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Archives for August 2018

How to Reclaim Unused Distribution Center Space with Better Slotting

By Ian Hobkirk | 08/31/2018 | 1:10 PM

Six Ways to Postpone DC Expansion Part I - Slotting - DCV

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.

Six Ways to Postpone – or Eliminate – Your Distribution Center Expansion, a Blog Series

By Ian Hobkirk | 08/24/2018 | 2:28 PM


Six Ways to Postpone DC Expansion Blog ImageCompanies that are out of space in their distribution centers face a host of financially undesirable choices. They can expand the current facility and live through the cost and chaos of a construction project. They can move to a larger warehouse – a highly disruptive activity with potential for major cost overruns. They can lease “overflow” space and shuttle product back and forth between the two facilities.

 

One common factor that all of these alternatives possess is that they almost always drive up the company’s ongoing operational expenses due to a larger investment in either real estate or labor.

 

There is an alternative to driving up operating expenses. Creative space utilization techniques can delay or eliminate the need to expand, move, or setup satellite facilities. This new blog series will be dedicated to six space-saving concepts that have been used by companies in a variety of industries, with success:

 

SIX STRATEGIES TO POSTPONE DISTRIBUTION CENTER EXPANSION:

1. Re-slot the distribution center

2. Optimize storage depth

3. Reduce aisle widths

4. Use overhead dock space

5. Use Automated Storage & Retrieval Systems (AS/RS)

6. Consider medium-density parts storage

 

Over the coming weeks in a series of six more blogs and a webinar (Watch the recorded webinar: Six Ways to Postpone - or Avoid - Your Distribution Center Expansion), I will be writing about each one of these concepts in detail. You’ll learn when and how to apply these techniques and the technologies and equipment that can be leveraged. Can’t wait? Read the Whitepaper: Six Ways to Postpone -Or Avoid- DC Expansion or watch the recorded webinar.

Build a Business Case – The Sixth Step in Selecting the RIGHT WMS

By Ian Hobkirk | 08/06/2018 | 4:46 AM

Business CaseBuilding a coherent business case will allow your company to confidently make a go/no-go decision with regards to investing in the purchase and implementation of a new Warehouse Management Software (WMS) system. The last five blogs in this series have outlined all the steps necessary to gather the information needed to develop a business case:

  • Perform detailed discovery
  • Define the current state
  • Define the future state
  • Project future savings
  • Estimate implementation costs

This blog focusses on how to build the business case itself.

EXAMINE THE VARIOUS OPTIONS

Once the cost savings and other benefits have been dollarized, and the cost of new software has been estimated (as described in the last two blogs in this series: Project Future Savings and Estimate Implementation Costs), then it is possible to compile a well-rounded business case which examines the various options available to a company. In most cases, at least three, possibly four scenarios should be considered:

  • Do nothing: Keep the current software and make no changes to it
  • Customize current software: Continue to customize the current software by modifying the source code as required
  • Upgrade: Perform a formal upgrade of the current software system to the current release
  • Replace: Implement a WMS system from a new vendor

CRITERIA TO CONSIDER

There are a variety of criteria to consider when evaluating each of these possible scenarios. Some of the major factors include:

  • Operational benefits: cost savings, scalability, supportability
  • Capital investment required to implement the software
  • Level of effort required internally to implement the software
  • Degree of customization and overall IT complexity required
  • Degree of risk involved if the implementation does not go as planned

All of these factors must be properly analyzed and compared for each scenario. For some scenarios, there will be a range of potential outcomes. For example, a new WMS from a Tier 1 vendor may be very expensive but not require as much customization as a solution from a mid-tier vendor which could be less expensive but less feature-rich.

If a strong business case for a WMS exists and your company decides to proceed with a new WMS, then a full WMS Vendor Selection Study is required to determine the optimal software partner to work with.

 

Related Reading:

White Paper: How to Choose the Right WMS – Part I: Distribution Center Process Optimization

White Paper: The Ultimate WMS Preparation Guidebook

White Paper: Selecting the Right WMS

White Paper: Six Ways to Postpone – Or Eliminate – Your Distribution Center Expansion

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Ian Hobkirk

Ian Hobkirk

Ian Hobkirk is the founder and Managing Director of Commonwealth Supply Chain Advisors. Over his 20-year career, he has helped hundreds of companies reduce their distribution labor costs, improve space utilization, and meet their customer service objectives. He has formed supply chain consulting organizations for two different systems integration firms, and managed the supply chain execution practice at The AberdeenGroup, a leading technology analyst firm.



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