4 Ways to Maximize Space in Your Distribution Center
One of the biggest problems that distribution centers face today is the lack of space, which is causing many reasons.
Prior to the pandemic, the manufacturing industry used and managed most of the distribution centers scattered worldwide. When the pandemic hit and consumers’ purchasing behavior changed, the e-commerce industry took over. And because business is booming, distribution centers are running out of spaces to put in more inventory. Simply put, too much inventory, whether they’re the right or wrong product, eats up space.
In some cases, dead inventory causes warehouse occupancy problems. Not all products can be sold as fast as others. When these products sit for too long in a warehouse, they are considered dead inventory. Sometimes, returned products for repair or warranty work also become dead inventory.
The third reason that limits distribution center space is the lack of coordination. For example, a company’s purchasing department buys too much of a product, using up valuable space in a warehouse. Planning out the layout of a distribution center includes the amount of inventory that can be stored for a specific period. If there is a lack of coordination, this plan is never followed.
Warehouse Occupancy Rate
The limit on occupancy rate for warehouses and distribution centers is between 85 to 90%. And this space is not limited to the storage area only. This percentage includes all the process areas, such as the shipping and receiving areas, for example.
When a distribution center reaches this occupancy rate, congestion can occur, affecting all processes. The result collectively is a significant decrease in warehouse management efficiency. This causes a ripple effect, which can even reach a company’s customers.
Unfortunately, property developers are not keen on building more facilities, according to a report from Logistics Management. That’s why many companies are resorting to other options such as
renting out abandoned shopping malls, unused retail establishments, and any other vacant buildings.
If you’re running a distribution center, having a warehouse is still your best option. Although reusing other buildings is sustainable, they don’t have the proper facilities to support warehouse management.
If you have limited space in your distribution center now, the best solution is to increase your capacity even without expanding reach. Here are some tips on how you can maximize space in your distribution center.
- Improve the Design and Layout of Your Distribution Center
To improve the design and layout of your distribution center, you have to follow eight steps.
First, measure the space that needs to be improved.
Second, identify the obstacles that eat up space. This can include clearances, doors, walls, and columns.
Third, define the products stored in your distribution center. Then, describe the storage conditions. Include the unit handling loads, replenishment/throughput requirements, and material flow paths.
Fourth, list the auxiliary facility requirements for shipping, holding and inspection, dock staging, and other processes. Don’t forget the requirements for offices.
For the final three steps, you should generate and evaluate alternatives for improvements and recommend and implement them. Keep in mind that generated alternatives should consider impacts on labor and material handling.
- Improve Your Management Tools and Systems
If you have an existing warehouse, inventory, reverse logistics, and warranty management systems, it’s best to improve them. You can replace or simply update them to accommodate the increasing inventory in your distribution center.
The right warehouse and inventory management tools can accurately forecast occupancy rates, effectively use fulfillment strategies, and correctly assign inventory to the storage location to optimize warehouse space. An updated reverse logistics system can streamline the returns and warranty work processes to prevent dead inventory from building up in your storage location.
- Use Extra Overhead Space
Floor-level processes such as receiving and shipping always have extra overhead space. You can take advantage of this space by installing a mezzanine, which can double floor space. You just need to consider the floor loading and the base plates and columns required.
- Clean Floor Space
According to Reliable Plant, floor space should be used for inventory only. Clean the distribution center’s floor space to open up unused areas and gain extra storage location. If unused equipment, pallets, crates, and materials take up floor space, consider selling them. Evaluate their condition, and if they’re still usable, maybe you can re-purpose them. Otherwise, remove them from the warehouse and put them in another location.
Of course, you should also remove any debris that clutters floor space. They are safety hazards.
Assess Your Situation
Don’t forget to assess your situation. What’s causing it? It will help identify the root problem and address it before implementing other improvements or applying other solutions.
Finally, these tips can help solve your distribution center’s occupancy problem. There is no one-step solution, though. Instead, you can use two or more of the tips provided here.
