Slotting Pays Off For Smart & Final

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.

In addition to applying OptiSlot to this project, Optricity worked with the company to reconfigure the placement and direction of case flow racks and pick path sequence to reduce over 10 percent of the total travel from the pick path. Tangentially, working with OptiSlot allowed for the creation of a separate pick path for caustic items, thereby isolating them from edibles.

“It’s not often you can find a tool that is sophisticated enough to solve your core problem, relatively easy to learn and use, and can help you execute the solution once identified,” Paolucci says. “We had high hopes for Optricity’s OptiSlot to do all those things, and OptiSlot and the Optricity team delivered beyond expectations.”

Smart & Final continues to work with Optricity to develop an application to integrate known future demand of promotional and seasonal items into the slotting tool so as to reslot items before the need arises.

Planning Pays Off

In addition to conducting a detailed evaluation to choose a slotting solution, Smart & Final took calculated steps to plan and ensure a successful reslot of its DC. To determine the core issues to be remedied, Smart & Final created a slotting committee, comprised of members of both DC and store operations.

According to Karen Korytowski, shift operations manager for Smart & Final, who helped to lead the reslot initiative, forming the slotting committee was essential to creating buy-in and completing the project successfully.

“We put together a group with an excellent understanding of the operation in order to determine groupings and stackability based on store layouts,” says Korytowski. “Forming this committee allowed us to communicate clearly and to promote the change.”

The slotting committee included hourly DC associates whose ground level perspectives and expertise helped validate decisions. Leadership for the slotting project also partnered with information systems in order to clean up the data required for the reslot.

Smart & Final’s planning also paid off when it was time to execute. Prior to conducting the actual reslot, Smart & Final used the software to run a number of “what if” analyses in order to determine what moves would most benefit the operation. Also, prior to the full reslot, Smart & Final conducted a test using a small portion of the DC.

While there are a number of slotting solutions on the market, OptiSlot takes a unique approach to the problem, according to Tim Riehl, vice president and principal, Optricity.

“With other solutions, if you want to group your items into different groups, whether it is retail groups or whatever, you have to follow a prescribed hierarchy and your data has to fit that hierarchy,” says Riehl. “We allow you to create whatever groupings of products you want in whatever hierarchy you want based off the data that you pass us.”

Smart & Final wanted to create various pick paths through the DC—to segregate product into even higher level groupings and force items into certain portions of the warehouse based on a series of criteria.

“With most slotting software, you would have to follow the WMS prescribed pick path through the warehouse and that’s how the items would get sequenced. We can do that, but we can also put another layer on top of that called a slot rating, and that puts another layer on top of the sequencing to force the items to first go into slots of a certain slot rating and then follow the prescribed sequence,” says Riehl. “So we were able to slice their warehouse into five or six different paths. So it was putting the items into a group based off of one criteria using the slot ratings and based off of another criteria, mirroring the retail stores.”

Loading