Measuring the Utilization of Your Warehouse Space

18 October 2019

For a warehouse manager who is keen on lean storage and cost-effectiveness, knowing how to measure the percentage utilization of the available storage space is the first step towards improved operations. From deciding whether you should expand vertically or horizontally to pinpointing efficiency issues in warehouse operations and maximizing storage density, this piece of information can have a significant impact on your next course of action.

But how exactly do you calculate warehouse space utilization? More importantly, how do you interpret the results correctly? Read on to find answers to these questions and more.

Measure the Total Size of Your Warehouse

The first and simplest step to determining your warehouse utilization is getting an accurate measurement of the storage space you have at your disposal. However, this is not as easy as grabbing the warehouse blueprint and calculating the total square footage. Many managers make this initial mistake, which, in turn, affects the accuracy of the end results.

Consider, for example, that the square footage presented on the blueprint does not take into account the fact that not all available space can be used for storage. The bulk of warehouse space is, indeed, intended to deposit goods, but a significant surface of it is likely dedicated to offices, restrooms, and other similar areas. If you factor these into the total size of the warehouse, you are likely to arrive at a lower utilization percentage that does not reflect real operations.

Instead, you should begin by deducting non-storage surfaces from the total square footage of the warehouse. Then, you must multiply the result by the warehouse’s clear height to obtain a far more precise cubic meter size. Remember that the clear height is not necessarily the distance from floor to steel, but rather from floor to the lowest overhead object (such as lighting, fire protection components, or other equipment).

Differentiate Between Total Warehouse Size and Storage Capacity

The next step to calculating the utilization of your warehouse space is to determine the actual storage capacity, which must be differentiated from the total warehouse size. You can measure your storage capacity by obtaining the footprint of every pallet rack, then using the latter to determine their overall vertical capacity. Once you add the numbers together for all present pallet racks, the resulting sum represents the total storage capacity of the warehouse.

This will allow you to measure storage capacity as a percentage of total warehouse size. The number might be smaller than you think, but you should consider that a normal percentage lies between 22% and 27%. This is due to the fact that aisles between racks must be large enough to ensure a good flow of operations, which will naturally reduce the number of racks you can use in a warehouse.

A result lower than 22% could indicate that an upgraded racking system and better positioning will significantly improve your space utilization. On the other hand, a number higher than 27% might be indicative of the fact that employees do not have sufficient aisle room to complete deposits and retrievals as efficiently as possible.

Measure the Size of Your Inventory and Calculate Storage Space Utilization

The final step to finding the percentage utilization of your warehouse storage space is comparing the volume of your inventory (in cubic meters or feet) to the total storage capacity calculated above. You can divide the two numbers to obtain a percentage figure, which will then help you evaluate whether you are making effective use of all your available pallet racks and shelves.

Unlike the percentage you obtained before, which measured how much of your warehouse space you are actually using for storage, the number indicating your storage space utilization should be much higher, from 60% to 90%, depending on the industry. If the results are not satisfying, you could consider the following steps:

  1. Changing the positioning and/or orientation of your pallet racks and aisles.

  2. Changing the size and/or number of available aisles to increase employee efficiency.

  3. Aiming for a better clear height in some storage areas.

  4. Upgrading your storage deposit and/or retrieval systems.

  5. Implementing a clearer labeling system.

Regardless of the solution you choose, knowing exactly how much of your warehouse storage space you are currently using is the first and most important step towards improvement. Before you know it, you’ll realize that these essential measurements can help you avoid unnecessary horizontal expansions and considerably reduce your costs.