collect information on how the warehouse slotting is done. To begin with, it is imperative that he collects at least a year’s data to understand the sales, trends and seasonality of the products. He must collect the following data -

• Key SKU - Make a database of the product dimensions, material composition, weight and other specifications
• He should understand the average inventory levels, reorder quantity and event the frequency with which customers are likely to reorder a product that was bought earlier
• He should know the seasonal fluctuations for the product and even the order picking history along with its sales forecast
• He should have proper knowledge about how fast the product moves out of the inventory and the quantity of the units sold. This is referred to as line velocity in warehouse inventory
• The business owner must have a fair idea about the SKUs bought together by the customer and should also check the product affinity in the different zones

Apart from this, the small business owner must also consider other vital factors such as international or expedited shipping, total warehouse area in square footage, fixtures and height. This data is necessary for developing a proper warehouse slotting strategy. According to available information, an entrepreneur must use a method known as ABC slotting or ABC inventory analysis to rank his company’s inventory as per the line velocity. Moreover, there should be a classification of the products as per their sales. The best-seller commodities must be counted in group A, products that have average movement should be kept in group B and slow ones should be kept in group C. The entrepreneur must pinpoint the most accessible locations using a barcode inventory system and even choose an optimal pick path for faster delivery of the products.

In the next step, the small business owner must assign SKUs that are fast-moving in group A to the most accessible locations and assign a pick path closest to them. He must place the products in group B to the following location and the group C to the areas in the warehouse that are not immediately required or can be considered as least accessible. This is known as the general slotting strategy in warehouse management.

How to get efficiency in warehouse slotting?

A business owner would always want to have optimal efficiency in warehouse slotting for the maximum sales of his products and reach the target audience. Once he becomes a pro at this technique, he should keep the following three practices in mind for the efficient running of his warehouse -

Listen to what your picker says

A picker has a better idea of the slotting strategy and can tell its effectiveness to the business owner to point out the plus and minus points. Hence, an employer must always consider the feedback of picker employees to know their inputs for improvements needed in the strategy before and after implementation. These professionals have a hands-on experience of the hob and can tell you details about multiple warehouse operations that you might not get in any dataset or forecasted predictions.

Do a regular review of the strategy used for slotting

It is always a better idea to change your slotting strategies and add new SKUs as the season changes. This ensures that your strategies are updated and according to the trends. Therefore, the business owner must do a monthly or quarterly review of the company’s warehouse along with the cycle counts. In this way, he would have better information about the entire warehouse and understand if there is a shift in the sales or a decrease in the warehouse efficiency. It can help him understand whether the entire warehouse needs to be re-slotted or only a particular area needs to be rearranged.

Consider automation to have a Warehouse management system

In business, the warehouse inventory happens to change constantly as per the need. This happens to meet the sales and demand ratio in the market which is based on the choice of the customers. Instead of revising the slotting technique multiple times, a business owner must consider buying a warehouse management system to process the SKU data. With automation, it is much easier to have an access to real-time inventory levels, know about the restocking dates in advance and even have various other useful functionalities.

There are multiple slotting tools available in the market for business owners. As per the available information, mostly the major warehouse management system (WMS) suppliers make use of the slotting module present in their software.

Conclusion

A business owner involved in the demand-supply industry in real, as well as online business, must have full knowledge of the availability of stocks in his company. He should regularly check the organization’s warehouse and consider slotting of the areas as per the need and even on the market trends. It facilitates easy pick-up and faster delivery of the product to the customer. At Deskera, you can get various blogs related to business which will assist to increase your gross income.

How Deskera Can Assist You?

Deskera can assist with inventory management, customer relationship management, human resource management, attendance management, and payroll administration.

Deskera consists of an advanced inventory management system that will help you to track your warehouse, stock transfer, bills.

As a business, you must be diligent with the employee payroll system. Deskera People allows you to conveniently manage payroll, leave, attendance, and other expenses. Generating payslips for your employees is now easy as the platform also digitizes and automates HR processes.‌‌‌‌‌‌‌‌

Key Takeaways

1. Slotting refers to the proper organization of warehouses for maximum efficiency in the business. This is a very useful tactic for small business owners and ensures the warehouse is well-organized for ease of pickup during sales.
2. Slotting can be classified as macro slotting and micro slotting. The different types of slotting in the business world are fixed slotting and random slotting
3. In this technique, the business owner does a complete analysis of the available material in the inventory. It improvises the pick-up efficiency for sales and reduces product damage.
4. The most bought products must be kept in group A while the less popular ones should be kept in group C in the warehouse. This arrangement makes the business owner identify the products easily and ensures they are taken out from the inventory with ease.
5. A small business owner must always listen to what the pick-up says, do a regular check of his slotting strategies to see if there is re-slotting needed and if possible opt for a software tool for warehouse management to reduce the human glitches.

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