Are you wondering if you need more warehouse space? If you and your team seem to be going back and forth on the subject, then it’s possible space might not be the issue.
That’s because the signs that your existing space is no longer sufficient are usually pretty evident - both in terms of what you can see with your own eyes - and what’s happening around you.
Of course, a deeper dive into your operation's analytics might reveal that it’s taking longer to unload goods into your warehouse or for employees to track down individual items. These are both signs that systems are breaking down due to a lack of space.
First, Establish You Are Using Space Wisely
Clear signs that your warehouse operations haven’t got the space required to function with maximum efficiency include the following:
Ill-Defined Zones of Operation
An efficient warehouse will boast clearly defined zones of operation. Incoming and outgoing stock will be handled in defined areas, for example, ensuring that separate teams of employees handle distinct functions. If the areas become poorly defined and start to overlap – with different functions interfering – it’s a clear sign that you’re running out of space.
Clutter
Clutter filling the aisles of a warehouse is another indicator that there is not enough space to store items. Not only will items be more challenging to find when picking and packing them, but it will also negatively impact employee safety.
Aisles full of unusable or damaged products or refuse are dangerous enough – and a sign that whatever system you have in place for clearing waste isn’t working – but items on the floor of whatever kind represent a real threat to employee safety.
Cramped Working Conditions
It’s usual for most of the space within the interior of a warehouse to be given over to the racks on which goods are stored. However, if there’s not enough space, the other working areas – unloading, packing and administration, for example – can be crammed into spaces that are too small to be used efficiently. It doesn’t take a rocket scientist to figure out the negative impact this will have on the speed and efficiency of the tasks being completed in these areas and on the morale of employees working there.
If you recognise signs like these in your warehouse, then your first instinct may be to start thinking about investing in new premises. Whether you’re considering building a new warehouse from scratch or renting an existing space, there are many reasons why shifting your base of operations should only be seen as a last resort or clearly linked to your business strategy. This could be around planned growth, for example. The first reason to consider, then, is simply cost. It stands to reason, for example, that if you’re looking to rent a space larger than your existing warehouse you’ll end up paying more for the increased footprint of the buildings. In addition, the cost of a warehouse –rental or purchase – in a location as good as or better than your existing building will be higher. Often, the only viable means of finding a cheaper unit is to search for one in a less appealing location, which has the potential for unavoidable knock-on effects on your operational efficiency and attractiveness to clients and your workforce.
The Big Move - Costs and Disruption
If you can honestly say that you are using space wisely and well and you believe your options for further optimisation are limited, then here are a couple of considerations to keep in mind. These focus on cost and business disruption.
The Numbers - Warehouse Real Estate Costs are On The Rise
According to real estate experts Colliers, writing in their Industrial Rents Map 2024, the average rent for large distribution warehouses of 100,000+ square feet hit £11 per square foot in the first quarter of 2024, representing an 8% increase year on year. At the same time, the average rent for mid-box and multi-let units in the UK reached £14.50 per square foot, an increase of 6.3% year on year. All of this assumes that you’ll be able to find a warehouse that suits your requirements and is in the right location, something which you can’t take for granted. The Figures published by CBRE in their UK Real Estate Market Outlook 2024 revealed that the vacancy rate across the UK for grade A units in the warehousing and logistics sector had been sitting at less than 2% for the past five quarters. This indicates that the most desirable warehouse units, in terms of size, facilities and location, are being quickly acquired. This demand is driven by the fact that, according to the Office for National Statistics (ONS), the number of business premises which were being used for warehousing and logistics had almost doubled over the decade leading up to 2022, while a single company, Amazon, accounted for a quarter of all the warehousing space in the UK.
Can Your Business Withstand the Upheaval?
Figures like this demonstrate why moving to bigger premises will impact the bottom line of any business, even before the disruption of doing so is considered. This disruption could include an operational break while existing stock is shifted from your current warehouse to your new one, followed by a period of less-than-optimal efficiency as employees and the systems they use become embedded in the new location. Every hour of disrupted operations will impact the bottom line, of course, not to mention the potential reputational damage that might accrue if your operations are disrupted enough to delay stock deliveries.
Staying Put
The good news for anyone struggling with a warehouse that doesn’t seem to contain enough space to function efficiently is that a range of steps can be taken - well before going for the nuclear option of investing in a new warehouse. And we’re not talking about sticking with something that’s not right.
Utilise Height
If you’re struggling with limited floor space in your warehouse, the first thing to do is look up. Warehouse spaces often include thousands of square feet above the highest shelving and below the ceiling, being wasted. In many cases, there may be a limit to how high you want to build the shelving itself, particularly since higher shelving requires more specialised equipment to reach the items stored on it, so the solution could involve installing a mezzanine floor. Our case studies feature numerous examples of mezzanine floors – including multi-tier mezzanines – installed in warehouse and logistics centres.
The advantages of a mezzanine floor include the fact that they can usually be designed and installed without the need for planning permission, as they aren’t always attached to the fabric of the building. However, you should always seek planning advice. At the same time, without increasing the footprint of the warehouse, they can add hundreds or thousands of square feet onto the available floor space, in some cases almost doubling it. Once installed, a mezzanine floor could be used to lift facilities such as employee rest areas, admin offices and a reception space for visitors off the ground floor, thus opening up more shelving and storage racks. Alternatively, the mezzanine might be home to more storage racks, with gates, lifts, conveyors, and forklifts, making it possible to move items on and off the floor quickly and efficiently.
Get Serious About Efficiency
It could well be that there is, in fact, sufficient space within your warehouse, but it just isn’t being used in the most efficient manner possible.
Before ripping everything up and starting again at a new location, you need to analyse your current layout choices to see if things could be done more strategically.
Take the time to audit the route taken by pickers when putting an order together. You want to avoid placing racks and shelves so that each picker must go back on themselves several times during the course of completing one order, covering the same ground again and again.
To eliminate these issues, you need to identify which items are most in demand and which are moving through the warehouse fastest. Tracking the inventory with accurate, real-time information is vital in understanding which items move through the warehouse at high, medium, and low speeds.
In simple terms, items in the warehouse for the longest periods can be placed the furthest away from the packing and despatch areas, while those in high demand must be stored close.
Warehouse automation will play a role in maximising efficiency as far as storage and re-ordering are concerned, avoiding the twin perils of over-ordering or running out of stock. Automation of this kind, coupled with technology like hand-held bar scanners, makes it far easier for pickers to be given orders in a way that puts them on the most efficient route between the racks and shelving. At the same time, the use of modular racking will enable you to create shelving systems that can easily be adjusted, adapted, and relocated as demand ebbs and flows.
Automation
Using automated systems to monitor the movement of goods in and out of the warehouse and automatically re-order when stock hits pre-set levels could also boost operational efficiency and help deal with space issues. These issues can sometimes be caused by too much inventory, with over-ordering a common side-effect of not having a clear grasp of exactly how much each item is in the warehouse at any given time. By ensuring that inventory hits the sweet spot of ‘enough to meet demand, but not too much for the space available’, automated monitoring will help ensure that the existing space in a warehouse is used with maximum efficiency, even before any physical changes are made.
A Recipe for Efficiency - Make The Most of Your Existing Assets
In simple terms, the recipe for efficiently using warehouse space involves analysing the current use of space and operations within the warehouse, tracking those operations and inventory on an ongoing basis, and introducing technology such as automation, software management systems, and AI. All of these, either individually or in combination, will ensure that the space available is being put to the best possible use.
You may need to expand within the space by moving upward with a mezzanine floor or introducing more modular racking and shelving systems. All of this will call for some investment, but it’s safe to assume that the money you’ll have to spend will be much less than the cost of moving to a new warehouse.
