Optimizing Warehouse Layouts for Efficiency and Cost Savings

Why the right layout matters
For warehouse operators, getting the right layout is an essential part of driving efficiency and reducing costs. Having a layout that enables goods to move in and out swiftly is important because it creates an efficient lean-warehousing system, and it helps customers receive their goods sooner. Running a profitable storage and distribution facility relies on the efficiency which is largely affected by the layout.

Productivity
Warehouse layout directly impacts staff productivity. Within a warehouse operation, workers typically account for 60-65% of the total operating budget, so it makes sense to ensure that workers can work as productively as possible. This is even more important in today’s climate, with labor shortages and relatively high staff turnover. An efficient layout means that warehouses can do more with fewer staff and it also helps eliminate some of the frustrations that warehouse workers, especially pickers, express about having to spend time looking for goods that are hard to find, or retracing their steps on a picking route. Getting the warehouse layout right increases productivity and plays a part in ensuring worker satisfaction and retention. 

Safety
Layout also impacts safety, which is paramount to warehouse operators. Layouts that don’t allow sufficient space for the operation of materials handling equipment such as forklifts, pallet jacks and low-level order pickers (LLOPs) contribute to accidents, as do heavy goods stored on inappropriately high shelves, or hazardous goods not being correctly stored and identified.

Avoiding damage and waste
Inappropriate or non-optimized layouts contribute to the damage and loss of goods, causing the warehouse unnecessary expenses. For example, if goods with expiration dates are not shipped in time, they must be discarded. Fragile or delicate goods risk damage if they are on the highest shelves, goods can become cross-contaminated if stored too close to other items, or items are spoiled by storage conditions such as high humidity or wrong temperatures.

Expansion
As a warehouse operation grows, the operator may be able to avoid, or at least postpone, buying or building a new facility, by judicious re-organization of the layout. Even a relatively small amount of space on a shelf, when multiplied by all the shelves in the warehouse, adds up to a lot more potential storage space.

Delivery speed
For today’s demanding consumers, speed of fulfilment is a significant factor influencing their choice of retailer. Retailers in place transfer this demand on their warehouse operation, requiring rapid picking, packing, and shipment of orders. An optimized warehouse layout ensures that pickers can fulfil orders rapidly and efficiently, getting the goods out to consumers, and keeping both shoppers and retailers happy. 

Considerations for Warehouse Layout Planning
So, what are the key considerations for warehouse operators when planning their layout?

• Product placement – an effective layout takes into account a range of factors when deciding which products should be stored where. Operators need to think about the size, shape, weight, storage method (e.g., chilled, low humidity, outdoor) frequency of access, expiration date, and whether the item must be isolated from certain other goods. It also determines how workers and equipment move through the space. Space usage impacts the storage, movement and retrieval (picking) of goods.
• Warehouse layout – there are several ways popular methods for the layout of a warehouse, to maximize productivity at every stage of the process –receipt of goods in, put away, inventory management, picking, packing and shipping. Popular layouts are the U shape, I shape and L shape.
• Storage types – depending on the type of goods in the warehouse, the operator should select between shelving and racking, bins, carousels, and automated storage and retrieval systems (AS/RS). 
• Labeling – labels are essential for efficient warehousing, enabling goods to be put away in the right place and to be picked rapidly. All warehouses need to have a clear and precise labeling system. A labeling system encompasses labels on aisles, shelves, racks, bins, totes and pallets, as well as on individual items, cartons, and pallets. Labeling in the warehouse include wall and floor signs, especially when robots or AGVs are used, as these labels help navigate around the warehouse. Labels can also indicate safety hazards, helping to keep workers from harm, and can reinforce special handling instructions, such as ‘This item ships with xyz item’ or ‘Needs supervisor approval’. While goods will come into the warehouse with manufacturers’ labels on them, the warehouse may want or need to add its own goods labeling, providing the information that they need for tracking and visibility. Labels must be readily readable, by both human and by machine, and color coding can help pickers to find items faster. For items stored on high shelves or racks, the labels must be scannable at a distance, and all barcodes must be of a high quality to ensure a first time read, otherwise worker productivity is compromised. 

Layout is one of the most important considerations in effective and efficient warehouse operations to increase operating productivity, keeping workers safe, and meeting the ever-increasing demands of the consumer.