Careers Business Ownership How to Maximize Your Warehouse Space Utilization Reduce Costs and Improve Efficiency of Your Space Share PINTEREST Email Print Echo / Getty Images Business Ownership Operations & Success Supply Chain Management Sustainable Businesses Operations & Technology Marketing Market Research Business Law & Taxes Business Insurance Business Finance Accounting Industries Becoming an Owner By Martin Murray Martin Murray Twitter Martin Murray is a former writer for The Balance Small Business, and the author of eight books on supply chain management and enterprise resource planning. Learn about our Editorial Process Updated on 02/03/19 Warehouses are expensive for companies to operate. The cost of the land, building, machinery, labor and the items stored in the warehouse can amount to a significant sum of money. Most companies would like to maximize the operation of the warehouse, either by streamlining the placement and picking of goods, reducing the time goods are stored in the warehouse, or automating as much as possible to minimize labor costs while improving accuracy. Companies can also reduce their costs and improve the efficiency of their warehouse by maximizing space utilization, ensuring that it is possible to store as many items as possible in the most optimum space. Improving Space Utilization Having a large warehouse is not always good business practice. A large warehouse means that a business can store large numbers of items there, which all have a cost associated with them. In addition, a large warehouse means the staff is not looking to utilize space efficiently and this can cause unnecessarily long travel times between locations, causing additional fuel costs, labor costs, and delays in loading or unloading trailers. Smaller warehouses can cause companies to be more creative in their thinking, which can lead to improving space utilization in the warehouse leading to short travel times, improved loading and unloading, and overall efficiency improvements. One area that is often overlooked when warehouse space is not an issue, is to ensure that the warehouse space is consistent with the items to be stored. For example, if a finished good is packaged in a container 3 feet by 3 feet, then the area where the item is stored should reflect that size. If the rack of bin location was designed to accept 4 feet by 4 feet box, then there is a lot of empty space when a 3-foot square box is placed there. By making sure that the bin location is suitable for the item, the change can free up space in the warehouse, and the company is no longer paying money to store air around an item. Another area that can maximize space utilization is to use containers in the warehouse that fits the item that is being stored. Quite often, a part is not packaged and will need to be placed in a storage container before it is stored on the racks. Many warehouses do not have various sizes of these storage containers and adopt a "one size fits all" approach. This means that a replacement valve for a pump can be placed in the same size container as a few yards of PVC piping. The pump may fill the container 85 percent, while the piping barely takes up ten percent of the container. When the containers are stored on the rack, the space maximization can appear to be good, but in reality, there is a lot of wasted space inside of the containers, which is costing the company money. Maximizing space utilization can help with keeping inventory visible and easy to find. Some warehouses with limited space can cram items on a shelf, which they believe is helping with space utilization, but in fact, can be detrimental as some items can become harder to find if larger items are placed in front. This can slow down picking and the delivery of items to the customer, and possibly customer satisfaction. When a company has performed some space utilization project they often find that they do not need as large a warehouse as they had been using. This can lead to a number of revenue-generating possibilities such as renting out warehouse space to a third party, moving other company facilities into the warehouse space reducing costs elsewhere or using the space for additional manufacturing.