Warehouse Space: Do You Have Enough?

Space is money, so use it wisely. You may not need a new warehouse... only better space utilization.

If an apparent space shortage is pushing you to consider the option of a new warehouse, doesn't it make sense to take a hard look at how to better use the space you already have? A close look at the expense budget for your warehouse is likely to reveal that your total occupancy costs may be your single largest group of expenses... larger than labor or equipment. Furthermore, if you look at escalation of costs over the past two decades, labor cost increases, adjusted for inflation, have increased modestly while the costs of constructing a new warehouse have increased dramatically. Improving the usage of existing space can postpone or eliminate the need to add more warehouse space, thus helping your bottom line.

• The first is to increase the stacking height.
• The second is to use racks.
• The third is to increase the density of storage in existing racks.

It is easy to overlook the lowest cost space in any warehouse... that which is close to the roof. Fire regulations typically allow storage up to 18 inches from sprinklers. With this knowledge you can and should calculate the highest feasible stack height in your building. Then determine whether it is being used. In many instances it isn't.

When we audit space utilization in a warehouse, we frequently make one very primitive test. We get close to the ceiling by being raised up with a fork lift or climbing a ladder. In this way we can see how many of the stacks in the warehouse are using all the cubic space available. Sometimes the space is not utilized because the lift trucks won't elevate high enough. If this is the case, part of the solution may be to trade in old equipment for lifts with higher masts. Sometimes the limitations are caused by racking that isn't configured correctly for current usage. At other times, racking should be installed in place of storage on the floor.

To best utilize the cubic space available in your building, consider the use of:

• Higher lift trucks.
• Racking which is designed to use the cube.
• Re-configuring your existing racking.

One or more of these options is likely to save you money by using the building more effectively than it has been used in the past.

It is surprising how many warehouses use almost all floor storage for furniture so that half or more of the vertical space is wasted. To squeeze more stock into the building, aisles are frequently completely blocked or product may be jammed together. When a particular piece is sold, many other pieces have to be moved to get to the item wanted. Racking can be justified in warehouses as low as 14 feet, but payback is better if the ceiling is higher. But what type of rack?

The most common pallet rack has conventional uprights every 8 to 10 feet and horizontal crossbars and decking. While this is very satisfactory for accessories and bedding... a cantilever racking system saves more space and is a more efficient and flexible system for furniture. In a recent warehouse updating, we replaced floor storage with cantilever racks having three levels spaced five feet apart. Each shelf was four feet wide and the aisles only needed to be four feet wide. Effective space usage increased over 100 per cent and everything was immediately accessible!

There's an ample supply of used cantilever racking available as well as electric order picker trucks. Today's tax laws allow rapid depreciation of equipment so it also improves your cash flow while reducing operating costs.

But we also find instances where excellent racks are installed but the clear space between levels is wrong. The spacing may have been great when installed but changes in product mix may require different settings today. Removing a level from one aisle and adding it to another may improve efficiency at nominal cost.

Space planning should start as goods are received. When a shipment of new merchandise arrives at your receiving dock, who makes the decision about where the merchandise will be stored? All to often, the location decision is delegated to the person putting stock away. It is only natural that person will make an expedient decision which saves time without saving space. One person should be designated as the space planner. The planner should know where empty storage locations can be found, where additional space can be created by re-warehousing, what other receipts are expected as well as the identity of the items which will be on each of these loads. Only then can the planner develop specific storage instructions for every arriving load of merchandise.

A key element in space planning is an effective warehouse locator system. Such a system is primarily designed to cut order picking time so that the picker doesn't have to search for lost merchandise. A good locator system will also identify opportunities to save space by re-warehousing like items in longer rows.

When setting up a locator system, remember that storage locations can be either permanent or random. A random location system saves the most space, since anything can be placed in any position without reserving places at fixed locations. By eliminating the need to reserve space for non-existent merchandise, you can get better space utilization.

You will probably do about 80% of your sales with only 20% of the items stored. These few fast movers should be in positions where they can be handled most inexpensively... close to the door and close to the floor.

An alert space planner will also spot problems with inventory control. Products that are not turning perhaps shouldn't be there at all.

As you look critically at your warehouse, you may find that you can put more merchandise in the building than it holds now. Some of these changes may be modest in cost. Some ways to save space involve functions which frequently are not assigned to warehouse managers, such as inventory control and shipment timing. Achievement of effective warehousing takes support from other departments too.