The Skinny on Space Utilization

Finding room in the distribution center for product and necessary processes often ends up being a game of Tetris. Ineffectively placed pieces decrease your time to react, space starts getting tight, and placing new pieces becomes a challenge.

But unlike with Tetris, you can’t simply get a clean screen to start over within your DC. Distribution centers must work to relieve congestion through cost-effectively optimizing the space within the four walls of the facility. This requires a two-pronged approach: minimizing space requirements and maximizing space utilization.

Minimizing space requirements
Distribution professionals understand the value of warehouse management and other software systems, but not all of them understand that failing to keep these systems tuned can lead to wasted space in the DC. Product master information that affects storage rules in put-away logic, slotting, and other functionalities must be kept current. Storage inefficiencies can result from inaccurate product dimensions, pack quantities, or pallet sizes.

Partial pallets and partially filled storage locations, like poorly placed Tetris pieces, are of little concern until things get tight. Often viewed as non-value-added work, combining partial pallets, consolidating block (bulk) stack pallet locations as product moves out, and relocating partial pallets to smaller locations are processes that are mandatory when space is at a premium. If warehouse personnel can bypass first in/first out (FIFO) rules they can direct partial pallets to pick locations or replenish pick locations with partial pallets first.

Work with your suppliers to provide storage relief. They may schedule smaller shipments more frequently to reduce the amount of inventory on hand, or they may be able to drop-ship directly to your customers.

Dust-covered cartons are indicative of wasteful storage. While often out of DC managers’ control, excess inventory or obsolete SKUs should be properly addressed: Holding on to a discontinued SKU within your DC ineffectively uses precious space, and a decision has to be made as to disposition.

Product slotting in pick areas is another maintenance consideration. Done by expert analysis or through slotting software applications, slotting manages the location of SKUs based on dimensions and weight considerations, pick velocity, and family groups (style, store, or vendor). Storage-media optimization requires determining the best storage media (pallet, shelving, flow rack) and the amount of space required within the media based on a product’s cube velocity. Ongoing slot maintenance may enable you to regain space when faced with the proliferation of SKUs, allowing you to postpone expansion of pick areas.

While not an overnight solution, it may be advantageous to evaluate product packaging redesign as a way to decrease space requirements. This could lead to additional benefits such as decreasing packaging and freight costs.

Maximizing space utilization
Use the cube. We’ve heard this time and again, and we usually do a good job at it. Nonetheless, voids continue to appear between those Tetris blocks when things aren’t done just right. Most people use their floor space well, filling every open spot possible; however, they may not be effectually using the height of their buildings.

For pallet storage, there are a number of options-block floor stacking, drive-in/drive-through racks, double-deep racks, pallet flow racks, pushback racks, selective racks. There are also many choices for small-item or carton storage-bin shelving, wide-span shelving, carousels, drawers.

With all these options, you need to keep some basics in mind. For one thing, as space utilization increases, flexibility and access usually decrease. With pallets, the greatest flexibility comes from selective racking where any pallet can be accessed directly without moving other pallets and, if the rack beams are uniformly spaced for the largest loads, any pallet received can be stored in any location. There is a space utilization cost for this flexibility, however.

If selective racks are right for your business, as is the rule rather than the exception, store as high as practical (six high vs. four results in a 50% gain per square foot), and select configurations to store two or three pallet heights. A limited number of storage locations set up for short or partial pallets will increase storage with minimum impact on flexibility. Short pallets can always be stored in larger openings, so err on the low side when determining the quantity to set up. Safety should also be kept in mind; product that comes with short pallet heights is usually crushable or very heavy. Rack beam and rack upright capacities must be checked before double-stacking these loads or adding additional storage levels to existing rack structures.

With selective racking, also do your homework on equipment types vs. aisle widths. Narrow aisle configurations with reach trucks and very narrow aisles with man-up turret trucks vary in storage density and equipment price points.

If you’re willing to sacrifice flexibility, the other options in pallet storage may be right for your business, especially when fewer SKUs and higher volumes per SKU are involved. Block-stacking stable, firm product to four or five levels, several pallets deep and wide, provides excellent space utilization. The product must be right for the application, FIFO or lot control may come to play, and consolidation to free up floor space for other products over time is a necessary labor expense. Similar issues arise with the pushback, double-deep, and other methods that provide excellent space utilization: You must be balance space utilization with flexibility, initial cost, operating costs, product mix, and product variability to maintain a distribution-on-demand facility.

Nonstorage areas that occupy a significantly smaller portion of most facilities should not be overlooked in your quest for space. Hanging conveyors and other equipment such as void-fill systems from the ceiling frees up floor space and improves forklift traffic flow and safety. Spiral conveyors and vertical lifts are useful substitutes for incline conveyors when horizontal space is limited due to proximate aisle ways.

Mezzanines are also effective ways to free up floor space and improve traffic flow. These raised work areas can be used for office space, value-added services, quality assurance, conveyors and processing equipment, supply storage, parts rooms, or file storage. Mezzanines are very effective when used over dock and staging areas.

When space is tight, remember to simultaneously maximize space utilization and decrease space requirements. Distribution-on-demand is achieved when companies can respond to changes in demand while shipping customer-compliant orders at the least cost. This requires inventory to be readily accessible and accurate, which is not customary when available storage space is scarce. There are numerous cost-effective ways to maximize space utilization without expansion, and there are many ways to decrease space requirements through continuous process improvement. Often the biggest challenge is identifying which is most appropriate for a particular operation.

Jerry Vink is the vice president of engineering improvement with Mason, OH-based supply chain services provider Forte.

Related articles:

Six Tips for Uncramping Your Distribution Center

Running Out of Room?

Hit the Skids and Reorganize Your Pallets

Three Solutions to Help You Think Vertically

Partner Content

Hincapie Sportswear Finds Omnichannel Success in the Cloud - Netsuite
For more and more companies, a cloud-based unified data solution is the way to make this happen. Custom cycling apparel maker Hincapie Sportswear has leveraged this capability to gain greater visibility into revenue streams, turning opportunities into sales more quickly while gaining overall operating efficiency. Download this ecommerce special report from Multichannel Merchant to more.
The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.