• Miebach India

How to reduce the size of my warehouse?

‘This warehouse was designed to accommodate business growth for 5 years. It has been operational for 3 years, and I already see little space to walk. We have been hiring temporary godowns for the last 6 months, and it is a struggle to coordinate movements between the two locations’

This is something we hear from many perplexed logistics managers. Across India, many supply chains have gathered inventory, and are expanding into different warehouses in an ad-hoc manner. How is it that a space designed for 5 years becomes full in 3?
The answer (often) lies in the fact that when a warehouse is designed, it is designed assuming perfect systems. The forecasts will be accurate, supplies will be in-time, and warehouse operations will run with clock-work efficiency. Factors like product obsolesce and their piling inventory often escapes people’s mind, as do returns or damaged stocks.
But of course, there is merit in assuming efficiency at the time of design. An operation which is already designed with an inbuilt inefficiency will always retain an element of that inefficiency. What needs to be done is to ensure that steps are taken to bring in that efficiency.
As a logistics manager, what is it that you can do to ensure you don’t go renting an additional shed every 6 months and face the headache of managing inventory across locations for no strategic benefit? Here are a few things that can be looked at:
Inventory levels: The answer almost invariably lies here. If your warehouse is running out of space, you are probably carrying too much inventory. The first step is to compare your inventory levels with scientifically calculated inventory norms and find ways to tackle the excess. For fast moving items, let the inventory run down to the norms before ordering more. For slow moving items, this could take much longer, so consider the following:
  • Liquidating the stocks through reduced prices or offloading to a distributor
  • Storing slow movers in a separate area in a much higher density (since it will be touched rarely)
For non-moving or dead inventory, periodic liquidation or write-off is necessary.
Even if your inventory is not far above the norms, it does not mean you cannot reduce it further. Question the supply lead times you are getting from your supplier and work with him on how they can be reduced. Figure out how to reduce your ordering costs so that you you can reduce the order size. And spend effort in understanding your customer to get a better handle on demand variability. Of course these are longer term measures, but you are going to be in the business a long time.
Going vertical: When it comes to warehousing, don’t be scared of heights. A lot of non-factory warehouses in India are still following the practice of keeping material on the ground. As a result, the third dimension of the warehouse continues to lie idle, even though you have paid for it.
The first step to using the available vertical space is racking. In racking too, warehouses often restrict themselves to 2-3 high levels. But, by investing in a slightly more expensive handling equipment like a reach truck, you can go higher. Suddenly you have 60-70% more space than what stacking on the ground allowed.
How high you can go depends on the height of your building, stability of product on the top shelves, and the height that your equipment can reach. The efficiency of picking from the top is usually lower, so it makes sense to store replenishment stocks or slow moving items at the top so it does not significantly hamper the picking time.
Pallet & cubic utilization: Cubic utilization refers to the proportion of the cubic capacity of warehouse space that you have used for storing products. While all racks in the warehouse are occupied, it is still possible that they are not completely utilized. A whole rack space may have been allocated to a product which only has 1 pallet of inventory, leaving 3 quarters of the space empty. You could also be using wider aisles, or have not racked up one corner of your warehouse. A thorough investigation of what is your cubic utilization can give an idea of how much space is getting wasted.
Similar under-utilization could also be happening if you are placing products that don’t quite fit onto a pallet, and thus waste 30-40% of pallet space. To address the utilization problem needs a bit more playing around with product configurations. There are tools in the market which can help suggest a configuration best suited to your product dimensions. You might also have to go for different racking size (adjust length, height) to suit your product dimensions.
One other alternative, especially when designing new warehouses is to consider using automated warehouse systems like AS/RS and VNA, which can significantly reduce the aisle space requirements.
Product profile versus storage profile: While selective racking is a great tool for most product profiles, if you are storing the same product across many shelves, you are also adding a lot of aisle space for accessing the same product. This is a waste which can be avoided by going to a denser solution for such items. Consider using a 2-deep, or even deeper storage system. Drive-in racks are a good solution for items that have more than 8-10 pallets.
Small is Big: Most DC managers suffer from “ batch and queue “ syndrome . Big batches are considered a panacea for boosting labor productivity. Though partly true with respect to picking productivity, due to load leveling issues across various zones in DC, this big batch also results in significant wastage of ground space in order consolidation area, where picked material from one zone of DC waits interminably for its companion from another zone of DC .  Lean principles of pull, flow, level not only help in faster turnaround of customer orders but also release significant “buffer storage” spaces. Critically analyze the space you allocate to order consolidation, and weigh it against the benefits of batch picking. Are you really saving as much manpower & time as the cost of additional space and operation?
Reducing waste in other ways: In-line with the spirit of small is big, there are some small changes that can be made to save overall space requirement: 
  • Documentation Storage: In India , storing 5-7 years of hard copies of all documentation generated in Inbound / Outbound transactions at DC is a regulatory mandate. Usage of mobile racks / carousels / library shelving for  documentation storage could provide storage density as well as easy accessibility to documents
  • Utilization of space above docks:  Typically staging areas at receipt / dispatch docks are 15 -25 meter long  with mostly ground storage of received  or picked material. Attempts to maximize cubic volume utilization by constructing mezzanines meant for office / canteens / documentation storage / IT rooms  / Meeting rooms / Packing material storage / selected VAS operations, etc. while ensuring that the mezzanine pillars don’t impede the material flow at docks could significantly add to the space productivity of the DC.
Have you got any other ideas on reducing space in the warehouse? Please share them with us.

Designing warehouses with high space efficiency is a key service offering at Miebach Consulting. Miebach has successfully designed & implemented warehouses with high SKU & throughput complexity  across industries like FMCG, Retail, e-commerce, automotive, etc.

For knowing more about this service and our success stories in supply chain consulting, please write to mcindia-mkt@miebach.com

One Response

  1. Reblogged this on Ohio Warehouse Equipment and commented:
    Well written post about maximizing space and efficiency in warehouses.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: