What is warehouse space utilization?

Warehouse space utilization refers to how business owners designate the space in their warehouse to make the business more efficient. The goal is to store as many items as possible in the spaces that make the most sense.

Packing a warehouse to full capacity is often not the best practicebecausewarehouse workers, equipment and machinery must be able to maneuver through aisles to pull inventory easily and safely. On the other hand, having too much aisle and bin space in a warehouse means that a company is spending too much on space and can take steps to improve.

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Benefits of maximizing space utilization

Maximizing your warehouse utilization benefits the overall efficiency of your business by allowing you to select a warehouse that meets your needs. When a company has good warehouse space utilization, this can result in:

• Inventory that is easy to find and easily retrievable
• Efficient storage
• Appropriate warehouse rental costs

A company may be surprised by the amount of warehouse space it actually needs and may discover that it can reduce warehouse space and, in turn, costs. Another benefit of maximizing your space utilization is improved organization. Inventory that fits neatly together without wasting space also displays better on the shelf than in mismatched bins of items. This allows you to move products off the shelves by understanding which products have a high turnover.

How to maximize warehouse space utilization

Follow these six steps to maximize the use of your warehouse space:

1. Calculate your current utilization

Determine the effectiveness of your current warehouse setup by analyzing how you use the existing space. To calculate your warehouse space utilization, determine the amount of usable warehouse space, and divide it by the combined volume of all your inventory. A standard formula for warehouse utilization is:

(Total warehouse square feet – offices and restrooms) x (Usable height) / Volume of all products

When calculating this number, keep in mind that22 to 27 percent is considered the ideal warehouse utilization for having full shelves and giving pickers and stockers enough room to work. Once you understand how well you’re using your current space, create goals for how to use your space more efficiently.

2. Assign bin space based on inventory size

Many businesses waste warehouse space by designating a larger space than necessary for each item. For example, a package that is 2 feet by 3 feet stored in a bin that is 2 feet by 4 feet wastes an entire foot of space on the shelf. Adjust your bin sizes or shelf heights and depths to match the inventory size as accurately as possible.

3. Consolidate similar items

Keep items of the same type in one central location and store similarly-sized items together. Make sure each section has some product facing outward, so nothing is hidden behind a bin or shelf of another product.

4. Use more vertical space

Many warehouses underutilize their vertical space. If you have access to a forklift or other equipment that enables youto pluck inventory from high shelves, you can free up a significant amount of floor space for maneuvering by increasing your shelf height.

5. Off-site overstock

If you have to keep an amount of overstock, consider storing it offsite so that your warehouse space can function to fulfill regular orders and move more inventory through the facility.

6. Adjust aisle widths

Based on the machinery you use, adjust the aisle widths so they have appropriate space to safely maneuver. You may find that you can fit additional merchandise in a warehouse. On the other hand, if you find that you need to increase aisle widths, you may be able to increase efficiency.

7. Rent out extra warehouse space

If you consolidate your warehouse space and find that you have room to spare, consider renting out the additional capacity to another company or using the space for additional manufacturing responsibilities.