“A place for everything and everything in its place.” It’s the golden rule of organization and the only way to run a parts stockroom. How do you decide where a part should be placed? We call this process “slotting.”
Many dealers slot their parts by product type, this is called Commodity Based Slotting. All the bearings are together, the belts, the bolts, the O-rings, the seals, and so on. As organized people, this feels right to us. We are comforted knowing the next new bearing we stock will be slotted next to the other bearings. Anything different sounds crazy to us. Who would put a bearing next to a thermostat?
Another method is velocity based slotting. With this method, we don’t really care about the part type, we are more concerned with how many times we touch the part. The higher the velocity, the more accessible the part should be. Fast moving parts are only a few steps away from your parts counter and easy to reach. Slow moving parts are stored in hard-to-reach areas or toward the back of your stockroom.
So which form of slotting works best? To answer that question, we should look at the benefits of each:
Commodity Based Slotting Benefits
- It feels right and the parts look amazing grouped together.
- It could be easier to find parts. You may not even need to look up the location in the system. You know where that type of part is located and with minimal searching, you could probably find it.
Velocity Based Slotting Benefits
- Increased efficiency when stocking and retrieving parts.
- Improved customer satisfaction because of quicker service.
- Inventory accuracy usually improves. The top driver of inventory errors is someone taking a part without doing the transaction. When parts are stocked by velocity instead of part type, it is harder to find the part without a system transaction.
Velocity based slotting has more benefits and works best for dealers and distributors. However, not all businesses benefit from velocity based slotting. For example, self-serve businesses must be organized by commodity. It would be crazy to find the whole milk in aisle 1 and the skim milk in aisle 7. We would never shop there again if the cheddar cheese and mozzarella were in separate parts of the store. But your stockroom is not self-serve, and you don’t want it to be.
There is another phenomenon that happens when we move to velocity based slotting. We normally see improved storage density in the stockroom. As we re-slot parts many times, we are moving a part that used to be high volume but now has slowed down. That part was probably occupying a bin location much larger than required. As it gets re-slotted, it is moved to an appropriately sized bin. When you’ve done this many times, you notice improvements in your space efficiency or storage density.
Moving from commodity based to velocity based slotting can be an emotional change. You may need to leave your comfort zone as you re-slot parts based on velocity, but that is the tip of the emotional iceberg. Be prepared, others in your dealership may flip out. They look to you to be the organized one and, on the surface, this may not make any sense to them. They may be frustrated because they can no longer locate parts without a system transaction.
Two suggestions for making the transition from commodity based to velocity based slotting:
- Communicate. Everyone should know what you are doing and why the change is taking place.
- Evolution works better than revolution. If you try to re-slot all your parts at once it will not go well. There is too much down time involved and the change is too quick for your co-workers. Start slow. Identify the 25 fastest moving parts and re-slot those. Then move to the next 25. Fast moving may not be high quantity, we are looking for the parts you touch the most. In your system it may be called bin trips, hits, lines or sales.
You can change to velocity based slotting. Just remember to communicate, evolve and don’t be surprised if a coworker flips out. It is the right thing to do even if it feels like you are leaving your organized comfort zone. John D. Rockefeller said it best, “Don’t be afraid to give up the good to go for the great.”
