Optimize Your Warehouse: Slot3D vs. ABC Analysis

• Published on August 25, 2016

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Steve Johnson

Slot3D Warehouse Slotting, Labor, Layout & Design with AutoCAD Software Consultant at Slot3D-Advanced Solutions

What factor(s) does Slot3D consider for slotting SKUs versus the commonly used practice of ABC analysis?

ABC analysis was once considered an industry best practice.  Certainly, it was preferable to previous practices, which barely took SKU movement into consideration.  Velocity based ABC analysis is designed to slot the SKUs with higher velocity ahead of those with lower velocity. 

Many have found this method to be a relatively easy one to setup using spreadsheet programs in conjunction with ever-changing database information.  Although using spreadsheets is a manual exercise requiring readjustment of slotted SKUs due to seasonality, new product mix, or varying demand, the results may render favorable savings, particularly if readjusted on a regular basis.

The downside of ABC analysis is that it does not take into consideration various other critical factors that apply to each SKU relative to corresponding slots.  Velocity is just one of many factors critical to proper slot selection.  Business and operational rules are most often also considered in SKU placement.  They may include potential SKU grouping, various restrictions (crushing, Hazmat, etc.), pick/replenishment height, pick paths, and zones. 

So, too, the costs associated with SKU placement require careful consideration prior to slotting.  So often the “Picking” cost is the only issue considered in ABC analysis.  Yet “Replenishment” is just as strong a factor needing to be weighed in each slotting decision.  Additionally, any slots outside of the “golden zone” for picking, whether by hand, or machine, require additional factoring for the reality of the time required to pick and replenish.  Of course, the slot itself has an inherent value that is often overlooked in the slotting decision.

Slot3D considers ALL of these factors for each SKU and every slot.  The resulting re-slotting, or Greenfield warehouse rearrangement, assures all of these factors have been taken into consideration for every recommended SKU slotting placement.  Preferable over ABC analysis, Slot3D users realize the benefits of up to date analysis, without requiring human intervention.  Of course, users may still drop in new information for “what if” analysis, reslotting for new SKUs, easy drop and drag 3D rack/shelf addition for increased capacity, etc.

The key element that makes Slot3D unique is not necessarily the fact of having AutoCAD® embedded within, so the SKUs being slotted actually fit in the recommended slot.  It is more so that all of the above factors are considered for the placement of every SKU to deliver the best, most cost efficient, automated results.