Profiling – ABCs of Warehousing and Distribution

Analysis of Warehouse Items – ABC – 80-20 Rule

ABC behavior is very common in warehousing and distribution, but it’s important not to assume that the typical 80-20 rule applies to your business without performing a fresh analysis. Why?

What if your facility doesn't follow the exact 80-20 rule? You could have a 95-5 situation, where only 5% of SKUs (Stock Keeping Units) account for 95% of the movement. Or maybe you have an 80-50 rule, where you need to visit 50% of the SKUs to account for 80% of the pick volume.

Each ABC scenario requires a unique layout and slotting strategy.

How do your customers place their orders?

Both the frequency and the type of order (number of SKUs, etc.) will determine your warehouse layout and picking process. We recommend analyzing lines per order and pieces per order, a process called Order Profiling.

Each ABC scenario requires a different warehouse layout.

Different Types of Lines per Order

Below are six key ranges of Lines per Order, which are typical of various warehouse picking scenarios. Each range offers different ways to optimize the picking process based on the average lines per order.

1 or 2 Lines per Order

Orders with only a couple of lines per order often result from targeted sales, such as TV promotions, where thousands of orders are generated for a single SKU. In such cases, these SKUs can be brought from a reserve location and kept as full pallets near the packing area. This is called consolidated pick.

Key point: Multiple orders for a single (or limited) SKU should be fulfilled from full pallets close to the packing area.

3 to 6 Lines per Order

These orders can be processed from a layout slotted by product velocity (sales volume). As customers can still easily match the items received with the invoice, there's no need to follow a family sequence for picking.

Key point: Orders with up to 6 line items should be picked from a path optimized for SKU velocity without creating congestion.

7 to 15 Lines per Order

This range falls between velocity-based and family-type slotting (items often sold together, or grouped by size or weight).

16 to 45 Lines per Order

Definitely requires family-type slotting. Layered slotting close to the dock is often recommended.

45+ Lines per Order

Family-type slotting is ideal for large orders. Grocery distribution centers frequently fall into this category. Batch picking can be helpful for "C" items in this range.

Slotting by Store Aisles

Slotting by store aisles is useful when your company owns both the warehouse and the retail stores. This approach allows for efficient warehouse picking and easy restocking in retail stores. This is known as ‘Store Aisle Group’ slotting.

How do I Slot my Warehouse by Store Aisle?

To begin, you'll need a store planogram, which shows how products should be displayed on shelves. Split a store aisle into segments, then group product families for each segment. In the warehouse, sort by velocity while mixing different product families from the same store aisle group.

This process ensures efficient picking in the warehouse and easy restocking at retail stores. However, variations in store layout and planograms may exist, so standardized layouts are important for full success.

A Planogram will reflect the grocery store's layout

Written by Ram Krishnan,

Senior Consultant
Karma Logistics