Increasing e-commerce distribution center capacity through slotting strategy

Abstract

To meet increasing consumer expectations around delivery times, ecommerce retailers must take orders from 'click' to 'ship' as soon as possible. For retailers with tens of thousands of stock keeping units (SKUs), item picking is often the slowest step in the distribution center (DC) fulfillment process due to time taken for pickers to move between item locations. Pick paths are dictated by item slotting, the process of assigning SKUs to locations within the pick area, and therefore slotting improvements increase pick rate. This decreases the time taken to pick orders allowing more orders to be fulfilled in a given time period and increasing fulfillment capacity. This thesis presents a method for increasing pick efficiency through improved slotting strategy. This is achieved through placement of high velocity SKUs close to the outbound path resulting in a reduction in picker distance travelled, and on mid-level shelves where they are more ergonomical to pick. The impact of slotting strategies was compared through a simulation model. Simulations with historical data indicated a potential 5.2-10.8% increase in fulfilled units over a given time period.