How to Maximize YOUR Warehouse Space
Anyone who has been responsible for operating a warehouse has encountered the problem of running out of space. Completely “out of room” but all the while new deliveries arrive at your dock. What’s a person to do??
In many instances this is the beginning of a warehouse disaster. Product is placed in every available nook and cranny in the warehouse, stacked in front of other product, behind other product, left on the floor and tripped over. I’ve seen other creative solutions too which often leads to lost and damaged material.
So, the purposed here to first identify how you ran out of room in your warehouse and then share some solutions. Generally, there are 3 issues that lead to space deficiencies in a warehouse/storeroom.
First, you are overstocked on the material that is turning, aka The Right Product. Secondly, you are overstocked on the material that is NOT turning, aka The Wrong Product. Third, is due to inefficient use of the warehouse space.
So let’s review these issues and their cause…..
Overstocked on “The Right Product”
An abundance of the right product appears positive in terms of customer service and order fulfillment goals, as product is readily available to fill customer orders. Yet, as the your sales staff and buyers embrace the joy of making customers happy by fulfilling every order 100% of the time, your warehouse is operating well below operational standards. A look into this type of warehouse will reveal pallets of product stored in aisles, stacked in dock areas, placed on rack end caps, or multiple SKUs of product mixed in single bin locations. Blocked visibility creates safety hazards, lack of ease in locating inventory, decreased labor productivity, etc.
Too Much of the Wrong Product
Having too much of the wrong product is often an indicator that sales projections and/or production planning were incorrect, but it also frequently indicates that the warehouse is not managing inventory levels or obsolete product properly. Unlike having too much of the right product, where inventory peaks can be handled with extra labor, having the wrong product usually results in inventory remaining untouched in the warehouse for months and even years.
Inefficient use of Warehouse Space
This condition is caused by many issues but the most common that I’ve seen has been steady growth in business, changing storage requirements and increasing service requirements. Poorly utilized space is a common occurrence that happens in all warehouses regardless of the type of material being stored or storage conditions in the warehouse.
Traditionally, warehouses are built to handle projected volumes, a set number of products and limited unit loads. Then they are expected to adjust to customer demands as well as be more efficient over time. To accomplish these conflicting goals, warehouses generally accept long-term penalties to accomplish short-term goals like creating customized floor-ready merchandise for end-cap displays, hand-pricing a key customer’s merchandise at the piece level, or creating mixed loads to simplify customer processing when goods traditionally ship in full case or full pallet quantities.
All of these customization steps take valuable floor space and labor from primary warehouse functions. Other common instances of poor space utilization include low vertical space utilization, wide aisles (over nine feet), and multiple products in single bin locations and/or partial unit loads being stored in full unit load locations. These types of problems should be addressed with physical layout and workstation design changes.
So now that we have some ideas of the cause of your WAREHOUSE PAINS, let’s review some options to help resolve the issue.
Improve your Inventory Management Process
In order to properly manage inventory, information on product demand must be maintained in real-time. This includes information at point-of-sale (POS) where applicable, all the way down to the delivery of raw materials. This requires a “real time” warehouse management system (WMS) to maintain inventory and transaction data. You should also implement a cycle counting program. Once implemented, you’ll be able to track inventory and ensure obsolete product is not occupying valuable space within the warehouse. A WMS can help with this as well as to manage an on-going re-warehousing effort. A good WMS is able to assign receipts to the best storage location based on product activity and unit load dimensions.
Management may then control of the flow of product from suppliers using blanket purchase orders that allow draws of inventory from a pre-planned pool of stock with short lead times. This minimizes on-hand inventory by having real-time planning information for reordering the right stock. Another approach to managing inventory is to have only the fast and medium moving products stored in the warehouse and to have your suppliers drop ship slow moving product to customers. This method can commonly eliminate the storage and pick face requirements for over 50 percent of the total items offered, while only impacting five percent of the total orders.
Warehouse Redesign
Redesigning your warehouse can be more art than science and more common sense than theory. The primary objectives of a warehouse redesign should be:
1.???Use space efficiently
2.???Allow for the most efficient material handling
3.???Provide the most economical storage in relation to costs of equipment, use of space, damage to material, handling labor and operational safety
4.???Provide maximum flexibility in order to meet changing storage and handling requirements
5. Make the warehouse a model of good housekeeping
8 steps you should follow to make this happen:
1.????Measure the space(s) you have to work with
2.????Make note of the fixed obstacles (columns, walls, doors, clearances, etc.)
3.????Understand the specifics of the product(s) being stored and handled
a)????Define storage condition zones
b)????Throughput/replenishment requirements
c)????Unit handling loads
4.????Create a material flow diagram and conduct a mock walk thru prior to implementation.
5.????Determine if there is a need for auxiliary facilities (offices, dock staging, hold and inspection, etc.)
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6.????Create alternatives (Plan B) for this layout redesign
7.????Evaluate and critique these alternatives
8.????Recommend and implement improvements-this is where the FUN begins!!!!
All alternatives must consider not only space, but also material handling, and impacts on labor. If too much of the right product exists in the warehouse in sporadic waves, the following should be considered as alternatives:
Bulk Storage: Appropriate for large unit load quantities of single products that are stackable or for low clearance areas (under 20 feet) for stackable product. This type of storage is ideal as large quantities of single SKUs may be stored in large blocks.
Portable Rack: Like bulk storage, but used for non-stackable product. Portable racks allow both the utilization of vertical cube in a warehouse and the added advantage of being re-configurable for any product mix. The disadvantages for this alternative are the high cost and the storage space required for portable rack components not in use.
Think “outside of the box”- Ideas to Create More Space
Too much of the right product can be handled with simple storage methods, but what happens when there is just too much inventory—right or wrong—of a mixture of products in variable quantities in the warehouse?
The classic warehouse is a mixture of bulk storage and wide aisle selective (10 to12 feet) pallet rack. This design works well when fast moving items arrive in large quantities and are stored in bulk, while medium and slow moving items are stored in pallet rack. However, due to product proliferation and shrinking customer order quantities, many warehouses have lower quantities of all individual products are stored, creating a space shortage as less dense pallet rack configurations are installed to handle ever-increasing pick face requirements.
Tunnel Racking
Another often under utilized space is the area over cross aisles. This area can be converted to storage space in back-to-back rack sections, also referred to as “tunneling the rack.” In a warehouse with 20- to 24-foot clearance with four levels of storage, generally the top two levels of rack may be tunneled. This will improve unit load storage capacity by 5 to 10 percent. When tunneling over aisles, it should be noted that pallet decking or netting should be added to prevent falling cases from reaching the floor. To tunnel existing rack, custom measured and fit beams must be purchased to fit the space between existing sections of rack which often vary by up to an inch in length. Tunneling of rack should be done in conjunction with forklift training to ensure operators are moving with the fork mast down.
Mezzanine Storage
In operations such as direct-to-consumer or small order fulfillment, most items are picked from broken case pick lines and then packed into shipping containers at secondary pack stations. These areas generally require low clearance, but are often located in the general warehouse building. One method to regain the space in these areas is to build a mezzanine structure above these work areas or to move the work areas to the mezzanine. This will yield roughly 50 percent vertical space utilization improvements, but is an expensive option that reduces future flexibility.
Properly designed mezzanines can be used for anything from bulk storage areas, to process areas, to value-added service areas (VAS). A large pharmaceutical distributor recently added two such mezzanines to create space for additional packaging materials and refrigerated storage. The first mezzanine was utilized for two days of corrugate storage on the lower level and the upper level was used for order inspection, invoice printing and final packaging. The second mezzanine was designed for refrigerated packaging materials on the upper level and a consolidated manifesting operation on the lower level. The additional space was required to handle increasing small quantity shipments of vaccines to doctors and small clinics. The addition of the mezzanines extended the life span of the existing DC an estimated two years before relocation will be required.
Alternative Storage Methods
When minor facility alterations like tunneling rack and adding mezzanines are not enough, the next step is to consider alternative storage methods to wide aisle pallet rack. All options below are dependent on column spacing and other fixed obstacles allowing for the design changes. These options include:
All physical changes in a warehouse incur a cost, while only being a part of the ultimate solution. After creating the ideal location types and sizes for the present operating requirements, a program must be put in place to review and adjust the storage plan on a regular basis.
Vertical Cube Utilization
To increase the number of pick faces and storage density, the first step is to ensure that the facility’s entire vertical cube is effectively utilized. Vertical cube includes all space above loads, total building clearance, above cross aisles, above work and pick areas, and space above docks.
Within the rack, the opening height should be approximately six inches larger than the load height to facilitate easy and safe loading and unloading of product. A quick formula to check this is to take a sample of unit loads stored in the warehouse and divide a typical vertical bay of product height by the clear height in that area of the building. If the space is utilized less than 50 percent, a great opportunity for improvement exists. If the space is utilized between 50 to 75 percent a moderate opportunity for improvement exists. A well-designed facility will have approximately 75 to 80 percent vertical utilization. In order to recapture lost space, the location opening sizes should be changed to meet the existing unit load dimensions. This means creating multiple opening heights and implementing a re-warehousing program to move partial slow moving pallets into shorter locations.
If product is received and stored in less than one-half pallet loads, decked rack and case flow rack locations should be considered. Typically, the pallet accounts for 10 percent of the storage requirement of a unit load. By hand stacking cases on decked rack or into case flow rack, the pallet is removed from storage. The density of the pick faces then increases dramatically by narrowing the pick face dimension from a pallet width down to a single case width. Both decked rack and case flow rack may be utilized with pallet rack to optimize vertical cube utilization. It is often found that gains of 20 to 50 percent in vertical utilization can be obtained by simply moving a few beams and adding a small amount of decking or case flow rack.
Outside or Temporary Storage
One final option that of course is available at any time is the utilization of Temporary Storage. This form of storage can be off-site or on-site but don’t let this be your “go-to” solution.
For an off-site temp solution you will using third party warehousing to store excess inventory or ship orders directly to customers. Unfortunately, a premium is charged for these services on short-term contracts vs. year-round deals. Several manufacturers and distributors have reduced the penalty of seasonal storage by forming alliances with companies that have different seasonal peaks, but similar storage needs.
For an on-site temp solution you will be using storage trailers for short periods. This method can be extremely expensive as monthly quality trailer rental or demurrage can range from $150 to $300, not including drop-off charges, trailer loading and unloading labor expenses, and security risks. Trailer storage is most effective when the company has a true partnership with a dedicated carrier. Often the carrier will manage the freight and store trailers in their yard as part of the freight agreement. The carrier benefits by having guaranteed freight throughout the year and by being able to charge a profitable rate for all routes.
In Conclusion:
The implementation of any single or combination of changes discussed will create additional space in a warehouse, but every warehouse has specific operational requirements that must be addressed. If space is the only concern, labor efficiency, safety and throughput will suffer and create even greater problems. Companies can make a lot of improvements but must realize that no change made is the ultimate solution. Change is constant. Uncovering ways to optimize existing warehouse operations while preparing for business changes must become primary concerns for company management. The flexibility to handle both long-term projections and short-term need is what make operations world-class.
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About Joe Crews & Key Warehouse Solutions
Joe Crews is the Founder and President of Key Warehouse Solutions, a Warehouse Operations Consulting firm based in Winston-Salem, North Carolina. Joe shares his 30 plus years of Warehouse Management experience to help companies across the county how improvements in 5 KEY areas of their operations will allow them to CONTINUOUSLY maintain a HIGHLY EFFICIENT WAREHOUSE.
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