Establishing and Running a Hot Pick Zone in Your Warehouse
The idea that all items are created equal just does not fly when you are slotting SKUs in the warehouse. An often overlooked attribute of SKUs is their sales velocity. This simply refers to the number of physical shipping units of each SKU that are sold and shipped daily, weekly, monthly or annually.
It is very surprising when we work with warehouses and discover that they do not know how well each of their items sells. This is fundamental information required of every efficiently run warehouse. The old 80 – 20 relationship applies in most cases where 20% of your SKUs represent 80% of your sales. This ratio may change from company to company, but invariably, a small number of your SKUs represent a significant part of your total sales.
By identifying those SKUs that sell faster than others, the slotting process begins to make sense. Locating faster selling items closer to the packing and shipping area saves time in many conventional operations. The extreme utilization of the 80-20 rule is to identify those few items at the top of the velocity list and treat them differently. One way to treat these very fast sellers differently is to consider a “Hot Pick “concept.
The idea behind the “Hot Pick” concept is to segregate those very fast selling items and locate them in the most advantageous position possible relative to picking and packing and providing them with the slotting space required to minimize the replenishment dilemma of very fast selling items. This area can be fixtured with a variety of storage media from shelving to flow rack to flow through pallet rack based on the cubic velocity (cube of the item x the number of items sold in a defined time period) of the SKU. This time period is a reflection of the desired replenishment frequency of the SKU.
In many warehouses, this area is somewhat fixed with the SKUs assigned there and changes only when the person in charge of slotting realizes that a change is required. This works with attention from the assigned individual to keep it current to reflect changes in sales velocity.
Some sophisticated warehouses employ a more dynamic process where the items assigned to this area change with each warehouse wave of orders processed. It requires system support to identify unit sales demand by wave and select the highest demand items to be located in the “Hot Pick” area. These items can change with each wave processed. Usually the inventory placed in the pick slot equals the wave demand and is emptied after each wave.
Whether you use a basic or more complex version of the concept, you can reduce picker travel time and increase overall warehouse efficiency if you consider and evaluate the potential of the “Hot Pick” concept. Start small and let it grow to the level that still cost justifies the separate pick area.
Bob Betke is vice president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com
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