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"You’re organising your warehouse all wrong"

Running out of storage space is one of a warehouse manager’s worst nightmares, and with the slow economic recovery discouraging costly expansions in recent years, it’s a nightmare that’s increasingly likely to come true. Although expenditure is beginning to creep upwards, doing more with less is still one of the top five challenges for today’s warehouse managers, as revealed by a recent survey.

At Action Storage we specialise in getting the most out of storage space, so whether you’re planning a new warehouse or you’d like to squeeze some extra life out of your current operation, here are our top tips to help you maximise your warehouse space:

Know Your Space; Know Your Inventory
Fundamentally, any space-saving method will rely on optimising the available space for the particular goods you plan to store. In other words, there is no point thinking about the right layout or racking until you have thought about your space and your inventory.

Before making any changes to your warehouse, it’s also important to note that a clearing out of obsolete or excess stock is often the cheapest and most effective way to gain space. Though it’s extremely tempting to hold onto old goods in the hope that they might one day sell, working in this way can have an immense hidden cost. In short, storing these items will be damaging your inventory turnover, which will diminish the returns on every item.

Effective inventory management ensures that you’re making the best use of your available space. Not every warehouse requires a full-scale warehouse management system, but a dozen or so metrics will help you track and improve the overall efficiency of your warehouse. As mentioned, you should be keeping an eye on inventory turnover to make sure that items are not spending too much time in storage. You should also be aware of your theoretical storage capacity, utilisation, and working capacity.

These measures are far too broad to tackle here in full, but InventoryOps have done a fantastic job in examining their importance. In simple terms, your theoretical capacity is the actual physical capacity of your storage areas. For example, if your warehouse contains 1000 full pallet (1200mm x 1000mm x 2200mm) locations, your theoretical capacity would be 1000 x 2.64m3, or 2640m3. Your utilisation is the amount of space that your inventory is actually occupying, and your working capacity is the highest level of utilisation you can reasonably hope to achieve.

When trying to maximise your warehouse storage space, it’s important to recognise that there are only two variables: you can increase your theoretical capacity or you can increase your utilisation. Either technique requires a good understanding of both your space and the inventory that will fill it.

Use the Right Storage Units
So what does this mean in practical terms? The first step is to ensure you’re using the correct storage units for your inventory. Your storage units will have an effect on both your theoretical capacity and your ability to utilise this effectively.

If your operation is a full-pallet-in, full-pallet-out operation then this will be simple enough. In most cases, a standard back-to-back racking configuration will provide both a high theoretical capacity and good utilisation. The picture gets more complicated in case-pick or piece-pick scenarios. The danger is that as pallets are depleted, vertical space in a full pallet rack location would be wasted, lowering your overall utilisation.

It might be possible to consolidate inventory into fewer locations, or to reslot items into smaller locations, in order to free up space elsewhere. However, if you’re finding that this is a constant problem then it may be worth considering other options. In piece-picking environments, the most common solution is to abandon pallets and install adjustable warehouse shelving.

A robust warehouse shelving system is an extremely economical way to store individual items, especially where you have a large number of SKUs. Boltless shelving is also much easier to adjust than racking, which enables poorly utilised shelving levels to be minimised when inventory is depleted. Extra shelving levels can then be added at low cost to supply more locations and make better use of the available vertical space.

Overall, choosing the correct storage units is a complex decision that will depend not only on picking type but also on the number of daily picks and the size of goods. OPSdesign have put together a very handy matrix to help you determine the optimal storage configuration for your inventory.

Maximise Volume
The right storage units will only go so far in helping to maximise the cubic volume of your storage area. The real benefits come from optimising your locations to your current inventory. Of course, if you consistently store 2200mm high pallets, your locations should be as close to this size as possible, allowing for a safe amount of clearance. This principle is widely understood, but it can be developed further.

The question is: what other dimensions are common in your warehouse? If you rely on case-picking for example, is there any regularity in the rate at which full pallets are depleted?

The power of such an analysis can be simplified: imagine your inventory generally consists of around 500 full pallets and 500 half pallets, all occupying full pallet locations. In this case, a simple reconfiguration of your racking to provide 500 half pallet locations would leave you with space for approximately 250 extra full pallet locations.

In reality, performing inventory analysis of this sort is really only possible with a warehouse management system, but it can drastically improve utilisation by minimising wasted vertical space. Even if you don’t have the software to perform perfect reslotting, you can benefit from applying the principle more loosely. Simply put, if your inventory includes more than full pallets, your storage space should include more than full pallet spaces.
To find out more about the power of intelligent reslotting, take a look at InventoryOps’ full examination here.

Redesign Your Layout
The most important decision when it comes to your warehouse layout is aisle width. The standard choices are wide aisle (WA), narrow aisle (NA) and very narrow aisle (VNA). Each option offers a trade-off between storage capacity, productivity, flexibility and expense, so the right choice will depend on your exact needs.

At its core, the kind of equipment you use will dictate your aisle width. For example, a standard counterbalanced forklift is used with a wide aisle configuration. Narrower aisles will require specialist equipment, which can be many times more expensive and need further training to use effectively. Here is a simple run down of the correct equipment for each aisle type.

On the other hand, if you are willing to spend extra, and the flexibility offered by wide aisles is not critical to your operation, narrower aisle types can see anywhere from a 20-50% increase in storage capacity.

Another critical layout decision is whether to use a fixed location system, a random location system or a combination of the two. Which system you choose will usually have a profound effect on your overall space utilisation. In fixed location storage, every SKU is stored in a specific location, and no other SKU can occupy this space even if the location is empty. Random location storage allows any SKU to be stored in any available location.

Random location storage therefore results in much greater space utilisation as empty space is not wasted. However, it is much more complicated to implement, generally requiring a WMS. Entirely random systems, rather than zoned systems, can also result in very poor productivity as pickers must travel farther to reach the right locations.

Add a Mezzanine Floor
The final option is to add a mezzanine floor to your warehouse. Though relatively expensive, mezzanines provide a quick and easy solution that can increase your storage capacity considerably. The speed at which mezzanines can be installed also means that they are a superb temporary solution if you intend to expand your premises in the near future.

A mezzanine floor will require a large amount of vertical space, so the benefits will be felt most in warehouses with large packing or broken case picking areas. In this scenario, work areas can be moved up on to the mezzanine to allow storage underneath, or vice versa, without affecting the vertical space occupied by racking.

About the author: Tom Brialey is founder of UK-based storage specialist Action Storage and its Chinese subsidiary Shanghai Mammoth. Tom has over 35 years’ experience supplying shelving, racking and lockers to businesses, schools and other organisations across the globe.

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