Overcoming Small Warehouse Challenges
A prevalent issue for warehouse managers is dealing with limited space as their operations expand. Given the rising costs in the logistics real estate market, simply expanding may not be a feasible option. Often, inefficiencies in management can be the root cause of space shortages.
In this article, we explore common reasons for space constraints and suggest ways to optimize the available area while effectively managing a facility that feels too small.
Signs Your Warehouse Is Running Out of Space
Here are some indicators that your warehouse is nearing its capacity limit:
- High Occupancy Rates: If over 85-90% of your total storage capacity is consistently filled, it can create operational rigidity. While maximizing storage is beneficial, such high occupancy may hinder the warehouse's ability to handle even minor stock increases.
- Location Management Issues: Problems may arise from overloaded racking systems or the use of other areas (like aisles or maintenance zones) as impromptu storage.
- Growing Back Orders: An increase in pending orders indicates that stock imbalances are preventing fulfillment, negatively impacting dispatch efficiency and extending cycle times.
Factors Contributing to Warehouse Space Shortages
Space constraints can arise from various factors, often linked to business shifts such as:
- Increases in sales
- International expansion
- Higher procurement volumes for commercial purposes
Additionally, new digital business models can necessitate more space for complex order management and returns when adopting an omnichannel strategy.
Is It More Than Just Square Footage?
Sometimes, the perception of limited space is due to mismanagement. Common issues include:
- Inefficient Space Distribution
- Excess Inventory
- Rethink the Layout and Consider Automation
- Explore Alternative Storage Systems
- Improve Inventory Management with a WMS