Warehouse capacity is a challenge. Running out of space in your current warehouse setup can come down to a few reasons; like only having access to a small warehouse, or an increase in productivity and business.
This seems to be an increasingly prevalent challenge — people running out of warehouse capacity — and we’ve been seeing this trend in the Logistics Bureau for many years. People are designing newer, larger warehouses, and they’re trying to sort of retrofit or redesign existing warehouses to fit more in.
And, there’s no doubt at all that a lack of warehouse space will impact your supply chain performance. If any of your company’s warehouses are running at more than 85% to 90% of their total capacity, you’re probably finding it hard to operate them efficiently.
When pallet storage starts spilling into aisles and operating areas though, you don’t necessarily need to start looking for a larger shed — although more often than not, that’s exactly how warehouse operators choose to react.
So what are some of the causes for warehouses getting clogged up like this? We’re going to look at why this happens, and more importantly, how you can maximise your warehouse capacity.
How to Maximise Warehouse Capacity
Your options for solving warehouse capacity problems will depend on many factors, such as the shape, size, age, and design of your facility, as well as the nature of your operation and stored inventory.
This is where it can be useful to engage a warehouse design specialist to help you explore the possibilities and calculate warehouse space.
As a supply chain leader or operational manager, you might handle warehouse capacity issues a few times in your career, but warehouse design experts do so on a continuous basis, and can really help you evaluate all possible options to gain capacity. Minimising empty space is crucial for improving operational workflows and ensuring efficient use of available storage.
Still, if you want a few ideas to try, you can certainly look into any of the following potential solutions for reducing warehouse constraints:
What is Warehouse Capacity?
Warehouse capacity is the amount of inventory that can be stored in the warehouse. It’s a key aspect of warehouse management as it directly impacts warehouse efficiency and productivity. Understanding warehouse capacity is vital for businesses to optimise their storage space, reduce costs, and improve customer satisfaction.
Several factors can affect warehouse capacity, including the size and layout of the warehouse, type and quantity of inventory, and the storage systems and equipment used. For example, a well laid-out warehouse with efficient storage systems can increase the available storage space. So it’s important to consider these factors when calculating warehouse capacity to get accurate results and optimal warehouse space utilisation.
Calculating Your Warehouse Capacity
Calculating warehouse capacity means determining the total usable space in the warehouse and the maximum amount of inventory that can be stored in that space.
Here’s how to calculate warehouse capacity:
- Measure the Dimensions: Measure the length, width, and height of the warehouse to get the total square footage.
- Subtract Non-Storage Areas: Subtract the total non-storage space — offices, restrooms, and break rooms — from the total square footage.
- Stack Height: Determine the maximum stack height of inventory that can be stored in the warehouse.
- Calculate Storage Capacity: Multiply the usable space by the maximum stack height to get the storage capacity in cubic feet.
- Convert Units: Convert the storage capacity to pallets or other units of measurement depending on the type of inventory being stored.
Inventory Management for Warehouse Storage Capacity
A lot of your warehouse capacity is related to inventory management and optimising existing space. You have to balance purchase quantity versus purchase frequency and look at the total cost of ownership of inventory, not just the purchase price.
The key here is to get out of the trap of buying in bulk for lower unit costs. Those bulk discounts might look good on paper but often lead to overcrowded warehouses and hidden costs. Instead, focus on these:
- Purchase Frequency vs Quantity: Instead of big, infrequent orders, try more frequent ordering with smaller quantities. This keeps inventory levels more stable and frees up warehouse space.
- Total Cost of Ownership: Look beyond the unit price and consider all the costs of inventory storage — storage space, handling costs, insurance, and obsolescence risk. Sometimes paying a bit more per unit for more frequent deliveries is more cost-effective.
- Demand Forecasting: Implement strong forecasting to plan better for inventory. This is especially important during promotional periods or seasonal peaks when stock requirements can change dramatically.
Assessing storage locations within your warehouse is key to finding opportunities for improvement. Visual inspections and measurements of storage areas will help in planning for changes.
Even for growing businesses or those undergoing mergers, better inventory management can rationalise warehouse space without compromising service levels. The aim is to keep optimal stock levels that balance customer service requirements with warehouse capacity.
Slotting Techniques to Boost Warehouse Space Utilisation Efficiency
One of the best ways to get more out of your current warehouse capacity that we almost always suggest to clients is slotting.
In many cases, we see that 80% of the product picks are taking place from all over the warehouse, and if you’ve got a large warehouse, that’s a lot of travel time. This leads to poor productivity for the people picking the products.
In many cases, you can actually get much better picking productivity and reduce labour costs by 15 to 20% by optimising your warehouse products and making them more accessible to your pickers.
In turn, this also has an impact on how much you can fit into that warehouse, because part of the slotting exercise is looking at the size of the slots — when looking at the pallet positions, you’ll likely realise that you can actually condense quite a bit.
Theoretical storage capacity refers to the maximum physical space available for storage within a warehouse, whereas working capacity is influenced by operational factors, inventory characteristics, and actual usage, which can often result in lower utilisation than the theoretical potential.
Reduce Aisle Width
It’s often possible to gain pallet slots in a warehouse by changing from traditional aisle widths of 3.3 to 3.6 metres to narrow aisles (between 2.5 and 3 metres).
This can typically increase overall warehouse capacity by as much as 30%, although standard reach trucks may need to be replaced with MHE specially designed to work in narrow aisles. Additionally, calculating the total vertical storage capacity of warehouse racks is crucial for optimising storage efficiency.
Change Your Storage Media to Maximise Available Storage Space
Instead of reducing aisle width (or in addition to doing so) you could invest in racking or shelving designed to increase storage density.
Most warehouses use single-deep racking, but you may be able to increase density by changing to double-deep, push-back, flow-through, or drive-in racks, all of which reduce the number of aisles needed for storage and retrieval of pallets.
Fewer aisles, of course, means more space devoted to storage — perhaps enough to remove the need for a larger facility. When considering different storage media options, it is important to measure the total storage capacity to ensure optimal utilisation of available space.
Add Another Floor to Increase Total Vertical Storage Capacity
Depending on the design of your warehouse and the types of inventory you carry, it may even be possible to add one or more mezzanine floors to your warehouse.
Although this method can make excellent use of vertical space which might otherwise hold nothing but air, it involves more investment than the other options covered here, and might even require structural improvements to the warehouse itself.
Even so, if you think you can gain enough warehouse capacity through the use of mezzanine shelving, it may well be more affordable and realistic than moving to a larger facility. It is crucial to measure the entire warehouse facility to accurately calculate usable space and storage capacity.
Planning for Warehouse Capacity
Planning for warehouse capacity is essential for businesses to ensure that they have sufficient storage space to meet their inventory needs. Here are some tips for effective warehouse capacity planning:
- Analyse Historical Data: Review historical inventory data to identify peak and off-peak seasons.
- Forecast Future Needs: Use sales trends and market analysis to forecast future inventory requirements.
- Consider Inventory Types: Take into account the type and quantity of inventory being stored, as well as the storage systems and equipment used.
- Evaluate Layout and Configurations: Assess the warehouse layout and storage configurations to optimise storage space.
- Develop Contingency Plans: Prepare for unexpected changes in inventory levels or storage needs with a robust contingency plan.
By planning for warehouse capacity, businesses can ensure they have sufficient storage space to meet their inventory needs, reduce costs, and improve customer satisfaction. Regularly reviewing and updating warehouse capacity plans can help businesses stay ahead of changing inventory needs and optimise their storage space.
Conclusion
If your warehouse is getting over-full, moving to a more spacious facility might not be the ideal solution. It’s surprising how much extra volume you can gain from less drastic measures. The more efficiently you can utilise the warehouse capacity you have, the better will be your supply chain performance.
