Congestion and efficient space usage is one of the biggest challenges for many warehouses and distribution centers. are considered technically out of space when they reach the 80% to 85% occupancy storage facilities threshold. They may not be completely full, but managing the space in storage areas at that occupancy level will be difficult.
It is best to practice efficient space usage in warehouse centers. This involves strategic warehouse capacity planning and space utilization. This guide will review what warehouse space utilization is and why it is important. We’ll also touch on some of the best practices that allow you to maximize the available space and plan for increased capacity.
What is Warehouse Space Utilization?
Space utilization refers to effectively and efficiently managing available space in a distribution center. It involves warehouse capacity planning, maximizing the available space and reducing inefficiencies and waste. Warehouse space utilization can be achieved using various management systems and strategies.
This practice is critical for many businesses relying on efficient warehouse operations. Supply chain profitability can be severely impacted when space usage is not optimized.
Why is Space Utilization in Warehouse Spaces Important?
Efficient space utilization in warehouse facilities provides several significant benefits:
- Optimal Space Management and Utilization: Using proven space utilization methods, distribution facility managers can ensure the efficiency of the supply chain. Spaces in the storage facility can be utilized to the maximum capacity. This feature reduces the need for any additional space while allowing you to reduce costs in your facility.
- Better Inventory Control: You can reduce stock shortages and overstocking when your warehouse is well-managed. This increased efficiency in managing your inventory helps ensure that deliveries are made on time, increasing profitability and improving customer satisfaction.
- Efficient Operations: You can better streamline operations when your distribution center is well-organized. It allows you to quickly move goods in and out of your warehouse space, improving your overall productivity.
- Workplace Safety: Proper management of storage spaces can play a crucial role in maintaining a safe working environment. When stocks are stored efficiently, you can significantly reduce the risk of accidents when your team handles inventory volumes. With proper utilization, warehouse managers can plan the systematic use of equipment and machinery while protecting workers and reducing potential liabilities and risks.
Why Do Warehouses Run Out of Space?
Inventory and warehouse problems can occur for several reasons:
- Increased Business Demand: Sometimes, you can run into problems with your facility’s space when there is an increased demand for products. The increased demand can result in a shortage of available storage space.
- Product Line Expansion: Clients can expand their product lines when business is booming. However, if a storage facility cannot expand its physical footprint, you will run out of space sooner or later.
- Seasonal Inventory: Some products can take up a lot of space in your warehouse when they come in season. The increase in demand can take its toll on your distribution center.
- Slow-Moving Inventory: When sales and demand for certain products decline, the inventory will move slowly, which takes up more storage space. These items can create backlogs if they’re not handled appropriately.
- Inefficient Use of Warehouse Space: When spaces aren’t used efficiently, you will run out of available places for your inventory sooner than expected.
How to Optimize Warehouse Space Utilization
Effective warehouse space management allows you to make the most out of the space available. It would be best to consider several factors, such as pallet movement, which will enable you to determine how fast your inventory moves. You can also look into the age of the items in store. Sometimes, you may have to do what you can to liquidate any overstock to make room for new inventory.
Here are some of the efficient warehouse space management strategies you can apply:
ABC Analysis, Load Reworking, and Slotting Optimization
ABC analysis is an inventory classification scheme where warehouse items and other goods are placed into several categories. Your team analyzes the contents of your warehouse in an audit to determine the value of the goods stored within, which can also be based on revenue.
Products under Category A represent the most valuable goods, category B includes all moderately necessary goods, and Category C goods represent the ones least-essential in your inventory.
After this categorization, the warehouse can organize goods according to their category, with the most valuable and fast-moving items placed closer to the picking area. In the process, you create various slots for each item category. By arranging the slots by item value, you reduce travel time during pickup and delivery, improving site productivity.
Optimize Warehouse Layout
No single layout can fit the needs of every warehouse since each storage facility has different needs. However, there are several principles and guidelines you can follow so you can maximize the space available to you:
- Ensure Clear Aisleways: When aisle traffic is appropriately organized, you can reduce accidents and delays.
- Group Your Inventory According to Velocity: Determine which fast-moving items and place them closer to the docks and shipping areas. Slow-moving items can be placed further away from high-traffic areas of your facility.
- Use Cross-Docking: Cross-docking means moving any incoming goods directly from a receiving dock directly out to a shipping dock. This way, any fast-moving inventory doesn’t take up any storage space.
Installing a Mezzanine
Adding an above-floor mezzanine can double your available storage space. However, you must ensure the floor you’re loading can handle the extra weight.
Reduce Aisle Widths
Determine the minimum aisle width that matches your facility’s material handling requirements. The typical width ranges depending on the type of lifting equipment you need to use. Sometimes you can reduce the widths in certain places, like the racking area.
Identify Underutilized Spaces
Review your warehouse layout and identify spaces that aren’t maximized. You may find more available space in areas for slow-moving inventory. You can add pallet racks or other storage methods that will be useful to optimize your warehouse’s capacity.
Think About Depth
Look into utilizing the depth of your available spaces and not just the height of your warehouse. For instance, find places where you can apply double-depth racking.
Reliable and Flexible Solutions At Warehousing Pro
You can find expert solutions to help you better manage your inventory at Warehousing Pro. Our experienced team provides flexible warehousing services tailored to your business needs. Please fill out our online contact form for more information or to request a quote.