Dynamic Slotting Guide for Ecommerce Warehousing

Ecommerce businesses need to make the best use of their warehouse space to minimize costs and increase their bottom line.

There are several ways to do this and one of the best ways is to optimize your warehouse setup to improve your warehouse space utilization. Storing as much inventory as possible may hinder warehouse efficiency as workers struggle to move between aisles and retrieve items. As such, ecommerce businesses may consider warehouse slotting strategies like slotting to maximize storage space and efficiency.

But what is dynamic slotting and how can you implement it in your warehouse?

This post serves as a comprehensive guide to dynamic slotting for ecommerce warehouses and how you can benefit from this approach. We dive deep into the core pillars that make up dynamic slotting and take you through our winning approach to dynamic slotting. Let’s get started.

What is dynamic slotting?

Dynamic slotting is a modern approach to warehouse management designed to reduce picking time. The dynamic slotting technique allows product locations to change based on variable factors such as SKU velocity, seasonality, product turnover rates, and so on. It involves the strategic placement of goods to improve accessibility and warehouse efficiency.

With this strategy, businesses store high-priority items closer to the packing area for easy accessibility, while slow-moving items are stored towards the back of the warehouse. That way, pickers can easily retrieve items that are in demand, which will reduce travel time and allow the warehouse to quickly move between different stages of fulfillment.

The core pillars of dynamic slotting

Dynamic slotting relies heavily on real-time data and accurate algorithms for increased efficiency. This allows warehouses to create new slots optimized according to real-time requirements using machine learning and AI. Some of the most common practices in dynamic slotting include:

• Assessing SKU velocity to optimize slotting based on demand. Using dynamic slotting allows businesses to identify high-velocity items (items that sell quickly) and low-velocity items (items that are slow to sell). As such, they can adjust slots so that fast-selling items are stored in more accessible pick locations to improve picking efficiency. Similarly, slow-selling items can be stored at the back to make room for high-velocity items.

• Adjusting slotting strategy for seasonal changes and sales trends. Seasonality and evolving trends influence how people buy certain products. To accommodate for those changes, warehouses may adjust slots to align with the latest buying trends. For example, winter apparel could be moved closer to the packing area during winter and then shifted to the back come spring. Similarly, new releases could be prioritized as you can anticipate a rush of buyers once the products go live.
• Regular review and adjustment of slotting strategies. To ensure that the slotting process is as dynamic as possible, it’s important to regularly review existing strategies and look for opportunities to improve. This will ensure flexibility and agility, allowing you to quickly adapt according to the latest trends and demand changes. For example, if you anticipate an increase in demand for a product that just went viral online, you could create a temporary slot close to the packing/shipping area to reduce travel time.
• Requesting feedback from warehouse staff to improve slotting strategies. People who work on the floor have first-hand knowledge about how your existing slotting strategies are working. Their feedback could help you look for ways to better organize your slots for greater efficiency. For example, it might seem logical to store similar products closer together, but your pickers might provide feedback that similar items regularly get confused during the picking process.

Dynamic vs. static slotting

To get a better understanding of dynamic slotting, it’s important to compare it to static slotting. In static slotting, product locations are fixed, meaning that products are assigned to specific locations in the warehouse. These locations don’t change regardless of changes in sales trends or consumer demand. So this slotting technique is ideal for businesses that sell a few products that each have a fairly high turnover.

However, for dynamic slotting, product locations change periodically. These changes are determined by variable factors such as product turnover rates. In Amazon warehouses, dynamic slotting is carried out by replenishing empty bins with any random product. This offers the flexibility needed to accommodate the wide variety of products that are often available only temporarily.

When to use dynamic slotting

As is apparent from the Amazon example above, dynamic slotting is ideal for businesses that sell a wide variety of products with varying levels of demand. Dynamic slotting gives you the flexibility to quickly adapt your slotting strategy according to your current needs.

The role of warehouse management software (WMS) in dynamic slotting

Dynamic slotting needs strategic and precise orchestration, which is only possible with warehouse management software that has access to real-time and accurate warehouse data. That’s where software solutions such as a warehouse management system (WMS) come in with the ability to create new or transient slots based on your current needs.

A WMS serves as a central location for keeping track of all your warehouse data, with access to real-time information about inventory levels and bin levels. By integrating with your ecommerce store or order management software, the system can access important order information such as fulfillment dates and sales trends. It then uses this data to strategically orchestrate the most ideal slotting strategy to prioritize well-known shipments or currently popular items.

The ecommerce advantages of dynamic slotting

With the ability to optimize product locations for increased picking efficiency, dynamic slotting speeds up order fulfillment and reduces shipping times while boosting customer satisfaction. Let’s break down the main ways in which dynamic slotting can benefit your ecommerce business.

Improve efficiency and reduce costs

Dynamic slotting ensures that your most popular products are always stored closer to the packing and shipping area even with changes in demand and buying trends. This reduces travel time, allowing pickers to quickly retrieve most orders. It also means that they don’t have to carry around these products while picking other items so they can move more easily across the warehouse.

As a result, overall warehouse efficiency improves, which contributes to fulfillment efficiency. This increased efficiency contributes to reduced labor costs, helping you increase your bottom line. Moreover, only high-impact products are moved, which reduces costs associated with re-slotting.

Enhance customer experience with swift delivery

Because dynamic slotting improves pick speed and efficiency, ecommerce businesses can get orders out the door quickly. This means your customers aren’t waiting around for their orders, which enhances their experience and increases their likelihood of buying from your brand again.

ShipBob’s winning approach to warehousing

ShipBob leverages industry-leading technology and an expansive fulfillment network to facilitate strategic warehousing and dynamic slotting. Our warehouses are powered by proprietary warehouse management technology tailored according to proven picking and packing processes. This allows us to effectively orchestrate slotting strategies to reduce travel time and improve picking speeds.

The ShipBob WMS serves as a single source of truth to manage all your orders and inventory in one place. It allows you to keep track of your order data, inventory levels, and warehousing processes in one place. This makes it easier to create new or transient slots according to the most immediate need, thus helping you achieve better warehouse agility.

The WMS supports location-specific inventory tracking so you can always stay updated about inventory levels at every part of your warehouse. This allows you to get real-time data on your inventory requirements so you can plan for replenishment accordingly. For dynamic slotting, this means you can accurately replenish empty bins with new items without disrupting the picking flow.

One of the highlights of ShipBob’s WMS is the ability to calculate optimal picking routes for your warehouse. It then generates picking lists that are optimized to reduce travel time and improve picking speed.

Additionally, ShipBob lets you store your inventory strategically across various fulfillment centers while giving you real-time visibility into inventory levels at every location. This makes it easy to strategically adjust your inventory distribution so that you prioritize regions where there’s greater demand. That means you can proactively reallocate inventory to fulfillment centers that are running low on stock. It also means you’ll be able to store your inventory closer to your customers and reduce transit time, which will speed up shipping.

ShipBob’s warehouses in action

ShipBob’s WMS is powered by algorithms that allow you to successfully implement slotting for your ecommerce warehouse. As soon as inventory is received in the warehouse, the WMS automatically helps decide the most optimal storage location for any SKU – whether it’s pallet, shelf, or bin – based on the current storage for that product. This allows for efficient slotting and significantly speeds up the receiving and putaway process.

ShipBob also supports lot tracking to help you avoid inventory spoilage and expiration and stay organized in the event of a product recall. This enables the unique and automatic storage of lot items so you can manage expiration dates and organize inventory based on unique lot numbers.

For brands that have their own warehouse and want to manage fulfillment in-house, ShipBob trains them on best practices related to choosing the right storage location for more efficient picking and retrieval as well as improved accuracy.

For example, ShipBob helped Spikeball optimize picking efficiency by ensuring that their most popular products are stored at the end of the pick patch instead of at the front. So by the time those items are picked, their pickers are already back at the pack stations.  

Additionally, they were able to improve picking accuracy by changing the way they stored similar items. While they previously stowed these items in the same area, this made them more likely to pick the wrong size or color because they were stored so close together. By distributing those items more strategically across the warehouse, they were able to improve their picking accuracy.

“We can rely on the automated system. All we have to do is scan the order, go where the system tells us, pick the item, then pack it. It’s way less stressful than our previous system. ShipBob has saved us time and labor costs.”

Adam LaGesse, Global Warehousing Director at Spikeball

Similarly, brands that have to deal with a large number of similar-looking products and an expansive SKU range such as Infuze Hydration have also been able to implement ShipBob’s WMS to improve picking efficiency and accuracy. They went from shipping out 300 orders a day to shipping out 700 orders during the same timeframe. The software also made it easy to adjust fulfillment based on inventory fluctuation so that fulfillment for in-stock inventory was prioritized.

“The team at ShipBob showed us how we could put orders on hold that we were not ready to ship, and release the orders we wanted to fulfill. This allowed us to continue to ship products out the door that we had in stock, while maintaining the on hold orders until inventory was replenished. This was the only way we survived during Christmas —otherwise, we wouldn’t have been able to catch up.”

–   Rick Corbridge, COO at Infuze Hydration

Meanwhile, brands like Pit Viper have been able to improve their order picking and routing with ShipBob’s WMS. The system enables them to create the most efficient picking routes, helping them save an insane amount of time on picking, packing, and shipping. The ability to quickly validate items has even helped them to drastically reduce mispicks.

“One of the biggest reasons we went with ShipBob is the multiple checks from start to finish. The WMS makes it really hard to send out the wrong product. It still happens on rare occasions – but it happens a lot less than before. Before we implemented ShipBob’s WMS, our order accuracy rate was around 92%. Now we’re at 99.7% for order accuracy, which equates to 2,100 less mispicks a year on average.”

–   Jourdan Davis, Operations Manager at Pit Viper

For brands like Bunker, which deal with print-on-demand orders, ShipBob’s WMS has made it easier to efficiently manage unexpected demand surges. The brand has managed to successfully onboard 200,000+ SKUs so they can keep track of fulfillment for all these SKUs in one place.

“ShipBob’s WMS makes it almost impossible to do things wrong. Eliminating the potential for human error during picking and packing has been great. That was our biggest problem before. Last time I checked, our error rate was less than 1%. We’re shipping out over 10,000 orders per month.“

–   Clint Sanders, Vice President of Operations at Bunker Branding

Dynamic slotting FAQs

Below are answers to common questions about dynamic slotting.