Tips to Maximize Your Space Utilization

While rising costs are impacting warehouses and 3PLs across the country, many companies are scrambling to find creative ways to minimize the aggregate financial impact to their operations.

One very basic but significant way to accomplish this goal is to examine space utilization strategies and see which, if any, may apply to the specific needs and routines of their business. When faced with skyrocketing lease rate increases, for example, getting the most out of the space you have can make a significant difference.

Where to Begin: A Simple Equation

In its most basic form, the space utilization equation is simple.

Warehouse Space Utilization (%) = (Used Space / Total Available Space) x 100

However, if you want to delve into the real science of space utilization, you will need to examine a few more variables. Here are some simple steps to help you calculate your current warehouse space utilization.

How to Calculate a More Accurate Space Utilization

First Examine Your Assumptions

Are all pallets being used the same dimensions (length & width)?
What business rules of mixing lots/items will affect capacity?

Next, determine a standard pallet configuration for each item

1. Units Per Tier
2. Tiers Per Pallet

Then, identify the capacity of each location in measure of pallets high and deep

Now use these additional equations to gain a better perspective beyond the basic two-dimensional percentage of space in use at any given time.

Location Pallets High X Location Pallets Deep = Total Location Capacity

Item Units Per Tier X Item Units Per Pallet = Total Cases Per Pallet

Location Number of Cases / Total Cases Per Pallet = Total Pallets in Location

Once you understand how much space you have and how it is being used, you can begin to determine if there is room for improvement, innovation, and efficiency.

Actions to Consider

Implement an effective storage system

Create a Floorplan That Optimizes the Space You Have Available/ Review & Adjust as Needed
- Often the layout of a storage scheme in a warehouse is the result of evolution over time. Initially there’s more space than can be used immediately, and gradually the space is filled. Storage systems like shelving, bins, or and racking are added to increase efficiency but seldom reviewed for maximizing effectiveness in the present circumstances.
Use Vertical Real Estate
- Many shelving and racking systems installed to create efficiencies can create limits as well, such as height restrictions and a narrowing of aisles. If your operation has not grown or changed significantly in the last two to three decades, there is little by way of adjustments that will improve your capacity or workflow. The key is to think in terms of what you need now, what you will need soon and what you aspire to grow into down the road.
- Wider aisles make it easier to maneuver, but if expanding capacity with expanding space is your goal the sacrificing aisle space and building shelving and racking systems higher may be the way to go. As they say, “air is free.”
Think About Workflow
- Restaurants have “in and out” doors to the kitchen to speed up delivery of orders and food once prepared. It also avoids the risk of busy, racing employees running into each other. Likewise, deciding, if you can, to designate certain dock doors as Incoming and others as Outgoing may speed up, you're receiving and shipping activities. If you can only accommodate mixed use docks and doors, you may consider assigning separate times of day for each activity. Deliveries could be pulled in the afternoon or evening and placed on the dock for loading and delivery in the morning, leaving the dock free for the rest of the day to receive materials and merchandise.

Other Strategies to Consider

Suggested/directed putaway – helps reduce honeycombing throughout building
Dynamic pick locations – pick all of one lot, empty specific spaces, maintain lot code integrity
Review stack-ability – review your SKUs to determine what can be stacked in bulk areas to reserve rack for those SKUs that cannot stack
Consider Loading Strategies -
1. Pick-To-Truck – eliminate the need for staging space and load directly onto trailers
2. Drop Trailers – to load parcel shipments throughout the day rather than taking up valuable dock space

Automate Warehouse Operations

Automation can incorporate both hardware and software components, from pallet movers, forklifts, to robots; from handheld scanners to tablets to sophisticated Warehouse Management Software (WMS) solutions. When considering a WMS, there are vital functionalities that are “must haves,” and many other modalities that can prove useful now or be added on later.

Conclusion

Space today is paradoxically both abundant and increasingly only available at a financial premium. It is therefore imperative that warehouse operators and 3PL businesses maximize the space they are occupying to remain competitive.

Developing a space usage plan that considers not only the movement of materials and workflow; but also, the usage of resources including employees; storage systems; tools to move, stack and retrieve items; data and information management tools such as a multi-module WMS, and even time as a usable resource, can greatly enhance both the competitive edge and the profitability of a company.