Where to Begin: A Simple Equation

In its most basic form, the space utilization equation is simple.

Warehouse Space Utilization (%) = (Used Space / Total Available Space) x 100

However, if you want to delve into the real science of space utilization, you will need to examine a few more variables. Here are some simple steps to help you calculate your current warehouse space utilization.

How to Calculate a More Accurate Space Utilization

First Examine Your Assumptions

• Are all pallets being used the same dimensions (length & width)?
• What business rules of mixing lots/items will affect capacity?
• Next, determine a standard pallet configuration for each item: - 1. Units Per Tier and 2. Tiers Per Pallet
• Then, identify the capacity of each location in measure of pallets high and deep

Then, identify the capacity of each location in measure of pallets high and deep

All these operations and data must be tightly integrated as part of a complete supply chain management strategy. There are many benefits of a WMS – it drives operations, helps you make critical decisions, and allows you to make those decisions based on real-time data.

Now use these additional equations to gain a better perspective beyond the basic two-dimensional percentage of space in use at any given time.

Location Pallets High X Location Pallets Deep = Total Location Capacity
Item Units Per Tier X Item Units Per Pallet = Total Cases Per Pallet
Location Number of Cases / Total Cases Per Pallet = Total Pallets in Location

Once you understand how much space you have and how it is being used, you can begin to determine if there is room for improvement, innovation, and efficiency.

Actions to Consider

Implement an effective storage system

Create a Floorplan That Optimizes the Space You Have Available/ Review & Adjust as Needed

• Often the layout of a storage scheme in a warehouse is the result of evolution over time. Initially there’s more space than can be used immediately, and gradually the space is filled. Storage systems like shelving, bins, or and racking are added to increase efficiency but seldom reviewed for maximizing effectiveness in the present circumstances.

Use Vertical Real Estate

• Many shelving and racking systems installed to create efficiencies can create limits as well, such as height restrictions and a narrowing of aisles. If your operation has not grown or changed significantly in the last two to three decades, there is little by way of adjustments that will improve your capacity or workflow. The key is to think in terms of what you need now, what you will need soon and what you aspire to grow into down the road.
• Wider aisles make it easier to maneuver, but if expanding capacity with expanding space is your goal the sacrificing aisle space and building shelving and racking systems higher may be the way to go. As they say, “air is free.”

Think About Workflow

• Restaurants have “in and out” doors to the kitchen to speed up delivery of orders and food once prepared. It also avoids the risk of busy, racing employees running into each other. Likewise, deciding, if you can, to designate certain dock doors as Incoming and others as Outgoing may speed up, you're receiving and shipping activities. If you can only accommodate mixed use docks and doors, you may consider assigning separate times of day for each activity. Deliveries could be pulled in the afternoon or evening and placed on the dock for loading and delivery in the morning, leaving the dock free for the rest of the day to receive materials and merchandise.

For purposes of making the most of the space you currently have we recommend that a WMS worth investing your time and money in should:

• Use real time tracking to increase production while decreasing errors
• Be customizable to provide the most benefit to your operation
• Be scalable to meet your needs today, tomorrow, and beyond
• Be flexible because progress is not always linear
• Be affordable so the solution does not become the problem