Warehousing and Distribution Centers: 5 ways to find hidden warehouse space
So, you’re struggling with higher inventories and upper management is not about to invest in new warehouse space. Fear not: Our team of experts will help you find space where you think there isn’t any.
By Maida Napolitano, Contributing Editor -- Logistics Management, 5/1/2009
In this current economic decline, many warehouse and DC managers are struggling with higher inventories as they lag behind in adjusting supply chain operations to lower-than-expected demand trends. This inventory has to go somewhere, and many times your space-challenged warehouse or DC may be the only option.
With upper management reluctant to spend money on anything these days—and most certainly not on a new warehouse—you’re stuck, but you need to find space.
If this situation has become all too familiar to you, we may be able to help.
We’ve recruited three “warehouse space” experts who bring more than 60 years of combined experience on the subject. Jack Kuchta is president of the warehouse-consulting firm, Jack Kuchta LLC, and author of the book “How to save warehouse space;” Larry Shemesh is president-CEO of OPSdesign Consulting, a N.J.-based firm specializing in the design of warehousing, distribution, and fulfillment operations; and Carlos Bastos is director of proposal development for Frazier Industrial Company, a leading manufacturer of structural steel storage systems.
Many of the suggestions they’re about to share require no capital costs, while a few call for minor layout reconfigurations and the purchase of low cost storage and handling equipment. However, all are geared to help warehouse/DC managers increase storage capacity in existing space.
By finding precious space, Bastos says, “You will eventually take control of your inventory, increase your operational efficiency by handling fewer pallets, and reduce current outside storage costs.”
Wise use?
How do you know If you’re using space wisely? First, Kuchta wants you to check your entire “airspace.” “That includes space within racking as well as above the storage modules,” he says. Not counting necessary clearances required by building and fire codes, you might be surprised by the amount of unused vertical and horizontal space throughout your facility.
One of the biggest culprits, says Shemesh, is unused overhead space above operating areas. “This is particularly prevalent over receiving and shipping docks, value-added processing areas, and packing stations.”
Are floor lanes only half full most of the time? Are full pallet rack positions holding half-pallet quantities? Although being 100 percent full is never optimal, as it will increase travel paths and cause redundant handling, “each type of storage/picking media has a specific range of utilization that best optimizes its use, typically ranging between 70 percent and 90 percent,” says Shemesh. If your storage positions are occupying consistently less than this typical utilization rate, then the cause should be investigated.
Do you really need such wide aisles? “Perhaps the aisles and the associated lift truck equipment are not well-suited for the operation,” notes Shemesh.
And, of course, the cardinal sin in any warehouse: Are you so close to capacity that you’re not only storing in access aisles, but also in emergency egress aisles?
Getting started
It’s been said that it wasn’t raining when Noah built the ark, so don’t wait for a major crisis before attempting to find space in your warehouse. “Space planning initiatives should be an ongoing, continuous improvement process,” says Shemesh. “It should not be undertaken only when the costs of outside storage or redundant handling becomes too great to bear.”
Instead, stay informed with inventory forecasts and SKU growth or reductions, upcoming marketing plans and promotions, and any other relevant company directives that affect the flow of product to and from your warehouse. Prepare alternative space configurations that can be readily implemented in response to these changing requirements.
Ways to create space
Solutions to space problems are plenty. For this article, we’re focusing only on a small number of them. The first few are mostly procedural changes meant for long term inventory control, but they require little or no capital investment and focus on working with what you already have.
The remaining solutions are physical changes, which may involve the purchase of low cost storage and material handling equipment.
1 Take control of your inventory. Compare each SKU’s cubic velocity versus its cubic inventory to find which products have little or no movement. “Every time your warehouse employees move past these slow and no-move SKUs, that unnecessary travel time results in increased labor costs,” says Shemesh.
He suggests liquidating this inventory and freeing the space it now holds. “It is the least expensive way of optimizing warehouse space and may actually generate some revenue by discounting and selling the goods or by donating them to a charitable organization.”
Shemesh also suggests profiling inventory to see if items are stored in appropriate modules. Are decked pallet racks holding piece quantities better suited for shelf storage?
Some warehouses have become a dumping ground for old files and old office equipment. Notify department managers of this equipment and initiate steps for removal.
2 Adopt distribution strategies for specific products that can lower inventory and increase turns. After receipt, move product “across the dock” and load directly onto the tractor trailer. In other words: cross dock.
Shemesh suggests pushing some inventory back to your vendors, where possible, in a vendor-managed inventory (VMI) strategy.
“Ask your purchasing department to work with key vendors to honor the quantity pricing, but hold back some of the quantities in your vendors’ warehouses for them to deliver upon demand,” he explains.
Kuchta agrees, adding that you should consider “receiving smaller quantities more often, thus increasing turns and reducing inventory.”
3 Make sure you’re leveraging your warehouse management system (WMS). The standard functionality that a WMS offers can do wonders with space. A WMS streamlines receiving, picking, and shipping procedures to reduce dock space requirements and free up valuable space for storage.
Combined with a good location system, it also permits directed random storage based on the availability of space instead of dedicated storage that can block the use of an available storage position.
It allows directed putaway of a product to the most appropriate locations based on size, movement, and storage conditions. A good WMS can also identify partial pallets and generate tasks to consolidate them to reduce space.
After gaining control of your inventory in Step 1, a good WMS will help you maintain control of it.
4 Find actual physical space at little or no cost. Kuchta advises you to review docks, staging, and VAS areas with an eye to minimizing them to current activity levels.
“The need is likely to be short term and the extra space will not always be designated for storage,” he says.
Move battery chargers for lift trucks between truck doors and use the existing charging space for storage. Is there space below the overhead sprinkler system? Kuchta suggests creating higher pallets on the top level of racked space.
Where possible, double stack pallets, but remember to treat each pallet as a separate location so that it can be tracked properly.
If you floor stack, Kuchta also proposes pyramid stacking, where the top pallet straddles two lower pallets.
“This may allow you to stack pallets to higher storage heights because the top pallet is stabilized by the two lower pallets. However, it may also mean less labor efficiency,” says Kutcha.
When palletizing, invest in low-cost pallet calculator programs to determine the optimal pallet pattern that maximizes the number of cartons that can be stored on a pallet, thus reducing the overall number of pallets.
And if you own outside trailers on your property, use them for temporary storage. Many managers use them to store their supply of corrugated. However, if you don’t own any, consider renting trailer storage during peak periods when space becomes a major issue.
5 Purchase low cost storage and handling equipment. “Spend money on equipment such as rack systems, mezzanines, and other vertical storage devices only after exhausting all no- or low-cost options,” suggests Shemesh.
Are there partial pallets occupying full pallet positions? If yes, purchase beams to create more levels. Bastos recommends adding racks over cross aisles (See Figure 1) and over the dock doors.
Use the space above the conveyors to install shelving for dunnage, empty cartons or additional pick facings. You can even add racking for reserved storage that can facilitate the replenishment of pick facings.
If using 9 feet or more wide aisles, consider dragging racks and creating 6-feet very narrow aisles (VNA) and purchasing VNA trucks to increase storage density.
As VNA trucks can cost up to $100,000, make sure you evaluate the ROI for these storage systems. In the long run, it may still be cheaper than getting outside storage.
Last words of caution
Lastly, our experts express a word of caution: The indiscriminate maximization of storage density can sometimes compromise productivity. Reducing the number of cross aisles can result in higher storage capacity, but it’s at the expense of a longer pick path, thus reducing picker throughput.
In Figure 2, deeper bulk lanes may increase storage density, but it means a longer travel distance for a driver to retrieve a pallet.
With this in mind, Shemesh emphasizes that a thorough data analysis must precede any space optimization initiative. “Depth of inventory by SKU, order profile, FIFO requirements, and many other attributes must be addressed before embarking on any such exercise.”
If push comes to shove and increasing storage capacity is indeed the number one priority, Kuchta maintains that managers must accept, for the short term at least, that some sacrifices in labor efficiency may be necessary to increase storage.
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