Everyone needs more to increase warehouse storage utilization in their sites! (Or at least I’ve never heard someone say “This site has too much space”…)
The problem is, getting external storage is hard and expensive.
So companies will always find a way to put as much volume in and through their sites as they can. It is up to you, the site manager or engineer or executive, to use whatever you can to get the most out of your building. You want to get as many pallets, cases, eaches, or whatever you’re shipping into and through your site.
Making the most of your space is a multi-dimensional exercise. It has to do with physical space, systems, processes, quality, and people. So buckle up, and use the checks below to ensure you’re making the most of your space.
Let’s start at the top…
Supply Chain Requirements
Sales forecasts can drive ordering. Ordering and sales drive site throughput design. And forecasting usually includes assumptions for how many days-on-hand of inventory are needed to prevent stockouts at a certain level of order variability.
But when those forecasts don’t match up to reality or haven’t been updated, then the inventory requirements (and downstream, ordering and storage) get out of whack. Then your facility gets filled up.
So the best practice is to have a regular process to check that inventory days-on-hand requirements and orders for inventory (and non-inventory items) up to date for what is actually needed. Excess inventory requirements or shipments will drive up utilization and space requirements.
Ultimately this is a result of an executive decision about what should be prioritized: Minimizing lost sales (the dreaded stock-outs!), per-unit purchase and storage costs, or responsiveness to other supply chain circumstances like COVID-19.
Action: sustain visibility to stock requirements through a regular Sales & Operations Planning process.
Check Item Master Data Accuracy
Have you ever investigated a warehouse storage utilization issue, to find out that the item’s system dimensions or weights were wrong?
If real-world item master weights and dimensions don’t match up to what’s in the system, the system may cause or prevent actions that keep you from getting the most of your space – and you may not even realize it.
Action: Put in place a regular process to check and update the item master data accuracy. Audit items periodically to check for packaging or version updates.
Action: Weigh and dimension new items as they come into your facility.
Action: Ask for updates to the item master data file itself, especially if you aren’t aware of an existing update process.
Cube Profiles & Corresponding Rack Profiles
Warehouse storage systems are often set up from an initial forecast. But if the forecast doesn’t match the profile of the inventory, then you could be wasting a lot of space.
As an example, assume a site design called for 60% of locations to be full-pallet locations and 40% to be partial-pallet locations. But you check and only 40% of the full pallet locations are actually being filled by full pallets, with the rest being used by half-pallet quantities. And you’re already out of partial pallet space!
Uh oh. Your site was designed for something that didn’t happen in real life.
In this case, consolidating the location types and creating a new partial pallet profile would use your space more efficiently and solve your storage issues.
Another way to approach this is to add more, smaller bins to create more locations per cube space. Custom corrugated cardboard dividers or plastic bins can let you put multiple SKUs where before only one would fit. Result: more SKUs per cube!
Action: Check that your storage facings align to your actual storage and picking cube profiles. How often do you check? If you are interested in automated tools to check your inventory against your storage profile, let us know!
SKU Consolidation
Keep your warehouse storage utilization high by avoiding having SKUs spread out all over your warehouse.
Run reports to find products in multiple locations.
Then check:
Can SKUs be consolidated from those locations?
Is your WMS set to pick locations clean?
Is your team trained to avoid honey-combed locations, and are honey-combed items being moved to less space-intensive locations? Can you run reports and action the moves in a timely way? If not, you’re probably giving up cube.
Remove Obsolete Items
Obsolete items and non-inventory can use a lot of valuable space. These items usually fly under the radar because non-inventory tends to be tracked outside the WMS, and obsolete inventory is slow-moving, therefore not a high-attention category.
Action: Check that obsolete inventory and non-inventory items being regularly reviewed and removed from inventory. Run reports to find the slow-movers. Then have a decision-making process in place to adjust those items out (coordinate with your CFO!). Finally, reap the rewards of more open locations.
Having business rules in place to make these decisions will streamline your removal of space-sucking stuff. Tip for CFOs: Sell the obsolete inventory through discount channel of your choice for extra margin!
Verify Your Empty Bins
Empty bins look great on reports but may not actually be used!
Putaway associates may avoid locations that look full. This can happen when a systematically empty bin has physical product in it. Even directed putaways can often be voided or skipped if an associate sees a problem.
Action: Conduct empty bin audits. Are empty bins audited and verified? Systematic empties with physical goods in them discourage proper putaway and present reporting errors. Employees should be trained on exception-handling when they get to a bin with incorrect physical product in it, and should not be penalized for productivity impacts if they do the right thing.
Bonus: Empty bin audits count as entries for inventory accuracy sampling… leading to:
Inventory Accuracy
Inventory accuracy is an output of Touches x Accuracy. The more touches on a bin, or the higher defect rate of those touches, the less accurate your inventory is. Inaccurate inventory means inaccurate information about what is where, which leads to sub-optimal use of space.
So, how accurate is your inventory? Discrepant records help cause errors in picking and putaway, interfering with visibility to utilization and ability to pick clean or complete puts.
Action: Check and verify your inventory accuracy. If your accuracy is low (Think: below 99% of whatever metric you use), then start taking steps to improve it.
Check Your Slotting and Pick Paths
Make it easy for your pickers! Slotting fast-moving SKUs and having efficient pick paths properly leads to more efficient picking.
We usually think about efficient picking in terms of labor cost, but more efficient picking can also mean higher inventory turns. Higher turns means less space required (thanks, Little’s Law!).
For those using directed or semi-random putaway, slotting is important for eventual pickers to be efficient. It is an exercise that should be part of the facility standard work depending on how quickly your item velocity profiles change.
Check your pick path for logical consistency. Or, just talk to your pickers – they’ll know more than anyone when the system is sending them to pick in non-sensical ways.
Let’s Talk Storage
There are other good ways to improve your warehouse storage utilization. Each industry and site may have its own special needs. Comment with any of your favorites that we missed!
Get in touch with us for a review of your storage strategy and to see how to make the most of your space.