Andy Recard, president of TZA, an LMS vendor, agrees that reducing labor costs is a primary impetus behind slotting, though balanced against other factors including building pallets the way customers want them, avoiding crushing items, and slotting products that tend to be ordered together by their order affinity.
Recard says that some organizations feed slotting software with data from LMS because a labor system contains precise information on how much travel is involved for pickers and current throughput with the existing locations.
* Most surveyed retailers said that slotting allowances help defray costs associated with product introductions.
* Slotting allowances were less frequent and in lower amounts lot products that did not go through retailers' warehouses, because suppliers delivered them directly to retailers' stores.
"Slotting software is really good at looking at those chains of moves and determining how one move impacts all other locations, then exporting the plan to WMS," says Hobkirk.
Slotting logic focuses heavily on units of measure, such as items, cases or full pallets, so solutions should be able to generate slotting plans for an item pick area or line as well as a case pick line, adds Tom Kozenski, vice president of industry strategy at JDA.
Optimal slotting might consider picking, replenishment, receiving, shipping, storage media, the SKU weight, dimensions, packaging and fragility, product family groupings, store-ready pick sequences, SKU velocity and volatility, marketing and promotional initiatives, and as many as 20 other criteria.
Slotting strategies generally come in two fundamental flavors: fixed and dynamic.
"When we did the cost benefit analysis, slotting increased the cost of palletizing in the warehouse, but that was off-set by labor savings in the store," says Peter Schnorbach, senior director of product management for Manhattan Associates.
What is slotting? Think of it as both a process and a tool.
"When starting a slotting
process, companies often find that their master data are flawed, particularly around product dimensions," says Banker.
If so, the value of slotting
according to activity levels is diminished.