It’s no secret that warehouses are being asked to do more with less. Ecommerce is growing faster than distribution centers can be built. The JLL commercial real estate group  reports that vacancies for logistics facilities remain below 6%, with national average rents recently rising to an all-time high of $6.30 per square foot. 

Floor space is commanding premium prices, and according to the US Department of Commerce, online order volumes are rising at a record pace. So optimizing your warehouse’s organization is an absolute must. These four tips can help you make the most of your distribution center’s capacity.  

1. Find the pinch points.

Focus your resources to resolve the most common sources of delay. According to Inbound Logistics, products will flow more smoothly through the warehouse when departments are coordinated and communicating.   

For example, if the pick face is constantly running out of stock, you might consider reassigning some of your picking staff to running restock trucks. Or if equipment breakdowns are causing backups, the MRO budget should probably take a larger share of the warehouse’s operations. Equitable allocation of your facility’s square footage and manpower can help alleviate chronic bottlenecks.  

2. Spread the burden.

It’s tempting to simply divide your inventory between a high velocity, high-traffic pick face area and a low velocity, high-density stacked storage area. But as the warehouse gets busier, an overly simple organizational scheme can create chaos and congestion.   

When too many high-velocity SKUs are concentrated in a single area, aisles will be congested with pickers and trucks, and cartons may start to back up on the conveyor serving the shipping dock. Meanwhile, the aisles of high-density storage will be a ghost town, their conveyors sitting idle. 

Reliable Plant advises striking a balance to reduce congestion. It’s not necessarily better to spread your highest velocity SKUs evenly throughout the warehouse: if you do that, pick paths will lengthen, wiping out the efficiency gains from free-flowing aisles. A better solution is to create strategic pick zones that bring common order profiles together, so items that are often ordered together will share a pick face and conveyor. 

For example, if your website’s algorithm suggests certain pairings of products—like bicycle tires and inner tubes—those SKUs should be located near one another to minimize the most common order profile’s pick path. But that pairing might be safely distanced from other high-velocity pairings, like tennis rackets and balls. A well-designed zone system can keep pick paths short and efficient without creating congestion.  

3. Embrace the trilemma.

Storage methods can be either accessible, dense, or inexpensive—but rarely can they be all three at once. A single-layer broken pallet pick face is cheap to set up and easy to access, but the arrangement wastes vertical space, sacrificing density. At the other end of the spectrum, pallets stacked two-deep to the ceiling are extremely dense, but the item will require a lift truck to access. Setups like flow racks can create moderate density while preserving easy accessibility, but they’re an added expense to install.  

Tompkins International encourages warehouses to determine the unique combination of accessibility, density, and storage costs that is appropriate for each SKU. When organizing your warehouse, it’s important to consider the mix of items and their unique needs. This will help you determine the ideal storage method for each piece of inventory.    

4. Don’t downplay MRO.

Order fulfillment generates revenue, while maintenance operations are a cost center. So warehouse organization tends to focus on maximizing space dedicated to inventory and picking activities, which can mean cutting maintenance, repair, and operating inventory to a bare minimum.   

This is fine, so long as you are realistic about what the “bare minimum” really is for MRO. Consider the tail-end risks of a major breakdown: if you replace the spare parts for your conveyor system with more available inventory, you’ll see a short-term gain in quantity on hand. But when the conveyor eventually breaks down, how many days of operation will you lose, waiting for spare parts to be expedited? 

SupplyChain 24/7 recommends shifting your MRO focus from reactive maintenance to preventive and predictive action. Instead of waiting for equipment to break, a proactive MRO operation will seek out signs of trouble and address maintenance issues before they cause delays. 

5. Stock up on flexibility.

Your organizational system needs to be able to adapt to changing consumer habits and new corporate strategies. Order profiles may shift considerably as trends change, and a good organizational plan will help your warehouse change with the times.   

Don’t just give every slot a number. According to Material Handling and Logistics News, adopting a locator system that carries aisle, section, level and position information will let you quickly slot new SKUs based on their dimensions, buffer stock requirements, and anticipated velocity. This will help ensure that your warehouse is keeping abreast of changing inventory needs. And incorporating random or floating slots can enable ad-hoc changes as certain items grow more popular. 

Every warehouse will have a different optimization program. Following these five principles can help your distribution center find an ideal balance of efficiency, density, and reliability. For all your warehouse needs, visit Grainger.com.