I can’t tell you how many times I have walked into a warehouse and heard the magic words, “I’m out of space.” What they are really saying is “I’m out of locations” – they just don’t see it from that aspect. Since the nature of humans (especially those who work in warehouses) is to fill all empty space … space mysteriously disappears.
There are a number of strategies you can follow to generate or reclaim space. The obvious one is to build or to find and move into more space. As a general rule of thumb, this should be the last resort. Let’s look first at some other options which require a little bit of work (doesn’t anything worth achieving? 😉 )
A Few Space Saving Methods Include:
- Eliminate old inventory – The real cost of dead inventory occupying live warehouse space is a subject for another discussion, but if your CFO starts to tell you that you already own it and doesn’t want to write it off … give us a call … he’s very mistaken! Most companies calculate the annual carrying cost of an inventory item between 18 – 25% of its value. The short answer is that it’s costing you a ton! But we will discuss this another day.
- Use equipment to optimize vertical space – I’ve hit on this subject before and figure I won’t beat that drum right now. Please visit my earlier blog to read about this. Click here.
- Optimize your existing storage systems – This is the ticket for today. Looking at your existing equipment and systems and setting up a system to optimize space and improve your productivity.
Finding the Waste
Look at your rack and shelving systems. How much space is there between the top of each box or tote and the shelf above? Often over 60%! Now look at each shelf and see how many boxes or totes have various heights. The heights will likely vary by 80%+. If you use shelf bins (plastic, cardboard, etc…) to house inventory, how much space is not being used within the bins? Many times these bins are 90% air with a couple of items laying in them. In other words the bin is taking 100% of its allocated space on the shelf, but the item is actually only using 10% of that DEDICATED space. This is totally wasted space!
To create a method to wrangle this wasted space out of a system, we will use cell sizes to optimize the space. We start with a survey to determine the current state of usage. Most inventory in a specific area can be generalized into groupings. Experience says, the more similar the inventory type, the more commonality in size. Often seven different size cells can be used to optimize a cell or area. The fewer the better, but you are trying to save space so you need to be the judge of your cube optimization.
Using Software & Cells to Save Space
Now depending on how sophisticated or simple your warehouse is will determine the implementation. If you have a WMS, WCS or inventory management software or module, often there is a built in method to store and track each SKU and it’s physical size. You can use this feature to designate a cell size. If you are not sure what I’m talking about when I say cell, think of it as a tote or box. Each cell has a length, width and depth/height.
With WMS, WCS or inventory management software, you can assign every specific SKU to a cell size based on its physical characteristics and maximum quantity kept on hand in that position.
If you have this software and haven’t turned on these features, turn them on or get someone like the software creator or integrator to work with you to turn them on. Likewise, invest in a Cubiscan. This device integrates into your software. You scan an item’s bar code, then place it on the Cubiscan’s platform, click a mouse and the system automatically registers its dimensions (length, width, height, and weight) using sensors and populates the information into the database for use with that SKU. Once you have the size, you designate the cell size. Now during replenishment periods, your system will always use that cell size and optimize your storage system.
Saving Space Using Cells Manually
If you are managing inventory via Excel and napkins from the lunchroom, this exercise is really no different – just more time consuming and manual. Either by looking at each SKU or by memory, figure out how many pieces need to be in each cell and what size cell is required, and write this down next to your inventory list.
You can designate a cell size by letter or number, but remember the fewer different cell sizes you have the easier it is to manage. The trade-off is, of course, to find the happy medium between putting everything in one cell size and creating 100 cell sizes. There is a point of diminishing value. Experience says seven is the magic number or darn close to it.
Once you have designated a cell size for every SKU, calculate how many cells you need of each size. Figure out the total linear storage required for each cell size (width). Now divide that by the width of a section of rack or shelving. You now know how many shelves are needed for that cell size. Repeat this same exercise for the height of each cell size to determine the shelf height required for each cell’s shelves.
Use the least amount of space above each box or tote that you can get away with. Only place totes of the same size on each shelf to eliminate wasted shelf spacing.
Net Result of Using Cells
This exercise will save you anywhere from 25% to 35% of your current wasted space. Using designated cell sizes does mean some upfront work to start, but it will provide tremendous space, productivity, and accuracy increase every day going forward. Keep in mind that, if your WMS/WCS or inventory system does not deal with item cube, there are standalone systems that will allow you to accomplish this work. It’s probably one of the best investments of time and resources your facility will ever make.
Once you have cells, the next step is to place similar velocity SKUs together. This exercise is called slotting. This can improve your performance levels by as much as an additional 50% … but this will be a topic for another article.
Integrated Systems Design is a leading consultant, designer, integrator, and manufacturer of guaranteed, cost-effective, and highly efficient warehouse order picking, packing, shipping, and assembly systems. If using cell sizes and slotting sounds like it might help your organization, please give us a call or email ISD today for help and more information.