Top 10 Ways to Enhance Warehouse Space Utilization

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For retail and logistics businesses, warehousing is often the most expensive part of the overhead cost, with just a single square foot of warehouse space costing $8.22 in 2023. And once you add in other costs associated with these distribution centers like management, staff, technologies, and utilities, the total overhead can be a real eye-opener.

Keeping these factors in mind, warehouse managers have realized the importance of maximizing warehouse space utilization in warehouses to save necessary costs for businesses. The ultimate goal of space utilization is to increase the quantity of inventory that can be stored in the warehouse without acquiring extra space.

Here are 10 innovative strategies to help businesses achieve this goal of utilizing warehouse space efficiently!

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Tip 1. Assess the Space You Have

Before you think about warehouse optimization, take a look at what you’re working with i.e. your current warehouse space. Take a team with you and gather all the necessary data including the total warehouse space, shelving and rack configurations, storing and picking spaces, and your current inventory management. This will help you identify the warehouse inefficiencies that need attention, so you can reconfigure the layout that is ten times more optimized than the current one.

Keep factors like the type of product that the business sells, seasonal trends, and appropriate storage systems before designing a new layout. Ask yourself the following questions:

  • How much space is needed for each department’s activities like receiving, staging, packing, and returns?
  • What layout works best for incoming products and outgoing orders?
  • How does space requirement change during peak times?
  • What space is needed for returns, especially for high-return items?
  • What’s the best long-term strategy: one center, multiple centers, or more local facilities?

Tip 2. Change Your Perspective (Think Vertical)

Stand in the middle of your over-crowded warehouse and look upwards, do you see plenty of free space?

While your original warehouse design did not include vertical space, you can start by expanding your rack and shelving units to make the most of the existing structure. You can store the excess inventory in these units using high shelves, stacked pallets, and storage racks rather than taking up valuable floor space. However, once you start utilizing vertical space, you will have to invest in some additional equipment to reach the top storage where the forklift cannot reach.

Make sure that the vertical design doesn’t impact your sprinkler and fire detection system.

Tip 3. Use Automated Storage and Retrieval

Moving pallets and packages around the warehouse all day is a waste of time and resources and all it does is bring down the productivity of a business. To tackle this problem, warehouse managers have come up with automated storage and retrieval systems also called AS/RS.

These retrieval systems utilize software and robotics to automate the entire process of handling, storing, and retrieving products from shelves. With an automated retrieval system, narrow width between aisles to pick equipment, saving you a lot of warehouse space. With the new narrow aisles due to the automated systems, a general 12 ft. aisle can be reduced to as low as 7 ft., creating 40% more storage.

These systems are scalable for a business of any level, whether you have a small warehouse or multiple distribution centers running across the world, all controlled via just one single software solution.

Tip 4. Use Pallet Racking Systems

It’s important to note that not all businesses can afford the costs that come with installing new AS/RS systems, especially small enterprises. A pallet racking system is an economical and reliable material handling solution that is typically made with steel and used to hold large crates or pallets. Such a system provides high-density product storage by maximizing the storage capacity per square foot, which also gives easy access to products stored on pallets.

With pallet racks, you can simplify the navigation within the warehouse because these pallets use vertical storage capacity, which leaves more space for the forklift to move around.

Tip 5. Save Time with Picking Paths

As the e-commerce industry is catching pace with the increasing customer demands, businesses can no longer rely on traditional order-picking and path-finding methods in a warehouse. In an industry where time is money, wasting time on picking items can be the ultimate nightmare for businesses.

It can take hours for your workers to find a specified item in a warehouse; it can be on any pallet in any rack in the warehouse. To optimize this, warehouse managers apply some strategies that plan the route for every worker so they pick items in the shortest time using the shortest path possible.

  • WMS Implementation: Digitally mapping the best possible routes for pickers using a Warehouse Management System optimizes the picking process.
  • Batch Picking: Simultaneously gathering items for multiple orders reduces trips to the same locations, improving overall efficiency.
  • Zone Picking: Dividing the warehouse into zones and assigning pickers to specific areas streamlines the process.

These strategies not only improve warehouse space utilization but also cut down unproductivity by a whopping 93% to 100%, which includes picking errors and keeping your business competitive among the crowd!

Tip 6. Add Mezzanine Flooring

A Mezzanine is a temporary floor created between the main floors of a warehouse that utilizes vertical space to create multiple levels of storage. Mezzanine flooring doesn’t take the ground floor space and can be customized according to the load you want to keep on it.

Usually, you can build storage features like long-span shelving and modular shelving systems on these floorings. These self-contained free-standing structures can have many levels, depending on the height of your warehouse.

Here are some things to consider when getting mezzanine flooring:

  • Measure Your Space: Find out how much room you have from the floor to the ceiling in your warehouse.
  • Follow Local Rules: Make sure to check the local building codes and stick to the safety guidelines.
  • Decide What to Move: Figure out what stuff can be moved around. You can free up space on the main floor by moving things like supplies, small parts, equipment, files, and even offices up to the mezzanine.

Tip 7. Adopt a Lean Inventory Management Approach

What is the best way to create some space in your warehouse? To clear out the clutter and keep things moving in a continuous process, which is exactly what the lean manufacturing methodology is. According to lean manufacturing, all waste including processes, activities, and products should require time and are of no value should be removed from the process altogether.

Taking inspiration from these principles, lean inventory management creates warehouse space by eliminating the amount of unnecessary inventory stored in the warehouse. This strategy avoids overstocking items that are turning obsolete while taking up valuable space in your warehouse.

Lean inventory management requires consistent monitoring of inventory levels and a keen eye on customer demands so anticipate in advance which product will be more popular in the market. Easier said than done, this strategy is implemented using practices like Just-In-Time (JIT) inventory, which helps reduce waste due to overproduction because companies produce goods only when the order is given to them.

Tip 8. Try a 3PL Logistics Company

Third-party logistics providers are efficient, economical, and expertly equipped partners that every business needs to save time and money spent on warehouse optimization. These providers have feet and feet of warehouse space that is well-optimized to store orders, pick them up, and complete delivery on time.

With a renowned 3PL company like Simple Global, all you have to do is leave your fulfillment operations with us, freeing yourself from the responsibilities of warehouse staffing and management. With Simple Global as your fulfillment partner, logistics success is within reach!

Tip 9. Invest in Warehouse Automation and Robotics

Remember, robotics and automation are your best friends if you want a fully optimized 24/7 running warehouse. Warehouse automation has shot to fame in the past years, not only because of technological advancement but the relief it offers to human workers. The biggest appeal with robots is that they do not sleep, which when applied to logistics means that they will work on-hours, off-hours, night shifts, and basically 24/7 tirelessly, keeping your business as productive as it can be.

invest in warehouse automation and robotics simple global

Here are some recent advancements in warehouse automation that will convince you why these are the right choices for space optimization:

  • Automated Guided Vehicles

These are robotic vehicles that move and transport goods within the warehouse without the need for human guidance or large forklifts that take up floor space.

  • Robotic Picking Systems

These robots are capable of storing and retrieving inventory, often by moving warehouse shelves. This removes any human intervention so you can easily create tighter packing of shelves, saving up storage.

  • Predictive Warehouse Management Systems

These systems use data and analytics to predict and optimize warehouse processes. They can forecast demand, manage inventory efficiently, and improve warehouse space utilization.

Tip 10. Implement Cross-Docking

With intense competition from one side and the constant need to cut supply chain costs on another, businesses are often backed into the corner with one single solution, cross-docking. The process of cross docking is very simple, you get a shipment from a logistics vehicle, and you transfer the goods into the vehicle that is handling outgoing shipments, with no warehousing or storage required in between.

Sounds almost impossible, right? Well, cross docking has its fair share of complexities, but once you implement it the right way, it’ll help you deliver products faster, reduce labor costs, and ultimately eliminate the need for warehouse space.

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From clever mezzanines that double your storage levels to the futuristic automated robots working night and day, each tip mentioned above is a key to unlocking a more organized, efficient, and uncluttered warehouse.

So, whether you’re pondering over predictive systems or thinking of adapting to pallet-racking systems, remember, that every warehouse has its own space optimization techniques. Here’s to your warehouse becoming the MVP (Most Valuable Place) in your business journey!

If you are still wondering how to improve warehouse space utilization, leave the complexities of warehousing operations with Simple Global. Contact us today and experience the future of logistics in action!

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