DC Slotting Reduces Labor, Operating Costs: Survey

A recent Supply Chain Consortium survey of 100 top retail and related companies reveals that less than a quarter of distribution centers use slotting optimization software-even though efficient slotting practices have been shown to reduce labor hours and operating costs.

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"Few

operations can afford to ignore slotting," says Tom Singer, a principal with Raleigh, NC-based Tompkins Associates and author of the report. "Product location is the key to optimizing warehouse operations. Furthermore, participants who use slotting software packages report an average 1 6 percent reduction in labor hours by using an automated tool over a manual approach."

Labor costs are a large factor in optimizing DC slotting. A typical warehouse spends around half of its operating expenditures on direct labor. Proper slotting will significantly reduce travel time, which accounts for up to 60 percent of these costs.

There are a wide variety of slotting approaches and methodologies, but they can be summarized according to four basic categories: