By the end of 2021, the average cost per square foot of warehouse rental reached $7.13 – a nearly 15% increase compared to the year before.
With research showing that, on average, a warehouse is only 35-40% full, warehouse space optimization tops the list of priorities for companies looking to make their operations more cost-effective.
A well-utilized warehouse space yields benefits not only in terms of decreasing rental costs. Maximizing warehouse space utilization improves inventory visibility and item handling and, ultimately, boosts customer satisfaction.
In this article, we share five easy-to-implement warehouse space optimization tips to help you maximize your storage efficiency.
What is Warehouse Space Utilization?
Warehouse space utilization refers to the efficiency of the use of a warehouse’s entire space – horizontal and vertical. In other words, it is the percentage of warehouse space used compared to the space left unused.
You can calculate the percentage of your warehouse’s space utilization in a few simple steps:
- Measure the total area of your warehouse, including the bathrooms, offices, meeting rooms, etc.
- Subtract the space used for non-storage uses from your warehouse’s total size
- Multiply that by the warehouse’s height to get the capacity of your warehouse in cubic feet
- Calculate the volume (in cubic feet) of your stored items
- Divide the volume of items by the volume of warehouse space
The percentage you get is your warehouse space utilization rate.
Is There a Warehouse Space Utilization Rate to Aim For?
Owners and managers can leverage the warehouse space utilization formula to assess the hidden potential of their storage area.
However, the goal shouldn’t simply be to increase the space utilization rate but to determine the most effective way to do so.
Before warehouses begin the process of reorganizing and optimizing space, it is essential to consider the benefits accrued.
For example, evaluate how much the present warehouse area can be divided to remain functional, how much space workers and machines need, and how the new space organization will impact overall warehouse productivity.
Maximizing your space utilization rate shouldn’t come at the cost of blighting day-to-day warehouse operations, misplacing stored items, or rendering a much-needed space inoperable.
Tips for Maximizing Warehouse Space Utilization Rates
Below, we outline five ways to improve warehouse space utilization. Of course, your item handling and tracking procedures factor in, so some solutions will work better than others for your particular storage needs.
#1 Map Out and Analyze the Current Warehouse Utilization
Any improvement-focused undertaking should begin with an in-depth analysis of the existing situation – and warehouse space optimization is no different.
To maximize the benefits of this process, you need to thoroughly understand the warehouse’s current setup. Get professional assistance in creating detailed warehouse drawings and use these to analyze the layout of your warehouse storage units.
As an owner or a manager, you might have less experience taking part in the actual on-site operations and the flow of work. Therefore, it’s a wise choice to interview your workers and get their perspectives on the pros and cons of the current warehouse layout.
Assess potential bottlenecks in item slotting, picking, management, packing, and shipping, and draft a comprehensive report on the goods and the bads of the present warehouse arrangement.
#2 Maximize Vertical Warehouse Space Utilization
Are you efficiently utilizing all the available vertical space? Vertical storage is a fantastic way to create a more extensive available area on the warehouse floor.
Systems such as vertical storage carousels and vertical warehouse racking enable loading and unloading items at an eye level and then elevating them with the simple push of a button.
Numerous vertical storage system vendors provide complete, customized solutions to warehouses. One of them is modula.us, a USA-based manufacturer that offers a variety of vertical systems for material handling, storage, and retrieval.
Vertical storage is deemed by many as probably one of the best inventions in the warehouse industry. However, make sure to think of your fire sprinkler system design when elevating your storage racks.
#3 Organize Department Locations by Their Needs
Lots of unused overhead space is an issue warehouses frequently face, especially in departments like packing and shipping, which do not require high ceilings. Which means your current warehouse staffing model is inefficient.
Underutilized space is also often found around doors, particularly if the shipping and receiving ones are separate.
This empty space can be greatly optimized with department location changes. For instance, you can relocate low-height operations to the part of a warehouse that cannot support vertical storing. Or, consider combining shipping and receiving docks to save storage space.
If your offices take up too much valuable warehouse area, investing in ancillary offices might be your best solution. This is an even better option for warehouses that boast extra land area around, allowing you to build modular offices of the exact size and room organization you need.
#4 Build/Install a Warehouse Mezzanine
Earlier, we mentioned that certain warehouse departments underutilize vertical space. Building a mezzanine can help alleviate this issue.
Mezzanines are great solutions for better space utilization, as they are quickly built and can be customized to meet diverse warehouse needs. Moreover, they aren’t permanent, so in case you require a different warehouse layout, mezzanines can be easily disassembled.
Warehouse mezzanines can come with a variety of useful elements, such as modular buildings, walls, cabinets, storage racks, and shelving.
Mezzanines are durable, moveable, and cost-effective; they increase warehouse space overnight and can easily be expanded.
#5 Ensure Item Slots are of the Right Size
The “one size fits all” approach to managing item slot size is surely easier – but it’s not the best solution space-wise.
Chances are, your warehouse probably stores items of varied shapes and sizes. Donning only a single slot size can result in plenty of storage space being wasted.
When planning your warehouse space reorganization, consider the ways to match the size of your different inventory items to the pick slot location.
In addition, determine the number of items you need to maximize the utilization of the picking slot and get the most picks with as little traveling as possible.