6 Practical Tips to Optimize Your Warehouse Space

 6 Practical Tips to Optimize

 Your Warehouse Space

Warehouse space is at a premium these days, and the cost of under-utilizing your warehouse adds up quickly. The following space-saving tips will help you optimize your warehouse space, improve efficiency and decrease costs.

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1. Calculate Your Current Space Utilization to Know Exactly How Your Space Is Used

Optimizing your warehouse space starts with determining exactly how much of your warehouse is being used and what it’s being used for. These warehouse utilization metrics are important to determining what steps you should take next.

Here are four easy steps to calculate your current space utilization:

Calculate Your Total Warehouse Size

• Start with the total square footage of your facility.
• Subtract office space, restrooms and any other space that isn’t used for storage.
• Multiply the remaining square footage by the warehouse clear height. It’s the distance from the finished floor of the warehouse to any overhead object.
• This leaves you with the total warehouse size.

For example:

Calculate Your Storage Area Size

• Multiply the length and width of the outside dimensions of your racking by the height of the highest load in that area.
• Don’t forget the height of the highest load may not be uniform throughout the warehouse. If you have one area with a 26-foot load height and another with a 20-foot load height, calculate them separately and add them together after.
• This leaves you with a cubic volume for your storage area size. It’s your potential storage space or maximum storage space based on your current setup.

For example:

Analyze Your Potential Storage Area

• Divide your storage area size by the total warehouse size and multiply by 100. What percentage do you get?
• This number represents the amount of your warehouse that can potentially be used for storage. You should be between 22-27 percent. This range means your workers have enough room to move efficiently for picking, loading and unloading without wasting available space. If your percentage is lower than 22 percent, your space could be improved by optimizing your rack locations and aisle widths.

For example:

Now Calculate Your Space Utilization

• Add up the volume of all the products that are stored in your warehouse. This information is likely available to you already in your warehouse management system (WMS).
• If you’re using a WMS, simply divide the total volume of all the products by the storage area size and multiply by 100.

For example:

• If you aren’t using a WMS, divide your storage area into logical sections (like rows of racking). Estimate the percent utilization of each row. Next, add the results together and divide by the number of each logical section or row.

For example:

• This leaves you with your warehouse space utilization.

Warehouse space utilization is completely dependent on your specific warehouse, your storage system and your inventory characteristics, including the number of items, their size and how much you carry.

Once you’ve determined your warehouse space utilization you can analyze that number. For example, you may ask yourself, “Why is our utilization only 60 percent?” The answer might be, “We use a floor-stacking method which requires the entire row to be emptied before it can be filled again.”

Use this number to evaluate your warehouse for possible improvements and changes.

2. Pull Extra Space out of Thin Air with Strategic Beam Placement

The space between the top of the stored product and the bottom of the rack beam is reserved for forklift interaction. You’re only required to allow for 6 inches here, but you might have 8 inches or more between the load and the rack.

Here’s how to fix it:

• Get out in the warehouse and measure!
• Place a ruler or tape measure on the top of the product.
• Measure up to the racking beam above it.
• How much space do you have there?

If it’s more than 6 inches, evaluate why. Is the same size product placed here every time? Or is a larger item stored here at times? Can the racking be optimized by lowering the beams to just 6 inches above the top of the product?

3. Use Containers That Fit the Stored Item to Find Extra Space

Unpackaged parts are often placed in storage containers and stored on racks or shelves. Many warehouses use a “one size fits all” approach when it comes to these containers instead of having a variety of sizes.

“When the containers are stored on the rack, the space maximization can appear to be good, but in reality, there is a lot of wasted space inside of the containers, which is costing the company money,” says Martin Murray at The Balance Small Business

Here’s the solution:

• Sort your unpackaged items by size.
• Keep a variety of container sizes on hand and place items in the appropriate container for their size.
• Then store smaller containers in one area of racking and larger containers in another.

You’ll find extra space you never knew you had and increase your storage capacity by simply storing items in containers that are the right size.

4. Maximize Your Space by Storing Items According to Size

You can optimize your available space by separating products by size and storing them with like-sized items. The process is similar to the previous tip, and it’s easier than you may think.

• Determine how many different sized items you have in your inventory. For example, you may primarily use a 48-by-40-inch pallet, but a few products are smaller or larger.
• Place those smaller or larger items in separate areas of racking. It doesn’t necessarily need to be a completely different row, just separated from the other items.

This strategy helps maximize the space you already have in your warehouse, and you’ll minimize the chance of misplacing the smaller items since they will all be together.

5. Follow the Pareto Principle to Use Your Space Effectively

You may have heard of the Pareto principle. It can be applied to many areas of business, including warehouse storage.

Victor Coronado said it best in his article on optimizing warehouses: “Eighty percent of the activity in a warehouse comes from 20 percent of the items, and these items are the fast-movers within the warehouse.”

Coronado outlined a product analysis to determine the optimum location for your SKUs according to the Pareto principle:

Sort Your SKUs into Different Product Categories

• Look at average inventory levels and growth projections by SKU.
• Don’t forget to include the unit of measure for each SKU in your facility (pallets, cases, etc.).
• Consider other variables. Do you have date-sensitive products or items that require refrigeration? Is special material handling equipment needed to move certain products?

Classify Each Product Category According to Activity

• You could classify the categories by the number of shipments or picks that are involved over a span of time.
• Choose an activity measurement that makes sense for your warehouse.

Establish How Quickly Each SKU Is Moved

• For example, you can use letters to reflect the velocity of movement. Use “A” to reflect the fastest and “C” the slowest.

Allocate Warehouse Space

• Prioritize based on the SKU’s combination of each element. For example, you may have one area for pallets and another area for cases.
• Store your highest turn SKUs together in the most accessible locations, such as nearest the shipping doors and at ground level.

6. Nix Obsolete Inventory to Increase Storage Space

Your storage space is extremely valuable, and obsolete inventory shouldn’t be taking up any of it. Here’s how to find and remove the space invaders:

• Pull a velocity report from your warehouse management system (WMS).
• Check to see how often each SKU is picked in a year.
• Get rid of any items that haven’t been picked in that time. You could sell them for a huge discount, donate them to charity or see if they could be returned to the vendor. The point is to free up that precious storage space for items that sell.

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