18 Practical Warehouse Organization Tips to Improve Efficiency

Warehouse organization is critical as warehouse space is at a premium these days. The cost of under-utilizing your warehouse space adds up quickly. That’s why we compiled a list of 18 warehouse organization tips that will assist in saving floor space, improving efficiency, and decreasing costs in your warehouse.

 

CALCULATE YOUR CURRENT SPACE UTILIZATION TO KNOW EXACTLY HOW YOUR SPACE IS USED

Optimizing your warehouse layout begins with identifying how much space is available in your warehouse and the specific purposes it serves. These warehouse organization metrics are crucial in determining your next steps.

Here are four easy steps to calculate your current space utilization:

CALCULATE YOUR TOTAL WAREHOUSE SIZE

• Start with the total square footage of your facility.
• Subtract office space, restrooms, and any other space not used for storage.
• Multiply the remaining square footage by the warehouse’s clear height. It’s the distance from the finished floor of the warehouse to any overhead object.
• This calculation will give you the total warehouse size.

For example:

CALCULATE YOUR STORAGE AREA SIZE

• Multiply the length and width of the outside dimensions of your racks by the height of the highest load in that area.
• Don’t forget the height of the highest load may not be uniform throughout the warehouse. If you have one area with a 26-foot load height and another with a 20-foot load height, calculate them separately and add them together afterward.
• This calculation provides the cubic volume of your storage area size, representing your potential storage capacity or the maximum storage space available based on your current setup.

For example:

ANALYZE YOUR POTENTIAL STORAGE AREA

• Divide your storage area size by the total warehouse size and multiply by 100. What percentage do you get?
• This number represents the potential amount of your warehouse space that can be utilized for storage. Ideally, this should be between 22% and 27%. This range ensures that your workers have sufficient room to move efficiently for picking, loading, and unloading without wasting available space. If your percentage is lower than 22%, you can maximize space utilization by optimizing rack locations and aisle widths.

For example:

ANALYZE YOUR POTENTIAL STORAGE AREA

• Add up the volume of all the stored products in your warehouse. This information is likely available to you already in your warehouse management system (WMS).
• If you’re using a WMS, divide the total volume of all the products by the storage area size and multiply by 100.

For example:

• If you aren’t using a WMS, divide your storage area into logical sections, such as racking rows. Estimate the percentage utilization of each row. Then, add these percentages and divide the sum by the number of sections or rows to get the average utilization rate.

For example:

• This calculation gives you your warehouse space utilization.

Warehouse space utilization is completely dependent on your specific warehouse, your storage system, and your inventory characteristics including the number of items, their size, and how much you carry.
Once you’ve determined your warehouse space utilization, you can further analyze this calculation. For example, you may ask yourself, “Why is our utilization only 60%?” The answer might be, “We use a floor stacking method, which requires the entire row to be empty before filling it again.”

Use this number to evaluate your warehouse organization for possible improvements and changes.

 

PULL EXTRA SPACE OUT OF THIN AIR WITH STRATEGIC BEAM PLACEMENT

In racking systems, there is generally space reserved for forklift interaction. This space exists between the top of the stored product and the bottom of the next rack beam (See image below).

Typically, around six inches of space exist here to give forklifts a safe amount of working space to lift products before they pull them off the rack. However, upon analyzing your racking system, you might find that you have 8 inches or more between the load and the rack.

Here’s how to fix it:

• Get out in that warehouse and measure!
• Place a ruler or tape measure on the top of the product.
• Measure up to the racking beam above it.
• How much space do you have there?

Now, before making any changes, evaluate why this space exists. Is the same size product placed here every time? For instance, you might discover that large items are occasionally stored here, requiring an additional inch or more space for safe maneuvering in and out.

If you do not find any reason for extra forklift space on that rack, you could optimize it by lowering the beams to 6 inches, thereby creating additional space for another row. This is a great warehouse organization strategy.

 

USE CONTAINERS THAT FIT THE STORED ITEM TO FIND EXTRA SPACE

The Balance Small Business turned us onto this handy trick.

Unpackaged parts are often placed in storage containers and stored on racks or shelves. Many organized warehouses use a “one size fits all” approach to containers instead of having a variety of sizes.

“When the containers are stored on the rack, the space maximization can appear to be good, but in reality, there is a lot of wasted space inside of the containers, which is costing the company money.” – Martin Murray at The Balance Small Business.

Here’s the solution:

• Sort your unpackaged items by size.
• Keep various sizes of containers on hand and place items in the appropriate container for their size.
• Store smaller containers in one area of racking and larger containers in another.

By storing items in the proper size containers, you can uncover extra space you never knew you had and increase your storage capacity.

 

MAXIMIZE YOUR SPACE BY STORING ITEMS ACCORDING TO SIZE

You can optimize your available space by separating products by size and storing them with like-sized items. The process is similar to our previous tip and it’s easier than you may think.

• Determine how many different-sized items you have in your inventory. For example, you may primarily use a 48-inch by 40-inch pallet, but a few products are smaller or larger.
• Place those smaller or larger items in separate racks. It doesn’t have to be a completely different row; just separated from the other items.

These warehouse organization ideas helps maximize the space you have in your warehouse and minimize the chance of misplacing the smaller items since they’ll all be together.

 

FOLLOW THE PARETO PRINCIPLE TO USE YOUR SPACE EFFECTIVELY

You may have heard of the Pareto Principle before. It is a helpful tool in many business applications, including warehouse storage.

Our friend Victor Coronado said it best in his article on optimizing warehouses: “80% of the activity in a warehouse comes from 20% of the items, and these items are the fast-movers within the warehouse”.

Victor outlines a product analysis to determine the optimum location for your SKUs according to the Pareto Principle:

SORT YOUR SKU’S INTO DIFFERENT PRODUCT CATEGORIES

• Look at average inventory levels and growth projections by SKU.
• Don’t forget to include the unit of measure for each SKU in your facility (ex: pallets, cases, etc.)
• Consider other variables. Do you have date-sensitive products, items that require refrigeration, or special material handling equipment needed to move certain products?

CLASSIFY EACH PRODUCT CATEGORY ACCORDING TO ACTIVITY

• You could classify the categories by the number of shipments or picks involved over some time.
• Choose an activity measurement that makes sense for your warehouse organization.

ESTABLISH HOW QUICKLY EACH SKU IS MOVED

• For example, you can use letters to reflect the velocity of movement. Use A to reflect the fastest and C to the slowest.

ALLOCATE WAREHOUSE SPACE

• Prioritize based on the SKU’s combination of each element. For example, you may have one area for pallets and another for cases.
• Our recommendation? Store your highest turn SKUs together in the most accessible locations: nearest the shipping doors and at ground level.

 

NIX OBSOLETE INVENTORY TO INCREASE STORAGE SPACE

Your storage space is valuable and should not be used to store obsolete inventory.

Here’s how to find and remove the space invaders:

• Pull a velocity report from your warehouse management system (WMS).
• Check to see how often each SKU was picked in the last year.
• Liquidate any items that have not been picked in that time. You could sell them for a discount, donate them to charity, or see if vendors will accept a return.

The goal is – to free up that precious storage space for items that do sell.

 

PUT VERTICAL SPACE TO USE IN YOUR WAREHOUSE

You can increase your storage capacity by using the vertical space already available in your warehouse.
Making better use of your vertical space can be a huge win when optimizing your warehouse space because it is already there! You only have to design and execute a plan to use it more efficiently.

• Determine your warehouse’s clear height. It’s the distance from the finished floor of the warehouse to any overhead object.
• Check local building codes and make sure you can stay within their regulations.
• Review your inventory to establish what is movable. For example, you might consider moving your slower-selling products up higher to free up more accessible locations for quick sellers.
• Research your options. Do you need a new racking system, or can you add to what you currently use? Keep your future needs in mind while you select an option that provides the flexibility you need.

Using the vertical space available in your warehouse can be more cost-effective than acquiring an off-site warehouse. The increased storage capacity often brings improvements to productivity and operating efficiency as well.

 

MINIMIZE YOUR AISLE WIDTHS TO ADD WAREHOUSE SPACE

Decreasing the width of the aisles between your racks can boost your available warehouse storage and add some much-needed square footage.

• Use this simple equation to determine the minimum aisle width to accommodate your forklifts.
• Once you have your minimum aisle width, compare it to your current. You may find that you can save two feet in every aisle. By reducing the aisle width and adding more racks, you end up with more space for storage.

All that’s left is to make the change and take advantage of all that extra space!

 

CLEAN UP YOUR FLOOR TO GAIN VALUABLE SPACE

Whether you use a racking system or floor stacking, your floor space is valuable since it’s one of the most accessible locations in your warehouse. It should be reserved for active inventory only. Here’s how to clean up those floors.

• Remove debris. Not only is it a safety hazard, but useless debris should not be taking up the most valuable space in your warehouse. Conduct regular sweeps of the warehouse and move waste to designated trash locations.
• If you have unused equipment taking up floor space in your warehouse, evaluate its condition and determine if it can be resold. If the equipment can be used at a later date but isn’t useful at the moment, consider storing it in another location.
• The same goes for unused pallets. Evaluate their condition and determine if they are reusable. If not, recycle the pallets rather than cluttering up your warehouse.
• Eliminate obsolete inventory. We mentioned this in one of our previous tips, but it bears repeating. Get rid of any items that haven’t been picked in the last year (or an appropriate period of your choosing).

 

ADD A MEZZANINE TO MAXIMIZE INVENTORY STORAGE

Mezzanines provide the opportunity to increase usable square footage without actually expanding. Here’s how to get started:

• First, you should determine your warehouse’s clear height, which is the distance from the finished floor of the warehouse to any overhead object.
• Check local building code restrictions and ensure you can stay within their requirements for safety.
• Review inventory to relocate and consider how easily the inventory is to move. A tip to maximize inventory storage is to move other items like supplies, small parts, equipment, files, and even offices to the mezzanine.

 

REDUCE SKU QUANTITIES TO MINIMIZE OVERLOADING

Storing too many of one particular SKU can overwhelm your warehouse. It’s more common than you’d think.

Someone in purchasing gets a great deal on a six-month supply of products, resulting in your warehouse clogged with too much inventory.

This scenario can be remedied fairly easily.

• Speak to the supplier to work out a program and have products delivered in stages. It’ll reduce the impact on your facility.
• The best long-term solution is to work with the purchasing department to create policies that prevent overloading in the warehouse. For example, you could implement a policy restricting purchases larger than a three-month supply, or larger purchases must be arranged with staggered deliveries from the get-go. Find a solution that fits your facility.

 

IMPLEMENT CROSS DOCKING

With cross docking, the stock isn’t stored unnecessarily between the legs of its journey. Instead, it’s quickly sorted and returned to the distribution chain. The technique can be difficult to manage, but it certainly saves space.

Here’s how to get started:

• Research the advantages and disadvantages of cross-docking. Look online, consult supply chain experts, and gather information.
• Determine if cross docking is for your warehouse.
  • Some materials are more suited to cross-docking than others, including retail products with consistent demand, pre-picked and packaged orders from another warehouse or production plant, and perishable items.
  • Cross docking also requires a high level of warehouse organization and up-to-date technology.
• If you’ve decided to go with cross-docking, you’ll need to implement strict asset management practices.
• Ensure your employees know the new processes, safety procedures, and best practices of the new system.

 

IMPROVE FORECAST ACCURACY TO REDUCE EXCESS INVENTORY

Inaccurate forecasts can result in excess inventory that complicates warehouse inventory management. Here are just a few ways to improve your forecast accuracy:

USE THE RIGHT FORECASTING SYSTEM

Instead of using a spreadsheet to generate forecasts, consider using inventory management software systems. Determine if the size of your facility and the complexity of your forecasting constitutes a different solution.

FORECAST AT THE RIGHT LEVEL

You should periodically review the current forecast level. Is it still appropriate for your goals? For example, forecasting at the SKU level may not be enough. You might need to use greater detail by forecasting by sales region or channel.

MEASURE YOUR FORECAST ACCURACY AND TRACK THE RESULTS

Check your forecasts against actual sales. You can use this information to fine-tune your forecasts and improve your results.

 

USE 5S & LEAN MANAGEMENT PRINCIPLES

5S can improve your warehouse space, reduce waste, and increase efficiency. You’ll be able to identify issues quickly, address their causes, and prevent them from happening again.

Here are the basics of implementing 5S in your warehouse:

IDENTIFY POTENTIALLY UNNECESSARY ITEMS IN THE WAREHOUSE ORGANIZATION

Evaluate their usefulness and eliminate any items deemed unnecessary. These items include obsolete inventory or unused equipment.

PLACE ALL NECESSARY ITEMS IN THEIR OPTIMAL POSITIONS

When organizing inventory, prioritize the highest-selling products in the most accessible locations.

LOOK FOR THE ROOT CAUSE OF EVERY PROBLEM THAT ARISES

As you continue the process, you may notice inconsistency or lack of warehouse organization. Make changes and implement countermeasures as you go. For instance, you might find that inventory is individually scanned when batch scanning could be more efficient.

DEVELOP RULES OR POLICIES THAT ALLOW YOU TO DUPLICATE THE PROCESS EVERY TIME

This approach allows you to share the process with your team and onboard new associates effectively:

1. Divide tasks into simple steps.
2. Perform these steps consistently every time to identify systematic breakdowns and replicate your successes.
3. Provide items needed to complete the process efficiently every time.

Finally, make the process a habit so that associates follow standards as second nature.

 

CHOOSE THE RIGHT STORAGE SYSTEM TO INCREASE STORAGE DENSITY

If you’re looking for more storage density, selective racking may not be the ideal storage system for your warehouse.

Here’s how to pick the right storage system for your warehouse organization:

DETERMINE YOUR TOP REQUIREMENTS FOR THE STORAGE SYSTEM

• Do you need a high storage density?
• Is pick selectivity still a factor?
• Does the system need to accommodate a FIFO or LIFO inventory management system?

IDENTIFY YOUR OPTIONS

Research which storage system will work best for your warehouse design and your top requirements.

Here’s a quick overview of storage options.

Floor Stacking – Floor stacking is a method where pallets are placed directly on the warehouse floor in rows to maximize storage density. This approach works best when products or loads are stackable.

Selective Racking -Selective racking involves storing pallets one deep which can be positioned either back-to-back or along walkways. This provides high pick selectivity despite low storage density.

Double-Reach Racking – Double-Reach Racking involves racks that are two rows deep instead of just one row or back-to-back rows. You can position the racks both back-to-back and two rows deep. This setup reduces the number of aisles and maximizes storage density. However, note that a specialized forklift is necessary to operate this system effectively.

Drive-In/Drive-Through Racking – Drive-In/Drive-Through Racking involves storing pallets on rails instead of shelf beams. Forklifts drive into the structure to place and retrieve pallets.

Push-Back Racking – Push-Back Racking uses nested, mobile carts on rails where pallets are placed. When loading a new pallet, it pushes existing pallets further back. This system is ideal for limited storage space and consistent-sized, consistent-weight products.

Pallet Flow – Pallets flow down an incline on a series of rollers or wheels.

Struggling to choose the right pallet racking systems for your warehouse design? Collaborate with your local dealer to find the system that suits you best.

If you’re in Wisconsin or the Upper Peninsula of Michigan, Conger has locations in Green Bay, Neenah, Wausau, Richfield, and Madison ready to assist you in selecting the optimal warehouse organization system for saving floor space.

 

WEIGH YOUR TOP OPTIONS

There are trade-offs for each storage system. One may have a higher pick selectivity but takes up too much space for the storage density it provides. Consult experts and stakeholders. Get input from others to compare the choices and determine the best solution.

 

RUN RACKING LONG WAYS TO INCREASE STORAGE CAPACITY

It is usually best to set up racking the long way if you have a rectangular facility. Doing so maximizes storage capacity by running rows for as long as possible, rather than in shorter sections.

Here’s how to check if this tip will work for you:

• Create a warehouse layout schematic. It’s typically easiest to set up using a one square = one square foot scale. You can use Excel for this.
• Ensure you’re working with accurate measurements (sometimes that means measuring the space yourself). Every inch matters when installing your racking because you want to avoid any issues once you get started.
• Identify important sections like loading dock bays, packaging areas, and offices.
• Add in racking. Draw up one floor plan for racking placed lengthwise and another for racking placed widthwise.
• Calculate your potential storage area size for each option. Here’s how:
  • Multiply the length and width of the outside dimensions of your racking by the height of the highest load in that area.
  • Calculate areas with different highest load heights separately and add them together afterward.
  • This leaves you with a cubic volume for your storage area size. This is your potential storage space or maximum storage space.
• Now compare the potential storage of the racking long-ways to short-ways.

 

ADD STORAGE IN UNEXPECTED PLACES TO OPTIMIZE YOUR SPACE

Adding extra space in your warehouse design can be as easy as installing racking over dock doors and above cross aisles. This additional storage doesn’t interfere with shipping, receiving, or forklift operations. Plus, it adds extra space without physically adding square footage.

Here are suggestions for implementing this tip:

• Determine what capacity you need. Typically, over the dock, racks are built for lower-capacity storage like lighter loads, empty pallets, or packaging materials.
• Consider your building and your current racking. Over dock racks often require wall ties or ceiling support. Keep in mind, that cross-aisle or bridge aisle racking is typically for selective racking only.
• Check building codes. Ensure that your additional storage is up to code.
• Train your operators. Make sure your operators know the changes at loading dock doors or cross aisles. They should be trained to handle any potential hazards.

 

UTILIZE AUTOMATION FOR ENHANCED WAREHOUSE ORGANIZATION 

Automating your warehouse operations with advanced material handling equipment can drastically improve warehouse organization and efficiency. Many material handling businesses such as Conger Industries Inc. offers a wide range of automated solutions, including conveyors, sortation systems, and robotic picking technology. These tools help streamline processes, reduce manual labor, and minimize errors.

Implementing automation in your warehouse provides several key benefits:

• Increased productivity: Automated systems can handle tasks faster and more consistently than manual labor, allowing you to process more orders in less time.
• Improved accuracy: By reducing human error, automation helps ensure that the right products are picked, packed, and shipped to the correct destinations.
• Enhanced space utilization: Automated storage and retrieval systems (AS/RS) maximize vertical space, allowing you to store more inventory in a smaller footprint.
• Reduced labor costs: While the initial investment in automation may be higher, it can significantly reduce long-term labor costs and improve overall profitability.

By embracing automation, you can take your warehouse organization to the next level, improving efficiency, accuracy, and ultimately, customer satisfaction. Don’t let manual processes hold you back – explore the possibilities of automation.

 

NOW IT’S TIME TO ADD MORE SPACE

These 18 warehouse organization tips should help you save space, improve efficiency, and decrease costs in your warehouse.

Keep in mind – not all of these tips make sense for every facility and only use the ones that will work best in your warehouse. Now it’s your turn to try out one or two of these ideas and begin making your warehouse organization more efficient!