Warehouse Management System (WMS)

24 Secret Ways To Optimize Warehouse Space

Ngoc Lee
24 Secret Ways To Optimize Warehouse Space
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When a distribution facility reaches roughly 85% occupancy, it is theoretically out of space. However, If you run out of warehouse space, there are various options for you, such as increasing storage capacity without expanding the facility to optimize warehouse space. Let’s jump into this article to find the ways to do it straight away.

Consider Whether You Can Expand Your Racks Up Vertically

ESFR is a fire suppression sprinkler system typically installed in new buildings, and you can store inventory within 18 inches of that area. Rack extension has various drawbacks, including the possibility that the base plates or racking uprights are not adequately proportioned. In that situation, a professional engineer and a structural engineer will determine whether rack expansion is a possible alternative or not. 

👉 Read More: 3PL Warehouse Services: Benefits And Offers 

👉 Read More: All Cost To Rent A Warehouse In 2023

Consider to Construct a Mezzanine Above A Floor-level Process

Constructing a mezzanine is one of the most effective methods to enhance your warehouse space. Having a mezzanine installed above the floor-level process, such as a shipping or receiving facility, can roughly quadruple floor space. However, some disadvantages come with installing a mezzanine. The floor load must be able to withstand it. Columns and foundation plates will fall to the floor. It is preferable to construct a mezzanine than enlarge the structure.

Constructing a mezzanine
 Constructing a mezzanine

Lower aisle Width in the Racking Area

A standard wide aisle may be wide from 10 to 12 feet, but if it can be decreased to 5 - 8 feet, you can conserve about 15% - 20% of your warehouse area. You must assess lift equipment and consider whether it is designed to follow or function in those small aisles. You must also pay additional wire guiding charges in a particularly narrow aisle.

Lower Aisle Width In The Racking Area
 Lower Aisle Width In The Racking Area

Estimate and Adjust your Warehouse Medium

Another technique to maximize your warehouse space is to upgrade your warehouse to greater density equipment, such as switching from a single-deep rack to a double-deep rack. Loading pallets on a double-deep rack necessitates the use of a reach truck. Higher density equipment solutions include push-back or drive-in racks. These alternatives are excellent for expanding storage, but the difficulty is that they are FIFO (first in, first out). The higher density, the harder first-in pallets accessibility.

Create Half-Pallet Locations For Half-Pallet Quantities Products

There are specific products that are only available in half-pallet quantities. Adding half-pallet locations can help save more space. You can imagine it like ice cubes in a glass. There would be more liquid if you pour water into it, and there would be more room in a glass if you put ice cubes in it. It is like fluid volume rather than just what is in that location. You can fit more pallets and more merchandise in the same space without sacrificing too much blank space when you compress your pallets.

Directed Put-Away By Leveraging Warehouse Management System

This is also a wonderful technique to optimize warehouse space. Your warehouse managing system often directs it, so instead of placing the pallet anywhere you like, directed put-away understands which places are most suitable for pallets. It will direct you to place a certain pallet rather than allow a worker to place pallets in the most convenient area.

Determine Underutilized Warehouse Space

Pallet racks are full of supplies, slow-moving goods, or staging for inbound or outgoing cargo that has not been processed can typically be positioned above receiving or shipping doors. For instance, suppose a conveyor along the middle of the module and a pick module in the facility. You just need to hang a shelf above the conveyor. It helps you have more space to stock slower-moving or smaller goods that do not need to be refreshed regularly. Those items will have to be restocked manually or via the conveyor system.

Stock Goods In Trailers For Short-Term, Seasonal Demands

Your warehouse may sometimes need temporary storage demands, so putting things on trailers is a solution you should not miss. Numerous warehouses will tend to bring in more trailers and pay the demurrage charge for temporary storage. It is popular for seasonal products, especially among merchants.

Estimate Your Current Space Utilization 

How to optimize warehouse space, you should concern with these two questions “How much of the area is being used?” and “What purpose is it used for?”. These usage data are critical in choosing the next measures to take. There are four simple methods for determining your current space utilization.

Calculating Total Warehouse-Size

  • First, you must know your facility's total square footage.
  • Next, subtract your office space, restrooms, and any additional area not used to store your goods.
  • Then, multiply the remaining square footage by the warehouse’s clear height. It is the space between the warehouse’s completed base to any above object.
  • Finally, the result will show you the overall warehouse size.
Calculating Total Warehouse-Size
 Calculating Total Warehouse-Size

Calculate Your Storage Area Size

  • Multiply the length and width of the racking’s exterior measurements by the highest load’s height in that section.
  • If there is one site with a 26 feet load height and the other one is 20 feet, you should calculate them separately and put them together later. Since it is not always the height of the highest load will be consistent across the warehouse.
  • This approach gives you a cubic volume for the size of your storage place. Depending on your present configuration, your potential storage capacity or a maximum storage area would be your potential storage capacity.
Calculating Potential Storage Area Size
 Calculating Potential Storage Area Size

Analyze Your Potential Storage Area

  • Multiply your warehouse area dimensions by the entire warehouse size by 100.
  • This figure reflects the amount of space in your warehouse used for stock goods. It should range from 22% to 27% since it ensures that your workers have ample area to maneuver when packing, loading, and unloading without wasting free space. However, if your proportion is smaller than 22%, you should optimize your storage space by optimizing aisle widths and rack positions.

Now Calculate Your Space Utilization

  • Plus all items’ total weight in your storage. The result will likely be available in your warehouse management system (WMS).
  • Then divide the total volume of all items by the storage space size and multiply by 100 if you use a warehouse management system.
  • If you do not use a warehouse management system, let’s divide your storage space into logical divisions. Then, calculate the percentage of each row’s usage. Finally, sum the results and divide them by the number of logical sections or rows.
  • In this way, you will receive your warehouse space usage.

Use Strategic Beam Placement to optimize warehouse space

Forklift contact occurs in the area from the top of the stored product to the bottom of the rack beam. You just need to let 6 inches here, yet the load might be 8 inches and above away from the rack. Ways to make it right:

  • Get out into the warehouse and start measuring.
  • Put a tape or ruler measure on the product’s surface.
  • Take measurement up to the racking beam above it.

If it’s longer than 6 inches, consider the reason. What is occasionally placed here? The same size merchandise or a larger object?

Use Containers That Fit The Stored Object 

Unpackaged parts are frequently housed in storage bins on shelves or racks. When saying about these containers, many warehouses likely use a “one size fits all” approach rather than having multiple sizes. Martin Murray from The Balance Small Business said: “ When the containers are stored on the rack, space maximization can appear to be good, but in reality, there is a lot of wasted space inside of the containers, which is costing the company money”. You can consult these solutions:

  • Arrange unpackaged things according to size.
  • Prepare a range of container sizes to put products in the appropriate container size.
  • After that, classify the racking and place smaller containers into one section and bigger containers into another.

Simply keeping stuff in the appropriate size containers will help you discover more room that you have wasted and boost your warehouse capacity.

Maximize Your Space By Keeping Products According 

By dividing things according to size and keeping them among similar-sized items, you will maximize your free warehouse space. The procedure is identical to the preceding suggestion, and it is simpler than you would believe.

  • Determine the number of various sizes of products in your inventory. For instance, you can use a 48-by-40-inch pallet for most items, except for a few bigger or smaller ones.
  • Put bigger and smaller things in different shelves spaces. It can be in the same row, and it only has to be isolated from the other things.

This method supports you create most of the space you currently own in your storage and reduces the possibility of misplacing smaller things because they are all together.

Apply The Pareto Principle To Optimize Warehouse Space

Pareto Principle, named after economist Vilfredo Pareto, states that 80% of the reason results in 80% of the consequences, implying an asymmetric connection between outputs and inputs. Pareto Principle can be applied in various industries, including business and warehouse storage.

Pareto’s principle illustration
 Pareto’s principle illustration

In Victor Coronado’s paper on warehouse space optimization, he stated: “Eighty percent of the activity in a warehouse comes from 20 percent of the items, and these items are the fast-movers within the warehouse.” He applied the Pareto principle to describe a product analysis to choose the optimal SKU position.

Categorize Skus Into Different Products

  • Examine SKU growth estimates and typical inventory levels.
  • Specify the measurement units for each SKU in your warehouse.
  • Consider additional factors like date-sensitive things, refrigerated products, etc., or products that use specialized material managing equipment to transport.

Classify Products Category Based On Their Activity

  • You can categorize the categories depending on the number of cargoes or pickups involved over a while.
  • Select a measurement method that suits your storage.

Determine The Rate At Which Each Sku Is Moved

  • You may use letters to represent movement velocity. For instance, you can sign the letter “A” as the fastest, while the letter “C” is the slowest.

Make Warehouse Space Available

  • Prioritizing depends on the combination of each component in the SKU. For instance, you can spend one section on pallets and one on cases.
  • Spend the most accessible areas for the highest-turning SKUs, like the shelves’ ground level or nearest doors.

Nix Obsolete Inventory To Increase Storage Space

Because the warehouse space is incredibly important, you should not take any outdated merchandise. The below steps will help you locate and eliminate the space invaders and maximize warehouse space:

  • Take a look at your storage management system’s velocity report (WMS).
  • Examine how frequently each SKU is selected throughout the year.
  • Remove any things that have not been selected within that period. You can sell them at a steep discount, donate them to charity, or ask the merchant to return them. Your goal is to free up valuable warehouse areas for products that will sell.

Put Vertical Space To Use In Your Storage

Improving your warehouse capacity by utilizing the vertical space in your storage that is currently accessible would be a tremendous help.

  • Determine the clear height of your storage. It is the distance between the storage’s completed floor and any overhead item.
  • Check your local building code requirements to ensure you can adhere to them.
  • Examine your inventory to see which items can be moved. You can shift your slower-selling items higher up to make room for more available spots for rapid sellers.
  • Research your choices. The following step is entirely reliant on your warehouse system at present. You should consider your future demands and choose an option that gives you flexibility. For example, you can consider whether your warehouse needs a new racking system or can you supplement what you already have.

This way can help you reduce some amount of costs in the warehouse. Moreover, the added warehouse capacity frequently increases operating efficiency and productivity.

Minimize Your Aisle Widths To Add More Warehouse Space

Reduce the aisles’ width between the rackings to increase accessible warehouse storage and provide some necessary square footage.

  • This easy formula can calculate the minimum aisle width required to adjust your forklifts.
  • When determining your minimal aisle width, compare it to your existing aisle widths. You will realize that you can save 2 feet on each aisle so that you can install more racking and create more space by narrowing the aisles.

Clean Up Your Warehouse Floor To Gain Valuable Space

Optimizing your warehouse space by cleaning up your floor is a necessary way that you can not miss. Floor space is particularly significant because it is one of the most accessible areas in your storage, regardless of whether you utilize a floor stacking or a racking system.

  • Remove any debris. It is a safety threat, but worthless rubbish should not take up precious storage space. You should clean your warehouse frequently and classify rubbish in the designated trash cans.
  • If underutilized equipment exists that takes up your warehouse floor space, consider its condition and decide whether you can resell it. If you can use it later, move it somewhere else, which is not the prior space.
  • It is the same for unused pallets. Examine their condition to see whether you can reuse them. Besides, you can recycle lots of pallets instead of piling them up in your storage.
  • Removing out-of-date inventory is mentioned in one of the most prior suggestions, but it is worth reiterating. Removing anything that has not been picked up in the past year or for a long time.

>> Learn more: Floor stocking meaning and how it works in 2024

Optimize Warehouse Space by cleaning up
 Optimize Warehouse Space by cleaning up

Add A Mezzanine To Maximize Inventory Storage

Another way to optimize warehouse space is by adding a mezzanine. Mezzanines allow you to increase useful square footage without really expanding.

  • Firstly, you must establish your warehouse’s clear height.
  • Secondly, check your local building code regulations to ensure you can keep within their safety criteria.
  • Thirdly, examine what things you can resettle and how easy they may be. You can transport other goods, including supplies, minor components, equipment, paperwork, and even offices, to the mezzanine to enhance the inventory warehouse.

Reduce SKU Quantities To Minimize Overloading

Stocking too many same SKUs might overburden your storage. It happens more frequently than you expect. Someone in buying gets a terrific bargain on a six-month supply of certain goods, and your warehouse becomes overcrowded. This situation is readily correctable.

  • Work with the supplier about developing a program in which these goods may be provided in phases. It will provide a lessening effect on your facility.
  • Another alternative is to collaborate with the buying department to develop procedures that avoid warehouse overcrowding. This way would be the most effective long-term method. For instance, you can create a policy prohibiting purchases bigger than a three-month supply. Alternatively, larger orders must be planned with staggered delivery from the start.

Implement Cross-Docking

Cross-docking eliminates the need for merchandise to be kept between the legs of its route. It is instead immediately sorted and moved back to the distribution chain. The warehouse space optimization technique is tough to master, but it does save space.

  • Analyze the benefits and drawbacks of cross-docking. You can do that by looking online and discussing with supply chain professionals, and you will find out the solution.
  • Decide whether cross-docking is appropriate for your storage. Some materials lend themselves better to cross-docking than others. For example, retail products with regular demand, pre-picked and packed goods from another warehouse or factory, perishable commodities, etc. Cross-docking necessitates a high degree of management as well as cutting-edge technology. If you choose to use cross-docking, you must adhere to tight inventory control procedures.
  • Ensure that your employees are trained on these new processes, safety protocols, and good practices for the new system.
Implement cross-docking
 Implement cross-docking

Improve Forecast Accuracy To Reduce Excess Inventory

Excess inventory can be caused by inaccurate forecasting, complicating storage inventory management. To increase your forecasting accuracy, you should consult these tips.

Make Use Of The Appropriate Forecasting System

You can use inventory management software to create forecasts instead of a spreadsheet. Besides, you have to decide whether the scale of your facility and your projections call complexity for a different solution.

Forecast At The Appropriate Level

You should check the current predicted level regularly. For instance, forecasting at the SKU level would not be sufficient since forecasting by sales area or channel may require more detail.

Track The Result Of Your Forecast Accuracy

Compare your projections to real sales. This data will help you fine-tune your forecasts and enhance your outcomes further.

Use 5-S And Lean Management Principles 

The 5-S warehouse space optimization technique can assist you in enhancing warehouse space, minimizing waste, and boosting efficiency. You will recognize problems quickly, treat their root causes, and avoid recurring. The following are the fundamentals of adopting 5-S in your storage.

Determinate Potentially Unneeded Warehouse Items

You should evaluate the usefulness of goods and eliminate any items that are no longer needed, like outmoded inventories or useless equipment.

Put All Necessary Products In Their Appropriate Places

There is one rule to follow, which is to put the best-selling items in the most visible places. Search for the underlying causes of each issue that arises. During the progressive, you may detect irregularity or a lack of structure in your storage. What you need is to make modifications and put countermeasures in place as you go. For instance, you may observe that stock is checked separately when it may be done in batches. Create policies or rules that you can repeat the process each time. It allows you to share the process with your group and welcome new workers.

  • You should break down tasks into basic steps.
  • Carry out the steps in the same manner. It will help you to discover systematic flaws and reproduce your triumphs readily.
  • Every time, provide the goods required to finish the procedure effectively and successfully.
  • Let partners adhere to standards as if there were second nature by making the procedure.

Select The Right Storage System To Increase Storage Density

If you need higher storage, selective racking would not be your perfect storage method for your storage. Let’s consult the following ideas to optimize your warehouse space.

Determine Your Warehouse’s System To Requirements

Now you should ask yourself these questions, such as do you require a lot of storage, or is it necessary for your warehouse system to support a first-in/first-out or last-in/first-out inventory management system, or does pick selectivity still an important factor to your warehouse?

Determine Your Options

Find out which storage method is finest for your storage and your top needs. You can take a glance at the most prevalent warehouse options below.

Floor stacking

Pallets are placed in rows on the floor. This option allows you to have high-density storage if items or loads are piled directly on top of one other.

Selective racking

The depth of selective racking is one pallet. You can arrange racks in a row or against a wall. Despite the low storage density, this alternate solution will provide a high choice selectivity. 

Selective rack model
 Selective rack model

Racking with double reach to optimize warehouse space

There are two rows of racking instead of back-to-back rows or one row. Racking can even be installed back to back and two rows deep. This technique helps you minimize the number of aisles while increasing storage density. However, this system requires a specialized forklift.

Racking for drive-in or drive-through

Instead of shelf beams, pallets are stored in rails. Forklifts have to drive into the structure to place pallets and remove them. 

Drive-in and drive-through racks illustration
 Drive-in and drive-through racks illustration

Racking with push-back

Pallets are stacked on a series of nested, movable carts that glide on tracks in this kind of racking. When a fresh pallet is loaded, the other carts are pushed back. It is ideal for warehouses with restricted space with consistent size and weight of products. 

Push-back pallets racking
 Push-back pallets racking

Flow racking for pallets

When using pallet flow racking, pallets flow down an incline on a system of rollers or wheels.

Weigh your top choices

Each storage system has its own set of trade-offs. It may have a greater pick selective, but it wastes too much storage space that the warehouse can provide. You should consult with the stakeholders and experts, collect feedback from others to evaluate options, and choose the most suitable solution.

Optimize Warehouse Space By Add Storage In Unexpected Places 

You can maximize warehouse space by installing racking over cross aisles and over dock doors. It is a simple way to increase warehouse capacity and space without increasing the square footage physically, and it does not obstruct the receiving, shipping, or forklift operation. Furthermore, it does not obstruct the receiving, shipping, or forklift operation. With this technique, you can look at the following ideas to understand how to maximize warehouse space.

  • First, you have to decide how much capacity you require. For example, over-dock racks are often designed for storing weight things like empty pallets, packing supplies, or lighter loads.
  • Then, you need to check for your warehouse structure and your current racking whether they can install over-dock racks. Since these over-dock racks sometimes necessitate the use of ceiling support or wall ties. You must remember that bridge-aisle or cross-aisle racking is usually only used for selective racking.
  • Examine the construction codes. Make sure your extra storage is up to date.
  • Finally, you have to train your operators. Ensure that your operators are informed of any adjustments at cross aisles or loading doors. They should comprehend the possible dangers and know how to work in these environments.

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In conclusion, we hope that these 24 suggestions can help you optimize warehouse space, increase productivity, and save your costs. Remember that not all the above techniques are appropriate for every facility. You should consider carefully before choosing the most suitable warehouse space optimization techniques for your warehouse.

Ngoc LeeNgoc Lee is an Content Creator Manager at EFEX. She wields her long-term expertise in Logistics and Supply Chain, harnessing her top-notch writing and research skills to bring incredibly valuable content. Whether you're a small startup or a well-established enterprise, Ngoc Lee is here to equip you with the essential knowledge of e-commerce, fulfillment, and all things business-related.