Proven Space-Saving Strategies
At our popular workshops on warehouse layout, we ask: “How many of you have more space than you need?” Among thousands of attendees over many years, almost none have raised their hands. Most of us operate most of the time with some degree of space shortage. We find many ways to cope — some better than others. From our experience, here are some proven strategies.
by Lee Hales, president, Richard Muther & Associates
If the shortage is sudden or transient, temporary measures may be needed, such as (more) trailers, storing in little used aisles, storing outdoors, or down the street. But those who have “been there, done that” and are still short of space need more permanent solutions.
Always begin with an SOS Program to get rid of surplus, obsolete, and slow-moving material. But you need friends in procurement and accounting when returning or writing off stocks.
Reduce active stock
The best way to solve a space shortage is to store less material. But how? Answer: Through your friends in supply chain and manufacturing management. Try receiving (or making) smaller lots more often, smoothing the flow. Consider letting suppliers manage their stocks provided they can reduce them. Delivering raw material just in time saves space. So, too, does delivering packing materials on a daily basis. In distribution, crossdocking without storage, or even drop shipping and bypassing the premises completely can save valuable space. And don’t overlook the impact of discontinuing your least profitable or unprofitable items. But you need friends in marketing and sales for this one.
Here’s a fix: Just contract with a public warehouse or logistics service provider. This may be the right answer if the alternative is costly investment in space-saving equipment, especially if storage is not critical to the business strategy and competitive position.
Reduce staging requirements
If you’re in to stay, and inventory is already low, then look first at reducing your staging space. Say what? In this age of milk runs, crossdocking and put-to-order, don’t we need more staging space? Perhaps. But staging is especially costly because it rarely uses the clear height above it.
Try loading directly into vans. If possible, combine checking, assembly and loading. Receive and ship on different shifts. Smooth or tighten dock schedules for delivery and shipping. On the inbound side, certified and pre-inspected material can be put away directly from vans, without staging. If stage you must, consider racks or carousels, or use mezzanines to make use of vertical space.
Change packaging and containers
One company was out of finished goods space. A particularly large category of stock had a carton size three times that of other, similar products. This most-popular product was packaged with the handle. Others were sold some assembly required. The difference in packaging was so significant that a second warehouse was needed. Marketing conceded that it had always been done that way. Research was undertaken to see if sales depended upon pre-assembly of the handle. They did not, and the space shortage vanished, along with unnecessary packaging and transportation costs.
Of course, some changes cut the other way, such as increased carton strength or corner stiffeners to stack higher, or changes in package, bin or pallet dimensions and types. If the space shortage is costly, these may still be worthwhile. With friends in engineering and marketing, you may find a solution that pleases everyone.
Change storage methods
If you can work around your computer, don’t overlook random storage versus fixed, or putting multiple items in the same physical opening. You may save space by using shelves instead of racks, or racks instead of shelves, or by decking and hand-loading your racks. Another low-tech, no-tech tactic is to vary the height of rack and shelf openings.
Buying more or different storage equipment may be the easiest answer, since we can make changes without involving others. All we need is money for narrower aisle trucks, taller or deeper racks, mezzanines, carousels and the like. But there is a dark side to high-density storage. As a general rule, it slows down your operations.
What are space shortages costing you?
The best space-saving strategies may require others to take actions on your behalf. The obvious question is whether the cost of these actions is greater than that of the space shortage. As warehouse planners, we must know what our shortage is costing in productivity, customer service, safety, or other indicators that matter to the rest of the company.
One investment in high-density storage cost roughly $300 per pallet position. Fair enough. But when compared to a less-dense alternative of floor stacking, the cost was more than $2,000 per additional position gained. The cost per square foot gained was $130. A building addition would have been cheaper. When evaluating space-saving measures, be sure to do the right math. The question is: How much must we spend per additional position or square foot gained? The answer may surprise you, especially when you compare to operational improvements that store less material.
About the author
Lee Hales is president of Richard Muther & Associates, consultants in industrial engineering and management since 1956. Hales is internationally known as a planner of manufacturing and distribution facilities. He has assisted such firms as Crown Equipment, PACCAR, Delta Air Lines, The Container Store, Sony, Nokia, General Motors, Fresh Express and many others.
A graduate of M.I.T., Hales is a past member of the College-Industry Council on Material Handling Education, past director of IIE’s Facilities Planning and Design Division, and serves on the adjunct faculty of the Georgia Tech Logistics Institute. Reach him at (770) 859-0161, or at hpcinc.com/rma.html.