The Complete Guide to Improving Warehouse Space Utilization

Improving warehouse space utilization can improve productivity, improve safety, save floor space and provide a host of other benefits. However, many people see it as a daunting task at first. Here are some practical steps you can take.

Use data analytics for better insights

It’s not always easy to see where to start when better designing a warehouse for how people use it. However, data analytics platforms can highlight what is already working well and where people can improve.

For example, a data-driven platform could reveal which warehouse areas are busiest at certain times of the day. It may also reveal persistent bottlenecks or indicate that certain areas of the facility are more prone to accidents than others.

A data analytics tool will also show a warehouse’s fastest-moving goods, as well as the people who don’t need access as often. Such information helps people learn the best ways to reorganize the warehouse and promote smooth traffic flow.

Warehouse managers can also use data analytics products once warehouse improvements begin. By studying the statistics, they can see whether certain changes have delivered the expected benefits. However, payoffs that are not immediately apparent are not necessarily an indication of failure. They may mean that people have to wait longer to see the effects or make small adjustments to see the benefits.

Data analytics is also helpful in maintaining management buy-in. When leaders see a significant increase in productivity after people make an effort to save floor space or make some other change, they are more likely to remain committed to continued improvements in warehouse space utilization. Relatedly, they will approve more investments to help the company achieve its goals.

What can data analysis reveal?

A recent survey found that respondents had an average of 85.6% peak warehouse utilization in 2022. However, 37% of respondents said their occupancy rate exceeded 95% during peak hours.

In addition, 47% of those surveyed said they needed more space in their facilities, placing this issue second only to supply chain disruptions. The survey also showed that storage areas and receiving docks were the two most congested areas, indicating that they may be most in need of improvements in warehouse space utilization.

These are just some of the valuable points people can learn from relying on data analytics tools. Whether a leader wants to save floor space or determine the best location for a new assembly line, hard data can move an executive from doubt to determination for change.

Choose vertical systems to save floor space

It’s also helpful to recognize what things people should prioritize in order to make key progress faster. Many leaders are realizing that they can enjoy multiple improvements by exploring how to save floor space. By focusing on this, tripping and falling incidents that lead to hospital visits can be prevented and employees can experience an unsafe workplace.

By maximizing floor space, people may also discover that they have larger warehouses than they thought. As businesses grow, leaders often approve moves to larger facilities that require significant investment. However, it may be that the respective companies could have stayed longer in the same spaces if representatives were looking for creative and effective ways to save space.

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One of the most effective ways to save floor space is to store things vertically whenever possible. Consider a case where a metal stamping company kept its dies in a single layer on the floor. Stacking them on top of each other would have created a risk of cross-contamination due to residual oils dripping from one die onto the die below. In addition, stacked storage can facilitate the transfer of metal debris, leading to future product failure.

However, placing them in a single row on the floor also took up a huge amount of space that the company could use in more valuable ways. The company invested in industrial customization shelving valued for £40,000 of vertical storage per shelf to solve these problems.

This shelving solution was fully load-bearing, meaning people could place items along the shelf instead of just over the support beams. That feature made these shelves more flexible for current and future needs. Warehouse managers should use this example for inspiration on how they can also take advantage of vertical space. This solution does not work for every warehouse area, but often has impressive effects when used strategically.

Develop a Digital Twin for better use of warehouse space

Many people wish they could see into the future before making major changes to a warehouse. Some efforts that on the surface seem like the most appropriate options end up falling short due to unforeseen factors. However, people can use models and simulations to reduce the likelihood of such undesirable realities. For example, some logistics professionals use models to optimize their processes and discover new business opportunities.

One option is to create a digital twin of the warehouse and then run several simulations through it before deploying it in real life. A digital twin is a highly realistic, automated model of a physical asset or location. It can help people experiment with different layouts and how they each affect warehouse space usage. Perhaps the warehouse currently has a U-shaped flow, but managers believe an I-shaped flow would better support the continued growth of the facilities.

The digital twin can also prevent costly errors. McKinsey data indicated warehouses spend about $350 billion a year on storage. However, the company’s research also found that digital twins can increase efficiency by 20-25%. The companies test changes in the simulated environment and then get confirmation of which changes are the most profitable or otherwise beneficial.

People can see the optimal slotting and production flows or understand how equipment positioning positively or negatively affects the overall workflow. It can be challenging to visualize such details with the mind alone. However, digital twins provide the visibility individuals need to identify problem areas and the best ways to make lasting improvements.

Warehouse improvements take time, but are worth the effort

Renewing a warehouse can completely change the way people use the facility. However, such efforts require significant resources and dedication from individuals at all levels of the organization. Setting periodic milestones that everyone can strive for can be a great way to keep people motivated. Adapting to change isn’t always easy, but it becomes more manageable when it’s clear that every decision is an action that moves the organization closer to an overarching goal.

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