The most important asset of a warehouse, or any storage facility, is its capacity.
By improving the effectiveness of their storage architecture, business owners can increase the amount of product they can maintain in their warehouses.
And by accumulating more items at once, they may save money on transportation and other expenses. It also increases employee access to inventory, which speeds up order fulfillment and decreases customer delivery times.
Warehouse managers and business owners would be prudent to analyze the quantity of available space and its efficiency. But how can you achieve that?
In this article, we’ll go over the math behind those estimates and the best ways to optimize the space and increase storage in your warehouse.
Defining Warehouse Capacity
For online retailers, warehouse capacity is the total amount of space used for stocking, inventory, order preparation, and shipping.
In order to understand it correctly, warehouse capacity should be broken down into two categories: theoretical storage capacity and working capacity.
On the one hand, theoretical storage capacity resembles the physical capacity of the warehouse – both horizontally and vertically – while on the other hand, working capacity is the available space grounded on:
- Dimensions and mass of products in storage
- How much space is required to store inventory and ship orders effectively
- The amount of inventory needed on hand to meet the customer demand
The Importance of Warehouse Capacity
The need for warehouse capacity extends far beyond simple inventory management. When you understand this, the danger of stockouts and backorders can be mitigated by keeping only as much stock on hand as is reasonable, given your warehouse’s capacity.
It’s not always preferable to have a larger facility. As your warehouse grows in size, so do your rent, storage, packing, picking, and inventory management costs. As a result of investing in more inventory upfront, an excess of unsold goods may accumulate if storage capacities are greater than the requirements.
Besides storing products, you might use the area for processing orders. In this instance, you’ll have to plan out your warehouse’s layout to maximize productivity and speed up processes without sacrificing accuracy.
So, with all that in mind, how do you properly calculate the space needed for your business?
The Math Behind It All: Calculating the Total Storage Capacity
First step is determining the maximum storage capacity of the warehouse in order to evaluate its efficiency. One common blunder is to calculate the total square footage of the building and stop there.
However, this figure does not take into consideration the unused parts of the facility. That’s why there are some more measures you’ll need to conduct before you can arrive at a reliable estimate of your warehouse’s total storage capacity.
Here are the directions:
1. Determine the whole storage area’s square footage. For this equation, let’s say we’re analyzing a facility of 120,000 square feet.
2. Total square footage used for storage should be reduced by the amount of space put to other uses. This should include spaces where items cannot be stored, such as offices, restrooms, loading docks, etc. Assuming the number 20,000 square feet holds true. That means you have 100,000 square feet of storage space in your warehouse.
3. Calculate the clear height of your building, which is the highest point an object can reach above the floor. This is the vertical distance from the floor to the building’s structural framework or the lowest point of equipment or illumination above the floor in the building. The clear height of your building is an important factor because it limits the height of your storage area.
4. To convert your warehouse’s square footage into cubic feet, multiply the total amount of usable space (100,000) by the clear height of the building. For this example, let’s use a height of 20 feet, which leads us to 2,000,000 cubic feet.
Why cubic feet, you may ask? To examine how efficiently you’re using your warehouse’s storage space, you’ll need to know how much space you’re using.
This example might help you estimate the amount of space in your warehouse, but remember that you also need to think about picking and packaging areas.
Your company’s storage needs, such as the number of units and SKUs, quantity of equipment, and the volume of space needed for the fulfillment, can all be factored into the optimal warehouse capacity calculation.
Get the Most Out of Your Available Space
Once you have a firm grasp on warehouse capacity, you’ll be in a much stronger position to maximize the available space.
Warehouse capacity may be optimized and eCommerce warehouse procedures can be enhanced with the help of digital warehousing systems.
With the use of a warehouse management system (WMS), you may keep track of your stock in real time as well as analyze past warehouse behavior. Using this knowledge, you can monitor the circulation of items around your warehouse, allowing you to spot bottlenecks and optimize your operations.
Inefficiencies in storage facilities can also be uncovered by regular warehouse inspections. You get a complete picture of how to maximize warehouse capacity according to overall performance when you consider the whole range of warehouse functions, not simply capacity, such as warehouse receiving and put-away operations.
By measuring how well your staff manages inventory storage, order fulfillment, and stock replenishment, KPIs for your warehouse may help you uncover ways to enhance and expand your operations.
Warehouse usage may be improved with minimal effort spent on rearranging and reorganizing the area, as well as employing different stacking solutions.
- Consider the Effectiveness of Your Current Storage Methods
When properly implemented, many different options for storing your items may greatly improve your efficiency.
The trick is to go with options that work well with the existing architecture and design of the space, as well as the products that will be stored there. Some of the most common methods for increasing storage capacity are:
- Drive-in and drive-through pallet racks: Drive-in pallet racks employ the LIFO approach, which means that the last product to enter the rack is the first to be chosen and, as such, are perfect for temporary storage and high-volume stocks.
Drive-thru pallet racks use a FIFO system—first in, first out—with double-sided points of entry in both the rear and front for product entrance and removal.
- Warehouse carousel modules; Horizontal carousels bring a new dimension of performance – combined with a WMS, they make item retrieval quick and easy, maximizing productivity and accuracy, as well as storing products up to the ceiling height.
- Mezzanines: A mezzanine is a great way to double or even triple the amount of space that can be used for storage in your warehouse. It basically adds another floor to your warehouse, giving you more room to store things without having to build or expand. Mezzanines are perfect for storing odd-shaped items or using as a place to put together or sort things.
- Flow racks: Another way of implementing the FIFO system, which makes them great for storing goods that go bad quickly and need to be moved around a lot. As pallets are picked up or moved, gravity will move them along the flow rack tracks till they reach the end of the rack.
- Stacker cranes: Using a stacker crane for boxes and pallets can enhance your usable vertical area by 65 feet for boxes and 131 feet for pallets. Both the pallet crane and the box crane are able to function in aisles as small as 5 feet. Not only can these machines move swiftly, but they can handle pallets and boxes of varying sizes, further increasing production.
- Organize Your Space Strategically
After determining what kinds of shelves, boxes, racks and other storage options would best serve your needs, you should arrange your belongings in the most efficient way possible.
Stack containers of the same size and group comparable goods together so they fit snugly, as if they were meant to be there all along.
Altering the width of the aisles can also increase the number of rows possible in a given space. For optimal productivity, however, it’s important to keep in mind that aisles should be wide enough for both machinery and workers.
- Raise Your Vertical Heights
The available vertical space for storage is heavily influenced by the clear height of your structure. It may seem impossible to get more vertical space, but by taking a look at the machinery, wiring, and other things that are suspended overhead, you may be able to expand your clear height.
You can create some more room by rearranging things like hanging lights, cameras, security systems, and so on. To increase the available vertical space for storage, consider mounting lighting and security systems on the roof or walls instead of the ceiling.
- Be Ready to Expand
How might it affect sales if one of your goods were promoted by a social media influencer? Or maybe a blog post gets thousands of shares on social media and millions of views on a prominent industry website?
It’s possible that your product may gain massive popularity suddenly. However, the client experience and your company’s image are both at stake if you lack the room to accommodate the flow of orders and fulfill consumer demand. Having high demand is a blessing, but only if you have the facilities, resources, and technology to meet it.
Think Twice Before You Cut
It’s not a good idea to just guess how much space you have in your warehouse. Don’t assume your storage capacity or eyeball how much space you’re consuming.
Take the time to do the math and work out the logistics of your facility now that you know how to get an exact estimate for your warehouse storage capacity and usage.
A well-informed warehouse optimization strategy, in terms of both physical structure and internal processes, is the product of careful attention to data.
And with the data gathered, you can always find ways to optimize your facility accordingly, making it work for your business, employees, and the further success of your brand, which you can gain by accommodating to an ever-changing economic climate.
Travis Dillard is a business consultant and an organizational psychologist based in Arlington, Texas. Passionate about marketing, social networks, and business in general. In his spare time, he writes a lot about new business strategies and digital marketing for DigitalStrategyOne.