Are you tired of struggling with warehouse setups that feel like an endless game of Tetris? Does your warehouse feel smaller and smaller every day? You aren’t the only one with warehouse layout optimization problems.

Alleviating these storage headaches is as easy as integrating the right warehouse management system, implementing some best practices and flexing some creativity.

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Article Roadmap

• Tips To Implement
  • Conduct a Space Assessment
  • Utilize Vertical Space
  • Pick the Right Equipment
  • Reduce Labor Consuming Applications
  • Leverage WES System
  • Optimize Storage Space
  • Automate Your Warehouse
• Primary Benefits
• Key Challenges
• Next Steps

Optimization Tips

Many existing floor plans fail to account for vertical space utilization and high-density storage requirements in warehouses and distribution centers.

While there’s no universal formula to optimize your warehouse layout, you can consider following these practices to help you streamline your operations effectively.

1. Conduct a Space Assessment

The major purpose of assessing warehouse space is to ensure enough room for inventory. This process is one of the most critical steps in warehouse layout optimization.

Space assessment provides valuable insights into your warehouse’s capacity, storage capabilities and operational efficiency and helps identify improvement opportunities.

Before placing inventory inside the warehouse, assessing the HVAC (Heating, Ventilation and Air Conditioning) system within the premises is crucial. HVAC systems maintain optimal environmental conditions like temperature, humidity and air quality.

These factors are particularly significant when dealing with temperature-sensitive products, such as perishable goods or pharmaceuticals, which require specific storage conditions.

For example, maintaining proper temperature control in the food and beverage industry supports product quality and safety. Warehouses storing frozen goods need robust HVAC systems to ensure the temperature remains consistently low, preventing spoilage and maintaining product integrity.

2. Use Vertical Space

Warehouses often face space constraints when dealing with growing inventory needs and expanding SKU counts. Implementing vertical space creates additional storage levels like mezzanines and multi-tier racking systems.

You can increase storage capacity without expanding the warehouse’s physical footprint. This capacity is ideal for warehouses with limited land availability or in expensive areas.

Here’s some additional tech you can implement to support this idea:

• Pocket Sorters: Install pocket sorters in tall structures and use vertical lift modules to store and retrieve items.
• Overhead Trolleys: They’re usually installed in the warehouse ceiling to allow smooth goods movement without touching the floor. They transport items to different locations to optimize storage density and enable efficient order fulfillment.
• Garment-On-Hanger (GOH) Systems: Most commonly used in the apparel industry, GOH systems utilize hanging racks or rails to store garments for efficient and space-saving storage
  .

  They include mechanized conveyors or automated storage and retrieval systems (ASRS) to transport and store the hanging garments.

These storage solutions help minimize warehouse area footprint, improve accessibility and ultimately contribute to a more streamlined and productive working environment.

Among other benefits, they also reduce costs by avoiding expenses associated with acquiring additional space or constructing new facilities.

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3. Pick the Right Equipment

No matter how you operate your warehouse, you must pick the right tool for your operations. Selecting appropriate equipment ensures smooth and safe goods movement, maximizes throughput and minimizes operational costs.

Equipment like forklifts and pallet jacks directly impacts material handling efficiency, worker safety and overall operational performance. Let’s see how these equipment types can help streamline your warehouse operations.

• Forklifts: Forklifts are pretty standard in warehouses. They can lift, stack and move heavy palletized goods. Selecting the right forklift type is vital to match specific warehouse requirements.

  For example, narrow-aisle forklifts are suitable for warehouses with limited space, allowing operators to maneuver in tight areas efficiently. In contrast, counterbalance forklifts are common in wide-aisle setups where stability and load capacity are important.

  Choosing the appropriate forklift based on factors like load capacity, aisle width and height requirements optimizes material handling, reduces accidents and enhances overall warehouse productivity.

• Pallet Jacks: Also known as pallet trucks, pallet jacks assist in moving pallets over short distances. They’re beneficial for tasks like unloading trucks, transporting pallets to storage areas and facilitating order picking.

  They can help match the load capacity, maneuverability and special warehouse requirements.

  Electric pallet jacks provide powered movement and are suitable for heavy loads or long-distance transportation, while manual pallet jacks are cost-effective and made for lighter loads.

• Material Handling Equipment (MHE): Conveyors, palletizers and automated guided vehicles (AGVs) automate repetitive tasks and reduce manual labor and other associated time-consuming processes.

  They’re designed with safety features that minimize injuries and accidents.

  For example, forklifts provide safety features like horns, lights and seat belts to ensure safe operation. Additionally, automated equipment reduces manual lifting to avoid strain-related injuries.

As the demand for efficient logistics and warehousing operations grows globally, the MHE market will significantly rise.

According to Markets and Markets, the global material handling equipment market holds a value of $30.6 billion in 2023 and is expected to grow to $45.7 billion by 2028. Ecommerce activities like warehouse automation and efficient supply chain management are major growth factors.

With the expanding MHE market, you’ll need to choose the right equipment to keep pace with industry trends and the evolving supply chain market.

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4. Reduce Labor Consuming Applications

With extreme labor shortages, warehouses are grappling with significant challenges to meet demand. As a result, labor-intensive activities like picking, packing and decanting lead to substantial time wastage.

• Picking and Packing: Implementing automation in picking and packing impacts space utilization directly. It eliminates manual sorting, organizing and item handling.

  Automated systems like robotic pickers can navigate through aisles and storage locations to retrieve items precisely. These systems can gather items from different areas within the warehouse and consolidate them for specific orders.

  This consolidation process minimizes the need for multiple trips and reduces the space required to store individual items before packing.

• Decanting: Decanting can be arduous due to its manual and time-consuming nature. Automation in decanting saves labor time and reduces delays.

As a result, it helps eliminate any delays caused by labor-related constraints and frees up human resources to focus on other value-added activities.

5. Leverage a WES System

Warehouse execution systems (WES) facilitate labor balancing, improve equipment performance and support warehouse layout optimization. Advanced algorithms and real-time data help optimize labor allocation within the warehouse.

By balancing the workload, a WES system utilizes labor resources efficiently to reduce bottlenecks and minimize idle time.

Seamless integration with conveyor systems, sorters and AGVs allows you to monitor equipment performance, track real-time data and optimize equipment utilization.

Intelligent routing, load balancing and predictive maintenance capabilities ensure the equipment operates at maximum efficiency to reduce downtime and enhance throughput.

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6. Optimize Storage Space

It’s surprising how much space you can save by optimizing your storage area. Implementing AMRs and ASRS in your warehouse operations can reduce labor costs and save storage space.

AMRs navigate the warehouse floor autonomously to transport goods from one location to another. ASRS systems utilize vertical space by storing items in high-density configurations accessed by automated mechanisms.

AMRs can pick, transport and place items to reduce manual labor. On the other hand, ASRS automates storage and goods retrieval to eliminate the usage of manual forklift operations.

By incorporating AMRs and ASRS, you can strategically plan layouts, minimize travel distances and improve overall workflow.

Efficiency, cost reduction and the adoption of Industry 4.0 practices contribute largely to the rapid growth of the AMR market. According to Acumen Research and Consulting, the global autonomous mobile robot market is predicted to reach $23.8 billion by 2032.

The growing AMR market size underscores the increasing importance of warehouse automation and layout optimization.

7. Automate Your Warehouse

A warehouse without automation is like a ship without a sail. Without agility and flexibility, keeping up with changing business requirements is difficult.
Without it, your warehouse might have to rely on manual processes for material handling, order fulfillment and inventory management. This strategy can lead to slower processing times, increased errors and inefficiencies, and more.

Automation streamlines various processes by working continuously without breaks, allowing warehouses to maintain high productivity 24/7.
Automated equipment can achieve faster outcomes compared to manual labor. This productivity level allows warehouses to meet higher order volumes, reduce order lead times and improve customer satisfaction.

By integrating with WMS, automated systems provide comprehensive inventory level, order status and equipment performance visibility. Such approaches help warehouse managers make informed decisions and quickly respond to changing market demands.

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Primary Benefits

Optimizing your warehouse layout offers several advantages. Let’s get into a detailed explanation.

Improves Productivity

Streamline material flow by moving goods smoothly from receiving to storage and then to order picking and shipping. For instance, using conveyor belts or AGVs for material transport can eliminate manual handoffs and reduce waiting times, improving productivity.

By utilizing vertical space efficiently, warehouses can accommodate more inventory within the same footprint. Maintain clear and efficient pathways for workers and equipment to move freely, avoiding unnecessary delays and collisions.

Maximizes Storage Space

Vertical storage solutions like ASRS help use vertical space efficiently. They can store goods in compact configurations, accessed by robotic arms or elevators.

An optimized layout can allocate specific zones for inventory categories based on demand and turnover rates. You can store high-velocity products or frequently picked items closer to the shipping area or in front of the warehouse.

You can also implement cross-docking areas within an optimized layout for immediate goods from receiving to shipping without intermediate storage.

Increases Customer Satisfaction

No matter the type of business you run, customer success is achievable by responding more efficiently to demands and delivering a better experience.

Employing efficient storage slotting and real-time data helps you maintain precise inventory counts. With customers receiving accurate order information, there will be fewer backorders or incorrect shipments.

Boosts Replenishment

Allocate storage space based on demand patterns and turnover rates. Placing high-velocity products in easily accessible locations reduces replenishment times. As stock levels for these items deplete, the replenishment team can quickly access them and restock the shelves.

Integrating with inventory management systems gives you real-time visibility into stock levels. This process allows you to proactively monitor inventory depletion and restock items, avoiding stockouts and ensuring continuous product availability.

For example, an automotive parts warehouse with RFID tracking can monitor inventory levels in real time. As certain parts reach low stock levels, managers receive alerts to initiate replenishment actions and maintain sufficient stock.

Key Challenges

Warehouse layout optimization often faces several key challenges that hinder efficiency, productivity and overall performance. Let’s explore some in depth.

Messy Warehouse Operations

One of the primary challenges is dealing with messy operations. A disorganized warehouse with cluttered aisles, poorly labeled shelves, and misplaced inventory makes it difficult for workers to locate and retrieve items efficiently.

This cluttered mess can lead to increased picking times, more errors and reduced order fulfillment accuracy. In such a scenario, an ideal suggestion would be implementing effective organization systems like ABC classification.

It can help prioritize high-demand items and keep the warehouse well-maintained and easily navigable.

Unsatisfactory Order Processing

Slow order fulfillment, delayed shipments and incorrect deliveries can lead to dissatisfied customers and damage the warehouse’s reputation.

Inefficient order processing can result from ineffective picking processes, poor coordination between departments or lack of real-time inventory visibility.

Warehouse optimization efforts should focus on streamlining order processing workflows, utilizing automation technologies and implementing efficient order picking strategies (batch or zone picking).

Excessive Labor Costs

Relying too much on manual labor can increase operational expenses. For instance, hiring additional workers to handle routine and repetitive tasks.

Automation technologies like conveyor systems, robotics and AGVs can help reduce the need for extensive manual labor, leading to cost savings. Investing in training programs to upskill workers can also increase efficiency and reduce labor costs in the long run.

Poor Inventory Management

Without a robust inventory tracking system, warehouses may face difficulties in maintaining optimal stock levels and fulfilling customer demands promptly.

Warehouse optimization efforts should focus on implementing an efficient inventory management system. They must include barcode scanning, RFID technology or a WMS for real-time inventory visibility and accurate stock tracking.

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Next Steps

With the warehousing industry facing increasing complexities, optimizing warehouse layouts is essential to meet customer expectations and gain a competitive edge.
With various WMS and automation solutions available, systematically comparing features, functionalities and compatibility with specific business needs is crucial.

Our free comparison report lets you select the most suitable technology and implement solutions that align with your optimization goals.

How has warehouse layout optimization benefited your business? Tell us in the comments.