Efficient Utilization of Space: Warehouse Effectiveness

Warehouse Efficiency

One of the core objectives of warehousing is to maximize the efficient use of warehouse resources, one of which is space. The term efficiency essentially describes the extent to which the actual level of output compares with the maximum level that would be produced if resources were utilized to maximum capacity. This, in terms of warehouse space, can be interpreted as a measure of the actual units stored vis-a-vis the units that would be stored if the available space was used to full capacity.

Very often, companies believe that they need to relocate to bigger premises; yet they have enough space and are just not using it efficiently. Ineffective utilization of warehouse space limits a facility from realizing its full potential, as it imposes additional costs of building and/or obtaining new space, which may not be necessary at the time. Further, it drives a facility to incur unnecessary maintenance costs, frequent restructuring costs, and costs associated with the loss of valuable personnel time, all of which produce a straining effect on organizational profits.

Poor warehouse space utilization could take a variety of forms, including the storage of low partial units in full load locations; having either very wide aisles (in excess of nine feet), or very low vertical space utilization; and adopting a poor interior layout, among others (McKnight, 1999). A warehouse manager who, for instance, uses the valuable space just next to their receiving and shipping area for the storage of non-productive maintenance supplies such as mechanical sweepers, gardening equipment, and brooms not only creates safety hazards, but also risks incurring massive losses in damages brought about by multiple product handlings and lost labor productivity.

In summary, the efficient utilization of available space helps a facility save on rent and purchase expenses by not expanding unnecessarily. Furthermore, a facility that utilizes its available space efficiently is able to go longer before having to incur the financial burden of moving to more accommodating premises. This is in addition to the fact that labor productivity is enhanced as members of staff are able to go about their duties in a more effective manner (McKnight, 1999).

How to Ensure Space is Utilized Effectively

Effective utilization of warehouse space does not just come about -- it involves a series of steps aimed at redesigning the internal layout to take care of changing customer requirements and growth patterns. The first step involves measuring the space available and defining the fixed obstacles (clearance, doors, walls, and columns). The manager needs to understand the nature of the product stored in their facility, as well as the containers used in the storage of the same -- shelving is tailored on the basis of this information (Hudock, 2014). They need to define the unit handling loads, replenishment/throughput requirements, as well as storage conditions zones so as to establish the SKU flow paths, and make provisions for such auxiliary facilities as holds and inspections, dock staging, and offices (if any) (Hudock, 2014).