For many distribution centers, it’s a continual battle to keep taking on additional inventory and maintain efficient order fulfillment operations. Those fulfillment and warehouse managers that are continually evaluating space understand that it must be a continual process – always moving and consolidating inventory to gain more space.
The most difficult aspects for companies are when little has been done for several seasons and now the storage space is in disarray, and it’s difficult to know where to begin to open new space for inventory. Before thinking about moving to a larger warehouse space, ensure that you have fully implemented each of the ideas below.
Inefficient Warehouse Layout & Designs that Affect Warehouse Capacity
- Inefficient Aisle Widths – When aisle widths are too wide, they eliminate the ability to create more storage. This often happens when a company moves into a new space. When utilizing forklifts, consider that a sit-down reach truck takes aisles that are two to four feet wider than stand up reach trucks. The cost of swapping out lift trucks is far less expensive than having to move warehouses because you are out of space over time.
- Underutilized Vertical Space – One of the most common mistakes is companies not initially installing uprights that take advantage of the fully height of their facility. Even if you don’t have the equipment, or need to utilize the full height, the additional cost to install taller uprights is minimal. It is significantly more cumbersome to do this once the racks or shelving is full. However, with full height uprights, you can add lift equipment and additional levels later on.
- Excess Dock or Staging Area Space – This doesn’t occur as frequently as other items in this list, however, it occurs frequently for companies that move into new spaces. The danger for most companies is that these areas are consolidated far too much and then present challenges with operational efficiency.
Inefficient Inventory Management Practices Affect Warehouse Capacity
- Dead Inventory – One of the most seen issues is companies are reluctant to make timely decisions to eliminate dead inventory. This inventory robs warehouses of valuable space with significant consequences. Companies can easily apply a carry cost to all inventory to help management understand exactly how much margin dollars have been eroded to help determine when an items inventory is actually in the negative.
- Holding Onto Slow-Moving Inventory – As with dead inventory, this is another area of concern for companies. Many times, they focus in on new products and inventory, but this creates too many challenges for products approaching end of life. This inventory must be trimmed to manageable positions. Again, apply a carrying cost to this inventory to make timely, factual decisions.
- Lack of Slotting Strategy – Slotting is one of the most critical aspects of any facility yet is one of the least implemented strategy in facilities – or is not implemented properly or fully. Warehouse slotting is what will help determine the right size location for each item. When locations are properly sized, companies can recapture space and increase the number of locations for future items.
- Excess Packaging & Unoptimized Pallet Builds – Bulky or unnecessary packaging can consume valuable warehouse space. It is better to optimize packaging to efficiently use space, even if this means taking some time on the inbound processing to remove excess packaging. Additionally, companies should evaluate whether pallets should be down stacked or optimized in other ways.
- Lack of Consolidation – One of the largest impacts on bulk storage is the honey-comb effect and stock locations are partially utilized. Companies should continually evaluate which items and bulk stock locations need to be consolidated to free up locations. When it comes to bulk locations, it is acceptable to combine a bulk overstock location and place two or three SKUs in the same location. This is not recommended for picking locations though, this should remain as one SKU per location.
Storage Equipment Inefficiencies Affecting Warehouse Capacity
- Wrong Racking Type for Inventory – If you are storing palletized goods, ensure that you are using the right type of racking. Select pallet rack is great for many applications, however, if you have a significant number of pallets for the same SKU consider options like push back, drive in or pallet flow for your needs.
- Unused Space Above Dock Doors or Overhead Areas – A great place for storing everything from record storage to supplies is overhead of dock doors. This area should be utilized for less frequently consumed supplies, etc. so it will not create congestion or risks during normal operating hours. Supplies can be pulled down off shift and restocked as needed.
- Poorly Designed Bin & Shelf Utilization – Another common issue is companies creating a one size fits all shelf height, this is one of the greatest waste of space. This is also true with palletized goods where too much space is provided over the top of product. Often, companies can collapse down these shelf heights and add additional locations. This type of reprofiling must be done on a regular basis.
By focusing on these aspects, companies can maximize the capacity and utilization of their warehouse space without immediately thinking about new warehouse space. It may be inevitable that additional, or new warehouse space is required, but only after all avenues have been exercised.
These are aspects of a well-planned Warehouse Optimization Study that companies should consider implementing. Consider the frequency at which new SKUs are added to your assortment, this is a good indicator as to the frequency at which some of these aspects should be reviewed. Even if you do not have high turnover of SKUs, it wont take long before your warehouse begins to lose efficient use of the capacity and utilization.
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