slightly down. Overall space utilized dropped by about 40%. From a business continuity perspective, U.S. Cellular can utilize the secondary DC to fill corporate-owned stores, if necessary, Sowell adds. KENCO’S SLOTTING SOLUTION CRACKS THE CODE Kenco, a third-party logistics provider, manages more than 100 distribution centers across North America. Over the past several years, as the volume of data collected from business intelligence tools grew, Kenco created a data warehouse to ensure a solid layer of data would fuel future innovations, says Satish Vadlamani, director of data science and business intelligence. The Slot DC solution Kenco developed leverages deep learning to create heat maps that show picking trends, put-away compliance, and zone recommendations for reserve and forward pick areas. It also monitors the movement of stock-keeping units (SKUs) between non-optimal and optimal zones and analyzes how relocating a product to a more optimal position can impact the bottom line. As Slot DC conducts its analysis, it considers sales data, as well as attributes such as product size and any hazmat
Kenco's Slot DC is an AI-powered warehouse optimization tool that automates slotting and zoning by analyzing SKU velocity, seasonality, and operational patterns to enhance picking efficiency and reduce labor costs.
Initially, orders were assigned to one of the warehouses based on where the products were headed. Often, both DCs had to meet minimum order quantities when purchasing from suppliers, driving up inventory levels. Because neither DC had all the products a store might order, stores would often receive orders from both DCs. This was cumbersome for all involved. Sowell brought together stakeholders from logistics, planning, and procurement—along with the company’s logistics and transportation partners— to brainstorm ideas. Among other conclusions, they found that trying to handle supply and demand for all channels out of both distribution centers complicated the planning process. The team shifted to planning and fulfilling by sales channel. Bigger orders for the company’s stores are handled through the primary DC, while direct- to-consumer orders are handled from the other. This shift allowed Sowell to move the bulk of inventory to the primary distribution center. Now, instead of six orders per day, stores receive fewer than two, on average. The change also reduced inventory levels, cut transportation spending by 10%, and slashed carton quantity by between 35 and 50%, even as unit volume remained relatively flat or
U.S. Cellular worked with its 3PL partner to standardize processes across the warehouses. For example, instead of randomly loading equipment on a pallet, the team “Ikea-ized” it, Augustine says. Parts that will be used quickly go near the top and parts that are needed last, on the bottom. This makes it easier for the general contractors to build the site. Among other benefits, Augustine and her team chopped about $1 million in warehouse fees within nine months. And in the first year, they also cut about $500,000 from the cost of transferring equipment from one warehouse to another. The consumer side of U.S. Cellular, which handles mobile phones, tablets, and the like, has also been working to improve warehouse operations. Historically, the company’s devices and accessories came through a single fulfillment center. This worked well from a resource and cost effectiveness perspective, and it simplified some planning processes. The downside was business continuity. When the pandemic hit in 2020, it became clear that an extended shutdown of the lone DC would cause trouble. “We did not have a good plan B,” says Robin Sowell, senior director, network supply chain. In early 2022, the company opened a second facility. The work wasn’t over, however.
34 Inbound Logistics • May 2025
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