Optimizing the storage capacity of a warehouse is a delicate balance between using available space and maximizing productivity and profit. Every square centimeter of the surface area in a warehouse is valuable, therefore, any empty space equals waste or opportunity cost. At the same time, overcrowding a storage warehouse could complicate operational processes by limiting movement and cargo redressing or staging areas.

Several considerations must be taken into account when attempting to find the right balance between utilizing space and keeping space free for operations.

Before starting any project to optimize space in a warehouse, several data points must first be collected.

Data required for optimizing warehouse space

Storage space assessment:

  1. The total floor area of the warehouse
  2. The total shelf area space of the warehouse
  3. Total floor area available for operational use

Operational space requirements:

Make assessments of space requirements:

  1. For safe forklift movement
  2. For product staging
  3. For office space requirements
  4. For product redressing
  5.  if shipment staging and redressing occurs concurrently7

Other areas of consideration in warehouse space optimization:

Other factors that can affect the storage concerns are listed below:

  • The type of shelving available in the warehouse. This will determine if all products can be put on shelves or if some products will always have to be stored on the floor.
  • The temperature requirements for storage of all SKUs.
  • Whether the products are DG in nature or not. The storage space available for DG products may be limited in some warehouses. A balance must be drawn between catering space for DG and non-DG goods. Moreover, a warehouse will not be able to utilize 100% of capacity effectively if a large chunk of the product has to go into a small space allocated for DG shipments (or vice versa). 
  • The number of SKUs. There may be limits to how many different SKUs can be stocked on a single shelf.
  • The throughput or cycle time for a particular SKU or group of SKUs.
  • The MOQ of outbound deliveries for each SKU.
  • The immovable assets affecting the layout of the warehouse.
  • Picking mode and requirements for each SKU. If most picking is done using a forklift or a pallet jack then space has to be catered for the movement of such equipment through the warehouse. 

The storage capacity of a warehouse is an important supply chain KPI. Warehouse optimization can also be further complicated as the company may have strategic plans to overhaul picking processes or to move into different types of warehouse management systems. Any decision to change processes or layouts has to also take into account future-proofing the warehouse to new technologies in the immediate future.

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