Guide Warehouse Space Optimization
Guide Warehouse Space Optimization
OPTIMIZING
WAREHOUSE
SPACE
UTILIZATION
Table of Contents
02 Introduction to Optimizing Space Utilization
14 Space-Saving Solutions
This guide will help supply chain managers better optimize their facilities, resulting in:
• Extra space for adding new product line(s) or processes to the existing footprint
• Reduced overhead costs
• Improved efficiencies
• Increased productivity
The demand
for warehouse
space in the
United States
is at an all-
time high.
When additional warehouse space is needed, it is not always financially feasible to build a new
location or find warehouse space to lease for the right price. The cost of land, rent, building,
machinery, labor, and inventory can be daunting.
The best option is to examine existing warehouse space. Warehouse and fulfillment center managers
constantly face the challenge of efficiently utilizing their existing space. Studies show that most
businesses are using only 20% of current warehouse space optimally. There is often more space
warehouses can unlock to store goods within their existing footprint.
Warehouse managers know that inventory levels can fluctuate anytime within a year or sales season,
especially during a holiday when inventory levels are typically at their peak - often double or triple
normal levels. In addition, because of ‘the Amazon effect’, consumers demand more products with
faster and better service, putting additional strain on warehouse space. Many businesses are looking
for extra warehouse space to distribute and store products, but warehouse real estate is hard to find
and can be costly.
If acquiring additional space is out of the question, what is a warehouse manager to do? The answer:
find more warehouse space within the four walls of the current operation. Many warehouses only use
20% of their existing space, so there is room to grow as long as storage is optimized. By optimizing
storage utilization, warehouses can maximize storage capacity without having to expand, buy or
rent additional space.
+$732.2billion
• Being able to feed parts directly to workers can keep them
working smarter and faster.
• Assembly workstations having enough space to hold parts
manufacturing market
while keeping tools close by for easy access.
The global general manufacturing
market is expected to grow to
$732.2 billion during 2021-2027, with
a compound annual growth rate
RELATED READING (CAGR) of 1.7% during the forecast
How to Increase Storage Capacity in period.
Your Warehouse
Sometimes it is feasible to
reduce the square footage of
the warehouse by consolidating
shelving that is not being used or
getting rid of slow-moving and
obsolete items. Reducing the
square footage of the warehouse
reduces costs, decreases the pull
on labor resources, and improves
efficiencies.
OPTIMALLY
helps maximize space utilization.
Today, fulfillment operations are designed to support all types of orders. These omnichannel
fulfillment operations can handle the large volume of a small number of items, typical of
eCommerce orders, or replenishment orders for brick & mortar stores, which are typically single
SKUs shipped in bulk.
ECommerce fulfillment operations hold many SKUs that continue to grow as businesses add more
and more products to their offerings. Often eCommerce fulfillment centers are tight on capacity
and have trouble adding more SKUs. The solution is to optimize their warehouse space to keep up
with customers’ wants for more and more products.
In addition, retailers today face competition from Amazon and other big-box retailers. Those that
can’t complete have gone out of business. The basis of competition for today’s retailers is meeting
customer demand for Amazon-like services with quick shipments and lower prices. Plus, retailers
need to differentiate themselves from the competition by offering products no one else offers or
delivering services better than the competition. These services can be quick, accurate deliveries,
delivery tracking, better prices, etc.
Many retailers sell just a few products, but others sell several thousands of items. Regardless,
retailers need to have the right-sized storage for the number of SKUs they carry. In addition, many
retailers have turned their brick & mortar stores into fulfillment centers to lower transportation
costs and speed fulfillment.
RELATED READING
The Importance of Dynamic Storage
in Omnichannel Fulfillment
Businesses can expand their markets with minimal costs by working with a 3PL. In addition,
utilizing a 3PL allows companies to focus on their core competencies when a 3PL takes over their
warehousing operations.
3PLs handle inventory management, fulfillment, and shipping/delivery for multiple clients out of
the same warehouse. They must know and utilize best practices in the industry to provide the best
services for their clients. 3PLs must optimize their warehouses for best space utilization to handle a
fluctuating number of SKUs as clients add/subtract items within their inventory.
measure.
executed U-shaped line can simultaneously
optimize storage space, shorten your lead
times, and dramatically reduce work in
– Peter Drucker
progress inventory (WIP).
Multi-level pick modules use FIFO (first in, first out) stock rotation
using tilted shelves with carton flow to deliver products to the pick
face. FIFO presents order pickers with the product in the correct
order ensuring the worker picks older products first.
“We’re all about providing customers with wholesome, fresh food. The
racking system helps keep our centers clean and organized to help deliver on
that promise.” - Valerie Clements, Special Operations Team
Optimizing warehouse storage begins with a holistic view of operations, including workflow and
organization. These ten steps will lead to fully optimized warehouse storage:
Warehouses are often designed with either a U-shaped or L-shaped product flow. A
U-shaped design arranges product flow around shipping and receiving areas, storing
or processing orders in the middle, sharing workers and material handling supplies. The
U-shaped design also facilitates cross-docking, which leads to less product handling. The
L-shaped product flow design uses different warehouses’ areas for shipping and receiving.
The advantage of this design is more storage space, larger sorting areas, and more
extensive shipping/receiving areas that can handle more products.
Regardless of the warehouse design, speeding fulfillment leads to more available space.
Also, while picking orders, a smooth flow of products and orders ensures workers aren’t
idle or unfilled products/orders aren’t accumulating.
Slotting improves storage density, opening up hidden storage space within a facility. Slotting
maximizes warehouse space by improving storage by optimizing product location. Inventory is
slotted using various strategies focused on speed/velocity of products, item storage (carton,
pallet, individual SKU), seasonal usage, etc. In a typical warehouse, approximately 80% of
inventory is slow-moving items. Using high-density storage minimizes the footprint of slow-
movers. Storing slow-movers in less space means more valuable space—such as the end caps
and racks closest to the shipping or packing areas—is available for fast-moving products.
Workers will be able to pick fast-moving products quicker and easier in this format, helping to
minimize footsteps while maximizing pick speeds.
Avoid unused pallet rack storage in the pallet rack by using the entirety of the pallet rack depth.
Instead of lining a shelf with one SKU and having workers reach deep into the rack to grab the
following SKU, use a carton flow system to load all the SKUs behind each other and let them
flow forward to the order pickers on the slanted shelving. Using carton flow allows more SKUs
in less space. This will help maximize space utilization in the warehouse or fulfillment center,
and it will help to make inventory easier to monitor and control while reducing travel time and
footpath between picks.
In addition, containers need to fit products so that the item stored fits snugly within them
to avoid wasted space inside the containers. Finally, items within containers are often
packaged with lightweight materials to protect the finished item. Choose packaging
materials for their strength, weight, and recyclability; the packaging must be small enough
to take up limited space but sufficient to protect the finished item.
7. LOOK UP
Most warehouses don’t use the vertical space they have. Instead, utilize all vertical space
available by stacking products in storage racks.
Reclaiming overhead space allows you to recover up to 85% of unused space. Combining
high storage racks with narrow aisles and vertical picking machines improves picking
speed and accuracy. Design the minimum width aisle required to match the material
handling equipment used without compromising operating efficiency.
9. CONSIDER CROSS-DOCKING
Consider cross-docking to reduce the amount of inventory requiring storage space.
A cross-docking warehouse moves products directly from receivables to outgoing
shipping without long-term storage. Most items cross-docked are palletized items
that stay in the warehouse for less than a week. However, individual cartons can be
cross-docked, as well. As a result, cross-docking facilities require far less storage
space than a traditional distribution center. Cross-docking is very cost-effective for
businesses with high-volume shipments.
streamline
operational needs, understand objectives, and suggest various solutions.
Work with a company committed to designing innovative solutions with
processes is
excellent customer support and service.
RELATED READING
critical.
Warehouse Optimization Tips to
Modernize Your Space
SpanTrack carton flow rollers provide the Shelf Track carton flow replaces unreliable
industry’s most efficient, reliable, and plastic wheel rails with a durable carton flow
durable carton flow solution for full case system featuring roller lane or wheel bed flow
and split case (each) order picking. The options. Shelf Track features flow options of
patented design easily drops into existing roller lanes or wheel beds. Roller lanes provide
structures, increases throughput, and 300% more surface area to eliminate hang-
optimizes product flow with the most ups, while wheel beds increase flexibility with
surface contact to eliminate hang-ups on slotting, providing 90% left to right bay usage
the track. right bay usage.
Pallet Track is a pallet flow system with Gravity Conveyors move all types of loads
rollers or wheel rails designed to optimize throughout a facility. Our extensive line
flow. Pallet Tracks are available for single of durable roller and wheel conveyor
or double-deep pallet flow systems. solutions are easy to install, made to
Spring-loaded rear stops prevent pallets order, and proven to increase efficiency
from being accidentally pushed off the and throughput significantly. Custom
rack. The tracks and wheel rails are variations of our conveyor products, such
customizable in length, width, mounting, as special lengths, widths, roller centers,
and track options. wheel patterns, or modified standards, are
available.