It’s not uncommon for warehouses to quickly run out of space due to the rapid growth during seasonal peaks or even from a slow sales period. There are generally three types of warehouse space inefficiencies that can be addressed to maximize warehouse space without having to overhaul your existing storage or spend resources on relocation or expansion.
Inefficiency #1: Too much overstock
When warehouses don’t have an efficient inventory management system, they often overstock frequently-used items so they are always readily available. However, a warehouse with too much overstock will typically operate below productivity and safety standards. Pallets of overstock are often stored in aisles, stacked in walkway or dock areas, placed on rack endcaps, or with multiple SKUs of items mixed into single bins. This creates safety hazards for workers and drastically reduces visibility, which in turn leads to difficulty in locating inventory and decreased productivity. Inventory peaks need to be handled with extra labor.
Inefficiency #2: Too much undemanded product
Too much product that isn’t moving through the warehouse usually indicates that the warehouse isn’t managing inventory levels or outdated product properly. Obsolete inventory remains untouched for months or years. Remember that out-of-date inventory brings no value to the open market and just eats up space.
Inefficiency #3: Poorly used existing space
This inefficiency is a common and inevitable occurrence in warehouses caused by growth or changing storage and service requirements, but it should only be an occasional problem that is quickly fixed by inventory re-evaluations. Warehouses often incur long-term penalties to accomplish short-term goals that end up taking valuable floor space and labor from principal warehouse functions. Other forms of poor space utilization include little vertical space utilization, wide aisles, multiple products in single bin locations (as often occurs with overstocks), and partial units being stored in full unit locations.
Using Your Existing Space
When expansion or relocation isn’t an option, try to maximize warehouse space in one or more of the following ways: 1) Outside or temporary storage, 2) Redesigning your warehouse, and 3) Improving your inventory management.
Overstock can occur when warehouses prepare for seasonal peaks or new products. In these cases, overstocking can be unavoidable, but temporary measures can help handle inventory peaks. Using third party warehousing can store excess inventory or ship items to customers. However, premiums are often charged for short-term contracts as opposed to year-round deals. Products could also be stored on trailers for short-term periods, but this method can also be very expensive. Developing a partnership with a dedicated carrier can reduce these costs.
The best way to prepare your warehouse for redesign is to first measure your existing space that you have to work with. After that, define your fixed obstacles such as walls, doors, columns, and clearances. Define storage condition zones, the product’s throughput and replenishment requirements, and the unit handling loads. Establish your material’s flow paths, and from here you can start generating ideas and evaluating your alternatives, making sure that you’re within safety and regulatory compliance.
Another method for consideration is automated storage. Vertical lift modules, vertical carousels, and horizontal carousels can be used to streamline the picking process by bringing stored items directly to the oeprator. These systems can maximize warehouse space by providing more storage density in about 85% less space than shelving, which often require extra space for wide aisles. Many automated storage solutions can also be purchased with software that will integrate with your existing warehouse management system. High density shelving systems can also be installed instead of or to work in tandem with automated storage.
Speaking of warehouse management, if you don’t have a real-time warehouse management system (WMS), you should probably think about getting one. A WMS is the best way to properly manage your inventory, providing real-time and on-demand information at all levels of the supply chain. A cycle counting program can be implemented to track inventory and ensure obsolete product isn’t taking up space in the warehouse. This way, you can also eliminate your tedious annual physical inventory by doing a little bit of cycle counting every day. A good WMS can also direct products to the best storage location.
After implementing these changes, it’s important to review and analyze your storage and space frequently. Sounds like a lot of work, but it’s worth it to have a more productive, organized, and overall more profitable business.
Where To Start
If all of this seems overwhelming, Southwest Solutions Group® can help. We can help you develop a plan to maximize warehouse space and provide you with storage solutions that will help you do it, even those nifty automated shuttles and carousels we mentioned earlier. We will also provide you with a free consultation to determine your exact needs. For more information, give us a call at 1-800-803-1083 or send us a message today.