Complete Guide to Warehouse Management

Chapter 3: Managing Warehouse Design and Layout: Contemporary Warehouse “Flow” Tips, Tricks and Inventory Design Solutions

Insufficient space and poorly designed warehouses are two of the most commonly cited challenges for warehouse managers. Regardless of warehouse type — from an around-the-clock retail facility to cold dairy storage — revisiting your floor plans can mitigate many concerns.

Warehouse floors must be large and spacious enough to maneuver equipment and personnel easily. Yet they must also maximize square footage through ample shelving and storage. They must have designated warehouse spaces for critical functions, such as loading and shipment docks, order processing and packaging and a central office. Yet these spaces cannot take away from the warehouse’s vital storage space.

What’s more, all these components must be stationed in a lean, organized floor plan. Warehouse employees must know that floor plan like the back of their hand. Any changes in layout, additional shelving or storage re-organization must be done with care, as once this kind of infrastructure is in place, it'll take significant time, energy and resources to re-do.    

It’s a reality small and large-scale operations inevitably confront — What do you do when space runs out? Most companies simply won’t have the resources for a warehouse extension or relocation. Making the most of what you have is therefore paramount, especially amidst shifting inventory, changing warehouse functionality and the drive to be more cost-effective.    

Recommended Designated Warehouse Spaces

Managing warehouse design and layout takes foresight. It also takes a little adaptability and communication with your employees, garnering feedback on actual warehouse spatial usage and flow. These points are crucial to understand to adopt more evergreen warehouse storage.  

Floor plans for warehouses will vary depending on your industry and the type of stored products. However, the following designated areas are fundamental for a high-functioning, leanly managed warehouse.  

1. Shipment and Receiving

Intuitively, all warehouses have some space where new products or inventory are received from vendors. Shipping and receiving areas typically house large amounts of staff and low amounts of technical equipment compared to other areas on the floor — though this doesn't mean they're without technological affordances. These areas run best using efficient scheduling and labeling tools that don’t take up a significant amount of room, keeping lanes clear to allow set unloading and sorting manual operations.    

2. Consignment

Consignment areas are where newly received inventory gets assessed, labeled according to stock-keeping unit (SKU) and put into the inventory management system before being taken to its relevant stack area in storage. In most warehouses, they sit adjacent to shipping and receiving docks to allow an automatic, minimal transfer of products. For spatially strapped warehouses, consignment can be included as part of office work.

3. Order Processing

Order processing occurs in a few steps. It begins with receiving orders and SKU analysis, usually through computerized systems, then moves on to product retrieval and packaging according to the customer’s exact specifications. Order processing layout should reflect this multi-functionality, with a mix of automated, digital and manual solutions that make the most of limited processing space. Order processing should also have computer systems in place where inventory can be updated in real time to reflect activity.    

4. Handling and Packaging

This is where ordered stock is brought to be checked, packaged, sealed, labeled and weighed. For large-scale, high-turnover warehouses that process many different types of inventory, these can be broken up into individual segments that handle only specific products. However, it's more likely handling and packaging is consolidated into one location and overseen by employees in the order-processing domain.  

5. Reconsignment  

Reconsignment is an area for returned or improperly indexed items. For consumer-goods warehouses and e-commerce, these are imperative designated spaces with personnel dedicated to them. Not only does reconsignment ensure your inventory is up-to-date and accounting gets real-time adjustments, but it keeps your regular workflow uninterrupted.      

6. Storage Stacks

Storage will make up the bulk of your warehouse's design layout. Stacks will be comprised of various shelving and storage units, organized with the utmost retrievability, navigability and consignment features possible for your industry. Managing warehouse storage can be augmented through the use of strategic equipment, such as contemporary pallet inverters, pallet changers or lift tables

7. Outgoing Shipping

Finally, all warehouses include a designated outbound shipping area to send out fully processed, outgoing orders. Similar to receiving docks, these should have dedicated personnel and a dock manager set in a precise location that won't interfere with other transportation operations yet keeps the warehouse layout streamlined.

Best Practices for Using Warehouse Space

The surest ways to use warehouse space don't revolutionize or add to what you currently have. Instead, they aim to simplify it.

You want the flow of executing a work order — from receiving to retrieving to packaging and shipment — to occur as linearly as possible. Designing a warehouse should, therefore, keep linear movement streams top of mind.

The end goal is to have warehouse employees always working in clear, quick and linear patterns while moving around and working on the floor. Management and warehouse organization are all laid out to aid in swift, serial product location and transportation, with minimal turns, gaps, process interruptions or lags.

The best practices for utilizing warehouse space all enhance linear spatial designs, product movements and flow:    

1.Inventory Turns

Perform bi-annual or quarterly inventory turnover calculations, analyzing each of your stored goods. This is a crucial metric in your supply chain, one that signals how often products are sold and how long they sit on storage shelves. Without an inventory turnover calculation, you cannot understand your return on assets (ROA), which means you do not have a full picture of your warehouse profitability and business performance.  

2.Commodity Matching

Place the highest selling and most-ordered inventory at the front of your warehouse, in that sweet spot nearest all order workflow stations. Use this logic to organize the entirety of your warehouse’s floor plan, with storage of lesser-pulled items in the rear or exteriors of the warehouse.  

3.Custom Kitting

Using data from your inventory turnover calculations, inventory management system and order logs, identify patterns in products routinely ordered together. Then, organize these products to be stored near one another, if possible. This will cut down on retrieval times, plus give your spatial layout a strategic advantage over out-of-date, route indexing.  

4. Vertical Thinking

With warehouse storage, go tall and prosper. Horizontal limitations restrict you as a warehouse manager far more than vertical ones. Always place high-turnover SKUs on the bottom or mid-level shelves to be quickly grabbed, or between waist and shoulder height. Ensure as your shelves grow vertically, you have readily accessible equipment to reach top-shelf inventory positioned near every storage row. While all this might seem obvious, shelving constraints can be one of the most frustrating challenges for warehouse managers to tackle. Use vertical solutions creatively yet reasonably to maximize your facility’s square footage.      

5.Automated Pick-Up and Putaway Routes

Test and employ set inventory pick-up and putaway routes around your storage floor. Like lanes on a highway, this increases equipment and worker mobility by keeping worker floor movements as linear as possible, all while streamlining product storage and retrieval operations.