It's no secret that corporations are adopting new software at breakneck speed, rushing to find the next application that will increase productivity or lower costs. If the activity in last year's warehousing market is any sign, slotting optimization software may be the next to be discovered by manufacturers and distributors seeking to cut a few more pennies out of their warehousing costs.
Slotting software, which helps warehouse managers optimally arrange inventory on a pickline, has been available for more than a decade. But during the past year, major warehouse management system (WMS) and supply chain software vendors acquired several small slotting software vendors. Purchasers include Descartes Systems Group Inc., Manhattan Associates Inc., and McHugh Software International.
According to Al Gagnon, vice president of business development at McHugh Software International, warehouse management system vendors are beginning to consider slotting software an important part of their product lines. McHugh Software International purchased Gagnon and Associates last May and is evaluating how to build Gagnon software's slotting optimization features into its WMS package.
Because of its high cost, early adopters of slotting software hail from the retail and grocery industries, where an ever-changing mix of thousands of constantly moving items cram huge warehouses. But some WMS vendors now hope to convince manufacturers that slotting software, which can cost as much as $100,000, can help them cut costs, as well.
"One of the reasons we look at [manufacturers] to start dealing with these things is because they can afford to," says Paul Allen, a product manager at EXE Technologies Inc., which released its Warehouse Optimizer slotting software last fall.
Traditionally, companies have relied on old-fashioned experience to design picklines, according to Mike Parson, facility manager for Certified Grocers, a grocery distributor in Los Angeles. "We were using our own common sense and job knowledge," he says, referring to the years he spent designing picklines before discovering Slot-It, a slotting software package from Performance Analysis Corp. (PAC). Manhattan Associates bought the company last year.
Despite his years of experience, Parson says Slot-It won him over quickly. In a warehouse with as many as 12,000 items that change frequently because of seasonality and promotions, he explains, "for someone to be on top of it 100% of the time is an impossible task. This program will tell you every item that the computer thinks is slotted wrong, and it starts [with] the one that will give you the most bang for your buck."
In fact, slotting software takes into account dozens of factors that can affect the best placement of any item on a pickline. They include such characteristics as the product's weight, dimensions, and value. The software also considers the type of slot to be used, the risk of handling-related damage, the frequency that the item is picked discretely or as part of a group of items, and whether the item is hazardous.
Given this complexity, companies that install slotting software have found that as much as 40% of the items on their pickline are incorrectly placed. Therefore, some companies use the software to help redesign their warehouses and reassign misplaced items.
Many slotting software packages also provide warehouse managers with tactical plans for reorganizing their warehouses gradually. "Some people do have the luxury of redesigning the entire facility, and others don't," says Ram Krishman, vice president of warehousing at Descartes Systems. Descartes Systems acquired Krishman's company, NRM Systems, and its Layout Master slotting software last year.
But even for those companies that undertake the herculean task of reorganizing their warehouses all at once, subsequent and ongoing review or maintenance is crucial, according to Dan Basmajian, senior vice president of Manhattan PAC. Because it can take as little as three to six months to lose all benefit of an optimal pickline design, the original design must be altered to accommodate new items as they are added to inventory, he says.
However, companies that can't justify the cost of slotting software but want to enjoy some of the related savings these packages promise can hire consultants. Consultants can evaluate a company's pickline slotting and provide maintenance spreadsheets at a fraction of the cost of slotting software. For many, that'll help determine if the software is needed, says McHugh's Gagnon. "They could find they're very justified in going the next step," he says.