December 2010 | Case Studies | DC Solutions

Warehouse Slotting, Profiling: The Right Place at the Right Time

Tags: Picking Solutions

An optimization project at Tandy Brands’ belts facility makes warehouse slotting and profiling a cinch.

The saying “A place for everything, and everything in its place” almost sums up the idea behind warehouse slotting and profiling. A more accurate version might be, “An ideal place for everything, and everything in the most efficient place.” Leather goods distributor Tandy Brands discovered the benefits of slotting and profiling when it undertook a warehouse optimization project.

Tandy Brands, a designer and marketer of branded accessories, distributes belts, small leather goods, neckwear, eyewear, and gifts. Based in Dallas, Texas, Tandy serves U.S. and global markets, distributing to large and small retailers, including Walmart, specialty stores, and upper-end department stores. Tandy’s brand portfolio includes Wrangler, Totes, Dr. Martens Airway, and Dockers, as well as proprietary and private brands for major retail customers.

trading two for one

Prior to launching its warehouse optimization project, Tandy used two primary warehouses: a 125,000-square-foot facility in Dallas that distributed women’s belts and accessories, and a 136,000-square-foot facility in Yoakum, Texas, that distributed men’s and women’s Walmart belts, and men’s belts and accessories for additional customers.

Tandy learned it could save $3.4 million per year in labor, freight, and facility costs by using a single facility in Dallas, according to a study performed by Kansas City, Mo.-based supply chain consulting firm TranSystems Corporation. The company decided to expand its Dallas facility by 60,000 square feet and eliminate the Yoakum facility. TranSystems managed the final design and implementation of the Tandy warehouse expansion project.

The first obstacle Tandy faced was that the existing Dallas warehouse picking area wasn’t designed for the 51-inch belt boxes utilized in the Yoakum facility. The expansion space needed to be configured to efficiently handle the longer box. This challenge required identifying the right configuration of storage fixtures for a specific set of products (warehouse profiling) and determining the optimal location for each product (warehouse slotting).

Tandy knew it needed an advanced software solution to properly slot the expanded warehouse area; determine the net benefit associated with slotting by end-customer product groups − required by Walmart − versus strict velocity slotting; and reduce replenishment activity.

After researching its options, Tandy chose OptiSlot DC, a slotting technology software from Optricity Corporation, an optimization solutions provider based in Research Triangle Park, N.C. Using OptiSlot DC, Tandy was able to determine the number and type of racks required for the new warehouse area. It was also able to generate a blueprint for how to slot product in the new warehouse area after the expansion.

achieving a balance

This slotting blueprint proved to be an important key to remedying Tandy’s efficiency issues. Tandy used OptiSlot DC to evaluate two different approaches to slotting: retail grouping, which yielded sequencing to support Walmart, and pure velocity slotting, in which sorting occurs after items are picked. This approach required balancing picking efficiency with replenishment frequency, while also adhering to customer retail groupings.

Balancing picking efficiency and replenishment frequency is an important factor in achieving least-cost labor associated with both activities, while also maintaining adequate inventory in pick slots to attain high customer service levels.

adding up the Benefits

Tandy completed its profiling and slotting project, including data collection and correction, in approximately two weeks. Making better use of shelf space reduced Tandy’s expected slot consumption, which freed slots for use by other product groups and end customers.

The optimization project also allowed Tandy to group all Walmart product together. In the consolidated Dallas DC, Walmart unit movement accounts for approximately 65 percent of the total daily unit movement, and is now slotted in 20 percent of the total pick area. To meet Walmart’s requirement that all product arrive in certain groupings, Tandy provided identification numbers for each product, allowing OptiSlot DC to establish rules to precisely classify product groupings.

The company’s goal was to replenish no more than twice a week, and it achieved this rate for 92 percent of the items. Finally, the optimization project showed that Tandy could eliminate its four-shelf racks, which were mixed in with five-shelf racks, and use only five-shelf racks, providing more product storage in the same floor footprint. This change to standard and uniform racks allowed for more flexibility during future expansions.

Not only did this optimization project improve operations for Tandy to source product for Walmart, but it also created efficiency within the four walls of the Dallas DC, allowing for more flexibility as product moves through the warehouse, now and in the future.

Mastering Product Placement

As Tandy Brands discovered during its warehouse optimization project, keeping product on the proper type of fixture and in the right spot can boost operating efficiency. Here’s a look at the specifics of warehouse profiling and slotting.

Warehouse Profiling Defined. Proper profiling maximizes space utilization by determining what type of slot is best suited to a particular product. Using a spreadsheet or specialized profiling software, an item’s slotting unit dimensions are evaluated relative to each slot type’s dimensions to determine which slot type(s) can accommodate products with the least amount of space left over in the slot type. In a profiling exercise, only types of slots are evaluated, not specific slot locations.

Warehouse Profiling Benefits. Profiling items to the right slot type optimizes space utilization and reduces replenishment costs. Moving an item from one slot type to another and/or changing its facings and stackings to align with outbound item movement can help speed picking.

Poorly profiled items have too much space dedicated to them. Well-profiled items make efficient use of shelf and rack space.

Warehouse Slotting Defined. Slotting considers the locations, opening dimensions, weight limitations (by level), product grouping, item slotting unit dimensions and weight, item picking unit dimensions and weight, among other factors, to profile and sequence items down the pick path. Slotting Benefits. The benefits of proper slotting include reduced picker travel, reduced bend and reach, more stable loads, fewer accidents, and less product breakage.

When products are properly slotted, heavier items are placed in the areas where they are easiest to pick, reducing the risk of injury and product damage.