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SOLUTION PERSPECTIVES: Warehouse Slotting for Increased Efficiency and Throughout

Slotting Optimization Solution Overview


Introduction
hether youre building a new facility, re-engineering an existing facility or managing your current distribution center, one problem is constantthe need to optimize your existing resources. Labor resources, the majority of overhead costs for a distribution center, can be made more productive through strategic product placement in your pick zones. The physical space, including racking, is the largest initial capital investment. Proper racking allocation and product assignments are critical to maximizing your capital outlays and increasing overall warehouse efciency.
Manhattan Associates provides a solution to these problems by optimizing product placement or slotting, according to user-dened goals including storage capacity, volume balancing levels, slot sequencing, family grouping, seasonal parameters and racking criteria. A sophisticated algorithm that continuously optimizes item slotting throughout your facility will have a positive impact on a number of key warehouse metrics, resulting in:

Contents
Introduction Product Overview Optimization Algorithm Slotting Strategies Graphical User Interface Item Forecasting Warehouse Design Simulation and Cost Analysis 1 1 2 2 3 4 5 6

Warehouse Management Interoperability 7

Increased picker productivity  Reduced replenishment volumes  Shortened batch/wave completion times  Improved warehouse space utilization  Minimized product damage  Decreased worker accidents and injury rates 

Users are assured of rapid payback by the softwares ability to simulate and project costs/benets of re-slotting activities. Furthermore, a rich graphical user interface (including more than 50-plus reports) and pre-built interface le formats enable rapid implementation. Finally, embedded forecasting capabilities ensure that top movers are proactively slotted to your most efcient pick areas. The Supply Chain People
1 Slotting Optimization Solution Overview

Regardless of the operation, maintaining optimal pick locations for each product is vital to increasing warehouse efficiencies and reducing labor costs. However, every environment is different and requires a unique set of slotting strategies.

Product Overview
Optimization Algorithm Because a facilitys product mix uctuates over time, Slotting Optimization includes everything from initial planning to ongoing maintenance functionality, to simulation of future changes to ensure that clients facilities are continuously optimized for maximum productivity. At the heart of this functionality is a sophisticated algorithm that optimizes product placement. The algorithm considers a complex set of slotting strategies to which item-level forecasts are applied in order to optimize large SKU-location data sets. The basic approach of the algorithm is to improve the overall score of pick location assignments by evaluating thousands of potential product moves and swaps. The score is congurable by the user to reect the merit of each items contribution to overall slotting effectiveness. An items t within a location, sequencing position and capacity utilization are basic elements of the score. However, dozens of congurable strategies (see Slotting Strategies section) to achieve your specic operational goals are available. The key benet of the algorithm is to facilitate automatic and continuous slotting optimization of your facility. This helps ensure that labor efciencies are optimized as customer demand and service requirements change.

Figure 1. Because ongoing shifts in SKU mix and demand occur over time, Slotting Optimizations maintenance features enable companies to continuously optimize product placement to keep overall productivity levels high.

Slotting Strategies Regardless of the operation, maintaining optimal pick locations for each product is vital to increasing warehouse efciencies and reducing labor costs. However, every environment is different and requires a unique set of slotting strategies. Whether the user is re-slotting an individual item or optimizing an entire section of the warehouse, the following congurable strategies can be simultaneously considered by the slotting algorithm:

Slotting Optimization Solution Overview

tem Sequencing: Sequences to promote golden zoning, bulls-eye, or end-ofI aisle ensures productive picking. Sequencing can also complement a variety of pick paths including serpentine, Z-picking and U-picking approaches. Like Item Separation: Keeps similar items separated for increased picking accuracy.   olume Balancing: Species volume balance goals to reduce bottlenecks and V increase overall throughput of a pick module.  roduct Family Grouping: Slots items grouped within the same product P family together (i.e., hazardous materials are kept separate from other items).  itting Capabilities: Stores products that are part of a kit together to simplify K picking and kitting operations.  ptimal Volume: Ensures locations are resized to best accommodate both an O items cube movement and hit level. Weeks in Pick Slot: Sets the capacity of locations to reduce replenishment trips.   ilters: Applies customized lters based on SKU attribute conditions to target F specic SKUs for re-slotting.  onveyability: Guarantees that only items meeting dened dimensional and C weight restrictions are slotted next to conveyors.  esting: Considers nesting attributes in three dimensions to properly N determine capacity when re-slotting items.  rientation: Sets parameters for evaluating (or restricting) various item O orientations in order to satisfy space utilization and capacity goals.

The graphical user interface (GUI) presents a user friendly visual representation of the warehouse, which can be defined to include the entire warehouse or break the warehouse down into zones, aisles and location ranges.

Strategy conguration that complements operational processes set in place for a particular facility is the key to a successful implementation. Once the software is setup, the algorithm can be periodically executed to propose racking changes to your facility or recommend re-slotting moves. In addition, all processes from importing to move generation can be automated to run on a periodic basis so that your slotting administrator can arrive in the morning with a set of recommended moves to analyze. The moves list outlines all recommended changes to achieve or maintain facility optimization, which can range from moving product to a different location to adjusting the exible guides on a ow rack. Graphical User Interface The graphical user interface (GUI) presents a user-friendly visual representation of the warehouse, which can be dened to include the entire warehouse or break the warehouse down into zones, aisles and location ranges. The slotting layout is displayed graphically in the main pane of the screen, and each area is color-coded and assigned a score to demonstrate how well the existing layout is currently optimized. Slot colors range from dark green (optimally slotted) to red (poorly slotted). Empty storage areas, unusable locations and locations that have been locked are also indicated. When inventory is optimally placed across an entire facility, all locations will be coded green. The lower the score, the more optimized the facility.

Slotting Optimization Solution Overview

Slotting Optimization includes archiving capability to store several years worth of historical movement, hits and inventory level data. This historical information can subsequently be incorporated into a movement, hits, or inventory level forecast.
Figure 2. Graphical representation of slotting efciency. Green items are ideally located.

Color coding can also be congured and displayed by individual SKU attribute or slotting strategy. This helps the user assess the effectiveness of conguration settings and slotting results. For example, color coding to show golden zone sequencing in isolation will help determine if this goal has been satisfactorily met with a given set of moves. Managers can use this graphical information for planning purposes and an at-a-glance evaluation of operations. In a single screen, they can visually assess the state of their slotting based on the color codes and scores for each location. In addition, users can zoom in on individual areas for a more detailed understanding of particular products and locations. Or, users can setup multiple, paned windows to compare different sections of the warehouse simultaneously. Item Forecasting An items future movement is the single most important factor dictating a SKUs optimal slotting assignment. Movement is typically the most dynamic characteristic of a SKU; an accurate forecast is critical to achieve peak operational efciencies. Slotting Optimization includes archiving capability to store several years worth of historical movement, hits and inventory level data. This historical information (captured in weekly snapshots) can subsequently be incorporated into a movement, hits, or inventory level forecast. There are several approaches to forecasting:

 veraged: This approach uses historical data from either one year ago or a A recent weekly average of movement to determine the forecast. mported: This approach relies on an imported value from your ERP or I forecasting system for future movement.

Slotting Optimization Solution Overview

 lended: This approach blends averaged and imported forecasts according to B user congured weighted averages to determine the forecast.  easonal: This approach utilizes only movement data from one year ago and/ S or applies a growth factor percentage to determine the forecast.

Slotting Optimization also contains intelligence to ignore empty historical records so that forecasting truly reects historical demand patterns. Forecasts for new items can be borrowed from similar discontinued items to improve accuracy. Similarly, items without history can use an average forecast based on its matching family of items. Once the forecasting approach is dened for SKUs, each item level forecast is utilized within re-slotting algorithms in the software.

Slotting Optimization also contains intelligence to ignore empty historical records so that forecasting truly reflects historical demand patterns.

Warehouse Design Whether you are planning a new facility, expanding an existing facility or relocating a warehouse, Manhattan Associates Slotting Optimization provides the warehouse design functionality you need to ensure optimal space utilization and inventory throughout. Several functions facilitate this process:

 eeds Analysis: Determines rack type requirements for forward pick areas N in a new facility. Rack requirements can be calculated based on user-dened product criteria and can be limited to a particular subset of SKUs.  aves/Needs Analysis: Provides the ability to analyze racking changes H needed to modify an existing warehouse. Imbalances between products and slot types within a given area of the distribution center are identied based on product attributes, location characteristics and forecasted demand. nitial Slot Determination: Determines initial slotting assignments for I new warehouses based on goals and strategies. Additional criteria such as location dimensions, holding capacity (i.e., replenishment maximum) and item orientations are calculated to aid in the setup of a new Warehouse Management solution prior to go-live.  eserve Racking Analysis: Analyzes reserve racking requirements to support R a specied forward pick area are determined. Based on expected inventory carrying levels, proper allocation of reserve racking is recommended to optimize reserve storage space.

Slotting Optimization Solution Overview

Functionality to analyze standards-based labor costs of simulated picking assignments provides capability to measure the impact of Slotting Optimization moves.

Haves/Needs Analysis Screen

Simulation and Cost Analysis Functionality to analyze standards-based labor costs of simulated picking assignments provides capability to measure the impact of Slotting Optimization moves. Users can maximize the productivity of their workforce by accurately assessing cost reduction and productivity improvement opportunities available from a moves list.

Simulated picking assignments and move recommendations can then be exported for analysis in one of two ways: (1) to MS Excel or MS Access for analysis via user-dened macros or formulas, or (2) to Manhattan Associates Labor Management solution for a realistic, standards-based analysis of labor costs. Integration with our Labor Management solution is seamless since common format standards are followed within Slotting Optimization. Furthermore, Slotting Optimization provides a rich tabular approach to display net cost-benets and to assess key performance indicator changes related to a set of recommended moves.

Slotting Optimization Solution Overview

Warehouse Management Interoperability


The slotting and planning functionality within Slotting Optimization is fully integrated with Manhattan SCOPE (Warehouse Management for IBM i and Warehouse Management for Open Systems) as well as with Manhattan SCALE, our Microsoft .NET-based solution. In addition, Slotting Optimization can be integrated with third-party WM systems via Warehouse Management data which provides all of the execution data required by Slotting Optimizationitem velocity, locations and other miscellaneous information. Warehouse Management maintains all of this information within its database and periodically sends this data to Slotting Optimization. Furthermore, Slotting Optimization can be congured to automatically leverage these les at pre-set time intervals.

About Manhattan Associates, Inc.


Manhattan Associates continues to deliver on its 22-year heritage of providing global supply chain excellence to more than 1,200 customers worldwide that consider supply chain optimization core to their strategic market leadership. The companys supply chain innovations include: Manhattan SCOPE a portfolio of software solutions and technology that leverages a Supply Chain Process Platform to help organizations optimize their supply chains from planning through execution; Manhattan SCALE, a portfolio of distribution management and transportation management solutions built on Microsoft. NET technology; and Manhattan Carrier, a suite of supply chain solutions specically addressing the needs of the motor carrier industry. For more information, please visit www.manh.com.

Learn more about Manhattan Associates and our solutions: North & South America + 1 877.596.9208 Global + 44 (0)1344 318000 www.manh.com

7Manhattan Associates, Inc. All rights reserved. 2012

Slotting Optimization Solution The Supply Overview Chain People