Warehouse layout optimization: 8 recommendations

Warehouse layout optimization refers to the redesign of the distribution of a logistics facility with the aim of maximizing space and streamlining the operations taking place in it. Recent market changes, such as the boom in omnichannel retail, have forced companies to reorganize their warehouse space to prepare a larger number of orders.

The warehouse layout design is represented in the form of a plan featuring the various areas in the facility and the location of the storage systems. This has two well-defined objectives: to make the most of the available space and to improve operational throughput. So, when should you optimize your warehouse layout? Although there’s more than one answer to this question, the most common are: when the company needs to increase its storage capacity, when it has to introduce a new operation, or when the warehouse becomes too small. This is when the organization should focus on redesigning its facility, redistributing the storage systems to get more out of the available space or assess the possibility of automating processes.

Warehouse layout optimization: 8 tips

Optimizing the layout of a logistics facility is a complex task. The company has to consider factors such as available space, the number of items stored and their seasonality, future prospects, and handling equipment used. Likewise, when devising the layout, the business has to prioritize the operational flow of the facility to speed up goods movements. 

Bearing in mind these constraints, there are three possible designs:

• U flow. This distribution is excellent for warehouses of any size. With this design, the loading and unloading zones are located on the same side of the facility but separate from each other.  
• I flow. Goods receipt and dispatch are carried out on opposite ends of the warehouse, with the storage area in the middle.
• L flow. The goods receiving zone is set up on one side of the building, with the dispatch area on the perpendicular side. The rest of the space in the facility is allocated to product storage and order picking.

Taking these three designs as a baseline, warehouse layout optimization can now begin. Below are eight tips to take into account when revamping your logistics facility:

1. Analyze current warehouse throughput

The first step to warehouse layout optimization consists of identifying and analyzing problems in the logistics facility. Knowing what warehouse inefficiencies need to be addressed is essential for evaluating opportunities for improvement and making sound decisions. Thus, for example, you can detect a lack of flexibility when coping with potential structural changes in the business, such as a sudden increase in orders.

To analyze the performance of the facility, it’s advisable to be armed with a warehouse management system (WMS) that can evaluate the main supply chain KPIs. Easy WMS, the WMS from Interlake Mecalux, features the Supply Chain Analytics Software module, specifically designed to structure the huge amount of data generated in a logistics facility. It then converts them into useful information, thereby improving decision-making.

2. Study product needs

Once you’ve analyzed the status of the facility, the next step is to analyze the type of product stored and the business’s requirements. This process carries a lot of weight when it comes to warehouse layout optimization because some companies need an area devoted to an operation for a specific good. An example of this is value-added service (VAS) stations, configured to transform products and fulfill specific customer requests, (e.g., screen-printing a T-shirt with a personalized message).

The type of merchandise stored can also affect the layout when, because of its characteristics, it is stored under certain conditions, whether for reasons of safety, temperature, etc. This is the case of flammable, pharmaceutical, and food products, among others. 

Lastly, the turnover rate of each good also has a direct effect on the warehouse design. High-demand products will be placed in the more accessible areas of the building and as close as possible to the loading docks. 

3. Choose suitable storage systems

Selecting the right storage system is crucial for leveraging space in your warehouse while maximizing the productivity of the logistics operations. At this point, the company should ask itself whether it should automate its warehouse processes or continue to manage them manually

Many factors play a role when deciding between an automatic or manual storage system. Despite the fact that there’s no exact rule for determining the ideal solution, it’s a good idea to automate if you want to boost productivity, make the most of the storage space, and improve the safety of the operators, the merchandise, and the storage systems.

To make the right decision, it’s best to rely on the advice of an expert such as Interlake Mecalux. This will help your company to decide on the storage system that meets the needs and constraints of its facility.

4. Mark off warehouse areas

The next step for warehouse layout optimization comprises planning the distribution of the space. To maximize the throughput of any operation, the space must be well organized, and the different areas need to be allocated for specific jobs.

Warehouses normally consist of five areas, each dedicated to a particular operation: goods receipt, storage, order processing, packaging, and returns control. All these areas should have their own space to ensure the optimal flow of movements (for example, the storage and picking areas should be near each other so that there’s never a lack of goods for picking). Other areas also need to be considered in the warehouse design, such as offices, changing rooms, and production lines.

5. Implement yard management

Yard management consists of monitoring and analyzing activity at the loading docks. This is where the logistics staging area is located. One of the busiest zones in a logistics facility, it’s used to temporarily store goods awaiting shipment. Therefore, both the layout and the operations that take place in the dispatch area and loading docks must be carefully studied. 

Proper management of the docks via a WMS improves transportation vehicle flows. And this is done with a single goal in mind: to avoid bottlenecks in warehouse inflows and outflows. To manage the docks well, businesses normally turn to technology.

6. Deploy a WMS

Digitizing your facility with the help of a warehouse management system is ideal for optimizing the layout. The WMS distributes the goods in the warehouse based on rules and algorithms. This minimizes goods movements, whether carried out by automatic or manual handling equipment. 

The WMS also performs extremely accurate inventory management to guarantee the availability of the goods while working with minimum operating stock levels. So, how do minimum stock levels affect the layout? By preventing overstock in the warehouse, which takes up valuable space that could be devoted to other products.

7. Set aside space for future growth

When redesigning a logistics facility, it’s important to take into account the company’s future prospects. There’s no point in rearranging the warehouse if, when SKUs or demands increase, you have to do it all over again.

The logistics facility should meet the organization’s present and future needs. That is, the company should anticipate whether it might be necessary to enable an additional storage area, to set up a space for preparing more orders, or to expand the floor space dedicated to the loading docks.

8. Digitally simulate warehouse operation

Another warehouse layout optimization resource businesses often resort to is digital simulation. This strategy is employed to design and validate storage solutions before implementing them in a logistics facility. 

With digital twin technology, you can create a virtual replica of the warehouse to simulate its performance in a real environment: the movements of the operators, the handling equipment, and the goods. Simulation is effective, for example, for introducing new processes in the facility or improving operations such as order picking.

Redesigning the warehouse: present-focused and future-ready

Warehouse layout optimization plays a major role in the development and growth of any company. An optimal design ensures faster goods movements. And this achieves targets set, such as distributing the largest possible number of orders in the shortest time.

Warehouses are facilities that are constantly evolving, since they need to adapt quickly to market changes. To optimize your warehouse, it’s advisable to seek the advice of an expert team. At Interlake Mecalux, we have vast experience in starting-up and renovating all kinds of logistics facilities. Get in touch so we can help you to make the most of your warehouse layout.