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Warehouse Space Optimization: 17 Tactics That Can Be Used to Improve
19 Jan

Warehouse Space Optimization: 17 Tactics That Can Be Used to Improve Space

Distribution centers or warehouses constantly face the challenges of efficiently optimizing space due to its limited availability. It is no news that running a large-scale warehouse can incur heavy cost on the business. Which is why warehouses or distribution centers must run as efficiently as possible and work on warehouse space optimization, and this requires the warehouse manager to be innovative, have a comprehensive logistical knowledge and implement new technologies.


The goal is to increase the quantity of stock that can be stored, avoid the cost of hiring external or 3rd party warehouse and to ensure it can be located and moved safely but effectively.

Best Warehouse Assessment & Improvement Tool


Planning a Warehouse or Warehouse Space Planning

The most important thing is Warehouse Space Planning. Planning increases efficiency facilitates proper coordination and maintains good control. When Warehouse Space Planning, the first thing is finding a suitable location. When choosing a location, planners should know how much square footage they will need to store their goods, and how much space will be required.

This generally includes the kind of shelving to be employed. Other facilities such as restrooms, breakrooms, sprinkler systems, fire alarms should be taken into consideration. The shape of the warehouse is also important. Depending on the type of product to be stored, there should be enough space for forklifts or other loading equipment as well as easily accessible loading docks, so that product can be loaded and unloaded without obstruction.


Furthermore, planners should know the inventory assortment and know their runners and repeaters to optimize warehouse space and picking using ABC Analysis.


Warehouse Space Optimization

The primary objectives of a warehouse are to use space discriminately, allow for the most efficient material handling, relatively provide the most economical means of storage in respect to costs of equipment, use of space, damage to the material, handling labor and operational safety as well as provide greater flexibility in order to tolerate changing storage and handling requirements. This brings us to the Pareto principle that states that 80% of the activity in a warehouse comes from 20% of the items, and these items are the fast-movers within the warehouse.


The next 15% of the activity comes from 30% of the items, which are medium-movers. Finally, 5% of warehouse activity comes from 50% of the items, which are slow-movers. Understanding this principle gives the warehouse manager insight into managing inventories and utilizing space even when problems such as booming business and obsolete inventory which causes congestion arises.


There is no one way of successfully optimizing a warehouse space, it involves a series of technique or methods. Here are 17 tactics one could use to maximize warehouse space.


  1. Mezzanine installation
  2. Reduce Aisle Width in the Racking Area
  3. Use of wooden pallet collars
  4. Use of underutilized space
  5. Analyzing depth of storage
  6. Use of vertical space
  7. Analyze departmental space
  8. Right-sizing your slot
  9. Organizing offsite or supplier storage
  10. Use of cross-docking
  11. Dealing with obsolete inventory
  12. Use of revamping racks
  13. Use Automated Storage and Retrieval Systems.
  14. Use of drop shipping
  15. Reduce SKU quantity
  16. Create extra storage space
  17. Consolidating location

Mezzanine installation

One of the best ways to maximize warehouse space efficiently without expansion is the installation of mezzanine flooring. This can be a little expensive but easy to install and is fairly permanent. This allows access to the unused height of a warehouse space thus; your warehouse storage space gets doubled. Depending upon the weight of the objects stored, mezzanine flooring can be built with materials like steel and wood or stronger materials like concrete. This is definitely one of the best and most drastic ways to attain warehouse space optimization.


Reduce Isle Width in the Racking Area

It is important to design the minimum width required to match the handling equipment used without compromising operating efficiency. Floor space is mostly always dictated by the aisles that house the stock. If the aisles aren’t properly optimized, this could be costly to your operation. Removing wasted space allows you to increase the number of aisles and the number of pallet racks, which means increased space for more stock.


Use of Wooden Pallet Collars

Wooden pallet collars are a very convenient, economical, and durable type of reusable packaging for various types of bulky, compact or friable products. Pallets have highly flexible construction and allow for optimized warehouse space optimization.


The ones supplied by Kronus are highly durable, have flexible construction, and allow warehouse space optimisation. Brilliant solution for professional logistics from reliable manufacturer and supplier!


Use of Underutilized Space

There is often space above receiving or shipping doors where pallet racks full of supplies, slow-moving materials, or staging for inbound or outbound product that hasn’t yet been processed can be placed. It’s an easy way to attain warehouse space optimization for slower-moving items that do not need to be replenished frequently.


Analyzing Depth of Storage

It is important to review the effective use of the height of locations and also the depth of storage. It is recommended that double-depth racking be considered.


Use of Vertical Space

Warehouses transcend beyond being used as solely a storage site safe for stocks. Thus, managing its space contributes towards ensuring that there is enough room to meet the ever-increasing storage space demand. Maximizing warehouse space can also be achieved by raising its roof, improving the height of your warehouse space can do well. This can give space for additional levels of pallet storage. The things to be taken into consideration before going for raising the roof is the engineering limitations and building codes so that your additional height doesn’t become illegal.


Use of Automated Storage and Retrieval Systems

Using automated storage and retrieval systems can remove the problem of space completely. Automated storage systems consist of a series of mechanisms like lifters, conveyors etc. These systems reduce space occupied by aisles, utilize the space to the maximum and minimize labor requirements.


Analyze Departmental Space

It is often observed that overhead space where large departments like packing and shipping are performed is usually unused. Identifying those functions that do not require high ceilings in areas where the clear height dictates lower stacking heights will provide more space for stocks.


Right-Sizing your Slots

Matching the size and sales of the item to the right sized pick slot can maximize the utilization of the picking slot cube. However, having various sizes of picking slots can facilitate this process. The same logic applies to locations where you store reserve or even overstocks.


Organizing Offsite or Supplier Storage

Instead it is effective to make use of offsite storage and reserve the primary warehouse for fulfilling orders already made, rather than overstocking items that haven’t been purchased which can take up space that could be used for goods due to be shipped sooner. This will enable you to streamline operation by separating your total stock into more manageable and locatable groups.


Use of Cross-Docking

Cross-docking allows a warehouse to minimize its use of storage by receiving, sorting and scanning inbound stock and then loading this stock onto outbound trucks and vehicles without storing it in between. This automatically means that stock will not be stored unnecessarily between its journeys, and can be quickly sorted and put back into the distribution chain. While this logistical technique can be quite tricky to handle, it can effectively maximize space.


Dealing with Obsolete Inventory

Stocks that have not produced any turn over in a given period of time poses as one of the greatest challenges to a warehouse. This is called a “dead inventory” and it occupies valuable storage space.


The main aim of logistics and warehouse managers to work with supply chain planning folks and use these 18 Targeted Inventory Reduction Strategies to reduce unwanted obsolete inventory as much as possible and as quickly as possible to avoid dead unutilized space and find a way for warehouse space optimization.


Use of Revamping Racks

Racking is the first thing to be considered for warehouse space optimization. But before going for a rack revamp, it is necessary to consider the factors that determine whether it will be effective enough to provide the necessary additional space.


An ideal arrangement will have 4 to 6 inches of gap between the top of the pallet and the base area of the beam for forklifts to operate easily. If your racks have more space than that, then you have found your opportunity for the additional space etc.


Use of Drop Shipping

If your warehouse is used to store and ship large items, it would be intelligent to consider utilizing some form of drop shipping to reduce in-house inventory and costs.

In some businesses, direct shipping is also known as one of the under-utilized strategies. Considering most freight and logistics companies are now using drop shipping, it is a great way to avoid any warehouse stocking and ship directly from the supplier to the customer to accomplish warehouse space optimization. This is especially beneficial for export shipments from the Far East.


Reduce SKU Quantity

It is common for warehouses to get overloaded with too many pallets of the same SKU or pallets with a lot of mixed SKUs, which slows things down to picking, packing and shipping. Big brands with SKU implementation are attaining better evaluation and performance from their inventory with SKU rationalization, in turn utilizing warehouse space optimization.


Create Extra Storage Space

The space available within a typical receiving area and a shipping area is always usually not well utilized. To create additional space, it is possible to add storage locations above the dock doors that do not interfere with receiving or shipping.


Another way to achieve short term warehouse space optimization is to use a temporary container as a storage location. I have used this few times and during peak seasons or summer holiday stock build this option serves very well!

Consolidating Location

If there are multiple locations for storing the same item, consider combining them to create better warehouse space optimization utilization. This can be done during the putaway process and as a standalone function.




The flexibility to manage long-term and short-term projection need is the characteristic of a good and efficient warehouse. It is important to note that making use of any one of these warehouse space optimization methods or a combination of these techniques can help improve its performance.


However, it is vital to consider that each storage facility has its exclusive operational requirement that must first and foremost be addressed. Every warehouse has specific operational requirements that must be addressed. Whether you are redesigning an existing warehouse or developing a new one, it is important to focus on balance to provide flexibility for future business requisite.

Recommended Reading:

The Time, Space & Cost Guide to Better Warehouse Design, Second Edition

5S – Kaizen Guide: Organizing the Workplace for Flow 

5s Kaizen Guide to Optimize Warehouse Space


About the Author- Dr Muddassir Ahmed

Dr MuddassirAhmed is the Founder & CEO of SCMDOJO. He is a global speakervlogger and supply chain industry expert with 17 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East and South East Asia in various Supply Chain leadership roles.  Dr. Muddassir has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and founded the leading supply chain platform SCMDOJO to enable supply chain professionals and teams to thrive by providing best-in-class knowledge content, tools and access to experts.

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