Do You Need More Warehouse Space? Think Packaging!

I was recently reading an article on how to optimize your warehouse without increasing space.  It got me thinking that most people see a warehouse space as a constraint, having limited options.  

The warehouse optimization options in this article I read were to broken down into 3 basic features;

1) Inventory/sales information; know what you have (take inventory), know what you need (revise re-supply / safety stock quantity), know what you don't need and get rid of it.

2) Inventory management; basically implement WMS (and connect to pick & put-away operations) and then run a slotting exercise.

3) Expand the warehouse; after implementing 1 & 2 from above (this one is not very helpful).

Most of the operations I have observed (primarily for packaging assessments) have done a pretty good job of tracking inventory, understanding stock quantities and are usually running one of the very good WMS systems available. Slotting exercises are only slightly less common.  Assuming your operation has completed the above two options listed above, does this mean that expansion is the next logical option?

I don't think so.

Making the Most of Your Existing Warehouse Space 

There are many options for the constrained warehouse environment not listed in the article I read, but almost all of them require some type of fiscal outlay and operational disruption; detailed justification is required and capital budgets need to be allocated.  

Here are some of the other options for maximizing your constrained warehouse space:

• Reset the steel for narrow aisles (typically requires different lift trucks).  This can be done in stages and can result in a lot more rack spaces.
• Use vertical landscape; many warehouses are not using all the vertical space possible.  This also means you may need new lift trucks and you may need to replace some steel, but this can also be done in stages and or combined with the reset for narrow aisles.  You may not need to buy all new uprights - some rack manufacturers can provide extensions to increase upright height.
• Implement a high density storage area for smaller products and or non full-pallet quantities; another option for these products is a high density vertical carousel.
• Change the layout of the space for better utilization (usually less common and less effective).
• Install mezzanines.
• Track guided very narrow aisles; again this will require new lift truck equipment.

However, the real game changer which is often overlooked and often can make the BIGGEST impact is to optimize packaging and palletizing for maximum density.  

Optimizing Your Packaging 

The result of a packaging optimization project is not only that the packaging is right-sized, but packaging costs generally go down overall, warehouse space allocation is reduced, better trailer utilization is achieved, resulting in lower logistics costs, and a boost to your sustainable metrics.  The ripple effects of these cost impacts are especially high if you are manufacturing in Asia and shipping to the Americas or Europe.

Packaging Optimization Case Study 

Below is a packaging optimization example from a client that was importing telecom equipment from Asia into a warehouse in the central USA for shipments all over North America. 

This particular example accounted for only a few SKUs as a part of a larger annual cost reduction initiative outlined for the business. When we started the project, we conservatively estimated a savings of $2MM in logistics and materials costs. When all was said and done, the cost savings and material reductions actually ended up totaling almost $4MM in efficiencies gained.



This Packaging Optimization project's cost savings calculations didn't include the cost savings from their 3rd party warehousing partners by way of the reduction in the number of rack spaces needed, trailer unloading times, and pallet handling charges. 

These simple packaging changes effectively reduced warehouse space by 2/3 for these SKUs. 

It cost virtually nothing to implement from a capital investment standpoint, and the best part, this caused no disruption to the business or daily warehouse operations! 

Just think of what a packaging optimization program could do for your constrained warehouse space problems, AND your all-in packaging & logistics costs. 

Have more questions? Chainalytics' Packaging Consultants can help. Simply email us at packaging@chainalytics.com.

By Eric Carlson, CPP