When a company implements slotting software, it typically expects to see improvement in warehouse productivity and optimization. But for Smart & Final Stores LLC, the benefits extended to the store—to the tune of $300,000 in annual savings by reducing store labor.
Los Angeles-based Smart & Final operates more than 235 stores for food and restaurant supplies in California, Oregon, Washington, Arizona, Nevada, Idaho and northern Mexico.
The company wanted to improve productivity and better handle new items with changing sales patterns in its 480,000-square-foot warehouse in Commerce, CA. When the facility was built in 1999, rack was configured with the travel aisle two-thirds down the aisle. The initial slotting placed high velocity items in the vicinity of shipping and low velocity items toward the back of the aisles. But in the following 10 years, a number of changes occurred, including the addition of 3,000 low velocity items—keeping in line with a new store concept, which was more geared to the retail customer—and the natural outflow of old items and inflow of new items.
Additionally, in 2005 Smart & Final moved 325 of its fastest moving items—roughly half of total shipped cube—to a separate DC due to capacity constraints.
Ultimately, the company knew it needed to reslot the warehouse and selected the OptiSlot solution from Optricity, Research Triangle Park, NC. OptiSlot DC addresses the complexities of slotting by utilizing advanced mathematical algorithms which consider:
- A product’s dimensions like weight and velocity;
- Physical characteristics of the DC environment including slot configurations, pick path and material handling equipment; and
- Operational goals like pallet building, seasonality requirements and retail groupings.
“We evaluated a number of options, but we particularly liked the OptiSlot features related to slot move execution and ability to labor plan and control workload,” says Tom Paolucci, director of distribution, Smart & Final. “We chose Optricity for its slotting expertise and because we knew we’d need the attention and support that only a small company can provide.”
Another plus, says Paolucci, is that the solution is stand-alone and PC-based, so it didn’t have to be integrated into the company’s warehouse management system. “We weren’t going to have to do some coding or customization of our WMS. We could just have our data files transferred to this tool.”
Beyond The DC
Although Smart & Final’s original objective was simply DC optimization, OptiSlot’s capabilities eventually lead the company to expand its goals to include reducing store labor by grouping product in the DC; improving store efficiency without negatively impacting the DC; improving slotting as it related to safety, ergonomic and associate concerns; and developing an ongoing slotting maintenance program.
Smart & Final’s reslot was completed in one weekend with no impact to customers. In total, 6,892 pallets were moved using a total of 783 labor hours, at a total labor cost of $25,000 (using overtime only). Retail stores immediately noticed a difference, and responded positively. Labor savings for product slotted in the DC by store aisle/section was assessed, and showed a 15 to 20 minute savings in store processing per load, which equated to an annual savings of $300,000 for stores.
“Without a doubt, the biggest benefit has been the impact on store labor because initially, when we did the formal ROI on the software, we had not planned for any store labor benefit,” says Paolucci. “Even though 15 to 20 minutes doesn’t seem like that much time, when you do the math it starts to add up to something very significant.”
Furthermore, the reslot realized a 2 to 3 percent improvement in DC selecting productivity, which equates to over $100,000 per year in labor savings.