Space Planning/Slotting

The average 200,000sf Distribution facility can cost from $2-4 million per year. We are consistently able to reduce these expenses by 10-20% by designing a more optimal layout to increase the storage capacity.

For example, one of the largest divisions at SWS experienced rapid growth and a broader product line and was considered overcapacity. Future growth was estimated to be another 20-30% in the next 5 years. Typically, a larger Distribution facility was needed to handle the added business, unless the shipping and storage capacity of the existing facility could be improved.

The existing layout was very typical for the industry. Some of the fast moving product was near receiving, but many items were stored where ever locations became available without much thought to minimizing travel time or optimizing storage capacity. Little consideration was made for other downstream tasks other than receiving, such as replenishment and order picking. This meant considerable extra travel time for these functions. There was also a shortage of small locations which resulted in a large number of locations that were partially empty.

We conducted a slotting analysis and analyzed the sales velocity and frequency, along with the inventory history. Then we compared the locations available to the locations required to ensure the product was located in the proper sized bins. There was an excess of large locations and a shortage of smaller locations, so the layout had to be modified to accommodate the inventory. The new layout also had the faster movers towards the receiving dock and the slower movers towards the back. This is referred to as an ABC layout since the product is stored in ABC order. The faster movers (“A”) and slower movers (“C”) are located to minimize travel time. We made the changes in AutoCAD so the staff could get a new floor plan with the changes.

There are numerous things that can be done to improve space utilization, including narrow aisle equipment, high storage racking, better cube utilization and slotting improvements, but the typical improvement from simply designing an efficient layout which matches the storage requirements was about 10-20%. At $5 per square foot and 4,000,000sf of total warehouse space, the total savings were about $2-4 million/year for SWS. This activity may have the highest payback ratio of any initiative you can undertake.

AJP Logistics

Supply Chain Engineering