Do you really need a bigger warehouse?
Your business has been growing, orders are flying out the doors and suddenly your warehouse feels a lot more cramped than it used to.
You might start to think that your warehouse is simply too small. However, before resorting to the significant step of taking on an additional or bigger site, what creative solutions can be used to extend the life of your existing facility?
Getting more from your current warehouse.
A warehouse is made up of many smaller sub-areas and processes, these encompass (but are not limited to) in-bound activity, storage and pick, packing, and outbound. Within this, there also exists many variables that can affect the overall performance of warehouse space, such as the frequency of supplier deliveries, the size of products, the volume of sales, and the levels of stock held based on the length of supplier lead times.
All of these activities can be redesigned and improved to maximize their effectiveness.
Before you consider a new facility, take a look at our top 23 tips for getting the most out of your current warehouse space:
1. Get the flow into the warehouse right.
Maximizing the use of space at Goods-In requires a steady supply of products. This means that deliveries are made throughout the day and during specific time slots, rather than a tsunami of products arriving in one go.
A greater amount of space is required to receipt a day’s-worth of deliveries in one go than a continual flow of receipting and putting away stock throughout the day, allowing for a smaller Goods-In space allocation.
Are suppliers being given delivery slots? And if so, are they conforming to them?
Building better supplier compliance will allow you to do more, with less, at Goods In.
2. Forecast future sales and establish how much stock to hold.
Procurement is a balancing act. Order too little and risk running out of stock too soon, order too much and risk items taking up valuable storage space.
Use historic customer sales to obtain greater visibility on what is likely to happen in the future, allowing you to prepare the correct stock or resources to meet upcoming customer demand.
3. Bring in what you need, not what your suppliers want to deliver.
While deliveries in pallet quantities might be easy for a supplier to provide, if that results in many weeks, or even months, of stock, the cost of space and handling in your warehouse might off-set any buying benefits, especially if space is tight.
In many cases the opportunity cost of lost storage far outweighs the small bulk discount obtained from over-buying.
4. Decide on your ‘Goldilocks’ storage quantity.
It might well be that pallet locations are the ideal storage quantity for all lines in your product range. But it is unlikely.
Better understanding each product’s sales over time means that you can assess how to best proportion stock so that it is ‘just right’. The proportion of pallet locations that should be split into 2 or 4 is likely to change over time, as well as the quantity of shelving required, and keeping on top of this dynamic will ensure best use is made of the space inside your warehouse.
5. Work with suppliers to receive ‘storage ready’ deliveries.
Additionally, working with your suppliers to receive products that are ‘storage ready’ (in terms of quantities and packaging) will help to reduce processing time.
6. Streamline the flow of products through the warehouse.
Similar to moving product through Goods In, pick activity should feed a continuous stream of orders to be packed and dispatched throughout the day in order to minimize holding space.
7. Build a heat map to find out what is happening in the warehouse.
As product lines grow and customer demand shifts, storage locations can become sub-optimal with the fastest moving lines being located far apart from each other, and far away from the dispatch bay.
Building a heat map of where the high-volume lines are within the warehouse can provide great insight, reducing both pick time and costs immensely.
8. Position fastest selling products closest to the door.
Placing fast selling lines closest to the warehouse door will help to reduce the movement of product, a benefit that will compound the more popular a product becomes.
As with everything, this should be considered in line with other improvements, to ensure that this does not create more traffic and bottlenecking.
9. Spread product from heavily congested areas to reduce traffic jams.
Nobody likes being stuck in traffic. Having too much movement around a collection of ‘hot’ stock locations can cause unwanted congestion and slow down. Measure and collect data on these problem areas and rebalance products to relieve the pressure.
10. Address the dead stock.
Businesses often avoid the issue of stock that is never going to sell; disposing of it means that it needs to be taken off the balance sheet and the ‘problem recognized’ by the company’s finances.
It’s hard to admit to mistakes in business, but without taking the pain of the write-down, the business cannot use the space all the non-moving stock is taking up!
Whether it’s improving your current warehouse or relocating to a new one, we can help you understand how much space you’ll need to cover your next 3-5 years forecasted growth.
11. Review the size of your pick wave.
How many orders are released at once has a significant impact on warehouse efficiencies.
Pick one order at a time, and the process of collating orders at the dispatch bay is easy, but picking time is enormous. Pick ‘all’ the orders at once, and the converse is true. Fine tuning the pick wave – number of picks and the products within it – will impact the pick efficiency and the space required at dispatch prior to loading.
12. Generate pick lists by orders or by products (or a combination of the two).
Batching pick lists by a combination of customer orders and specific products or product categories can be a great way to make better use of your warehouse space, reducing needless travel at the same time.
13. Number and sequence your storage locations to match the way employees move around the warehouse.
When your warehouse was first set up, it’s likely that there was an envisioned way of working. As businesses and the warehouses that support them grow, this way of working can quickly evolve and adapt, leaving behind historic organizational structures.
Numbering and sequencing your storage locations to reflect how your warehouse works today is another way to improve employee and product flow to maximise available space.
14. Implement barcode scanning.
If you aren’t already, using some form of barcode scanning within your warehouse can help to reduce systematic stock errors which disrupt the flow of putting-away and picking.
It takes effort to move to a barcode system, but the insights that can be gathered from the captured data can also be a big draw.
15. Group items by similar heights and set shelving to minimize wasted space.
As the capacity of your warehouse grows, squeezing every last bit of space out of your storage becomes more and more important. By grouping similarly sized items together, you can ensure that no shelf space goes to waste.
16. Stock more than one SKU in a location to best make use of depth of shelving.
This tip is best utilized if barcoding is already in place.
17. Identify any slow-moving lines to be stored in up-high racking.
If you can’t build out, build up. Make the most of your warehouse height by storing your slowest moving lines up high to get the most out of a shrinking warehouse space.
18. Identify opportunities to put fast-selling lines into 2-deep racking.
If you have a select few products that fly out of the warehouse almost as fast as they land, a 2-deep racking setup might help you squeeze that extra bit of space from your pick area.
This setup can be beneficial as it reduces aisle space but be aware that if implemented on too slow-moving a product, it can end up wasting more space.
19. For smaller items, Automated Storage & Retrieval Systems (ASRS) could allow you to make better use of space.
Any warehouse automation system has its pros and cons. For smaller items, a well implemented ASRS would have the double benefit of a smaller warehouse footprint and a faster pick rate.
Our consultants can help you understand the return on investment of such a system.
20. See where other technology can assist.
Technology is unlikely to ever be a silver bullet that transforms your operation. However, it could deliver sufficient efficiencies to either the picking or storage activities to reduce pressure on the overall site.
21. Plan temporary resource based on orders volumes expected in coming few days.
Having real-time visibility of orders to be fulfilled over the next few days can allow for better planning of resources and hiring of temps to maintain flow and avoid excessive overtime.
A business intelligence dashboard created with your warehouse data can also give visibility of what is happening across your warehouse, the ability to stay on top of the changes made from the previous tips.
22. Align with commercial teams to hold promotions not at the same time as busy periods.
Sharing information can benefit both teams, as well as the customer.
23. Identify ways to reduce the volume of returns.
Gather data on the reasons for customer returns and share with the wider business so that a plan can be put in place on how to reduce the volume of returns, therefore freeing up processing space within the warehouse.
So, there you have it, our top tips for maximizing your warehouse space. With the right combination of improvements, it’s possible to extend the life of a current facility or take the pressure off areas that feel over capacity.
Want to talk to an expert about any of the solutions mentioned above? Still need to relocate to a bigger warehouse? We can help you understand how much bigger to cover the next 3-5 years forecasted growth. Where would be the best location for your warehouse. And help with the tendering process, both for in-house warehousing or 3PL.
About the authors
Ashleigh’s work focuses on the performance of data analysis and production of statistical models to derive insights.
Ash has worked with start-ups, defence contractors, retailers and the NHS to derive value from data and solve big problems.
Jon’s client work extends across Manufacturers and Retailers with a scope that covers high level supply chain strategy through to detailed operational reviews and performance improvement.