Key Strategies to Improve Warehouse Space Efficiency

Written by Jonathan Goh Seng Kim, DLSM

by Jonathan Goh Seng Kim, DLSM

Warehouses are costly for companies to operate. The cost of the building, labour and inventory of a warehouse can be a significant amount. Hence, most companies would like to improve on their warehouse space efficiency, be it by streamlining the placement and picking of goods, reducing the time of goods being stored in the warehouse, or automating as much as possible to reduce labour costs while improving the accuracy of the warehousing activities. This can improve the maximize the space utilization and efficiency of the warehouse at the same time, ensuring that it is possible to store as many items as possible in the most optimum space.

This picture shows a warehouse that fully utilize their space

Lean Inventory

“Lean” refers to a systematic approach to enhancing value in a company’s inventory by identifying and eliminating waste of materials, effort and time through continuous improvement in pursuit of perfection.

Building and maintaining a lean inventory management revolves around six main attributes: These are:

1. Demand Management:

Providing inventory when requested by the customer. For effective demand management, companies need to plan their sales and operations, check the inventory management practices, demand signal and demand collaboration.

2. Costs and Waste Reduction:

While lean inventory management may appear to focus on reducing waste and cost, this should only be the case to the extent that it does not have a negative impact on customer value.

3. Process Standardization:

This enables continuous inventory flow in the company. Some inhibitors like transportation, batch processes and work in queue can slow down inventory delivery.

4. Industry Standardization:

Process and product standardization among tradition partners can still lead to waste, especially when common components are not optimally standardized. While standardization may enhance service delivery and benefit customer using the products, it also decreases the proprietary nature of a product, making other competitive factors more important.

5. Cultural Change:

Supply Chain Ads

Inventory partners, from suppliers to customers, must work as a team to provide value to the end user.

6. Cross-Enterprise Collaboration:

Cross enterprise collaboration through use of teams can help in defining value and understanding the value stream to maximize the added value delivered to the customers.

Adopt Enabling Technology

Today’s digital world is connected by constant communication transmitted primarily through mobile devices. Ideally, warehouse operations can maximize efficiency and profitability utilizing the appropriate tools.For example, mobile devices allow for hands-free mobility, faster data entry, and more advanced tracking. Improving warehouse efficiency is about improving the overall operations in the warehouse. Using mobile technology, you provide workers with a more effective way to accomplish tasks.

• Hands-Free Operation

Mobile barcode scanners were just the beginning. Now, innovations with wearable tech, AR, and RFID are emerging. Thus, hands-free operations are becoming more and more possible. With this,viewing pick or pack lists, scanning items, and locating bins are just a few of the tasks.As a result, these innovations have helped companies greatly increase overall productivity levels in their warehouses.

• Faster Data Entry

From using barcode and RFID scanners, data entry can now be a quick one-step process. This includes speeding up the process of receiving new shipments, performing cycle counts, or packing orders. One scan can perform the same task in a fraction of the time.Implementing scanning with mobile devices can greatly improve efficiency and cut down on task completion time.

• More Advanced Tracking

Through the use of mobile technology and inventory software, you can greatly improve visibility in your supply chain. As a result of mobile devices, info is updated more regularly and in a timely manner.This allows you to know exactly what is in each inbound or outbound order, where they are, and when they will arrive. Integrating inventory software with mobile tech provides a 360-degree view of your inventory.Thus, you will be more informed and react quicker to supply chain events. This advanced tracking can greatly improve your supply chain.

Organize workstations

Organising workstations improves productivity because workers do not have to search for tools or equipment. Use the “5S” method from lean manufacturing to ensure your workstations are as organised as possible.
It consists of:

• Sort – to remove all of the clutter from the work place
• Set in order – to organize all tools, materials and equipment in an efficient and ergonomic manner.
• Shine – To clean up the entire area removing all dirt.
• Standardize – to ensure standard ways of working for the first three stages.
• Sustain – to ensure that 5S principles are part of the culture of the business.

All techniques are designed to keep clutter at bay, reduce errors, and improve safety and organisation.

Maximise All Available Space

Maximizing warehouse space can be achieved by raising its roof. Where real estate is too costly to consider expansion an option gaining additional space, improving the height of your warehouse space can do good.

This can give space for additional levels of pallet storage. The things to be taken into consideration before going for raising the roof. Consider the engineering limitations and building codes so that your additional height doesn’t become illegal.

This picture below shows a vertical storage warehouse.

Pallet racking system

Racking and pallet storage serve as another vital method of warehouse space optimization. After ensuring you take all necessary safety factors into account, you should create a warehouse layout and design that fits your needs. Whether your company’s first install or a revamp of your entire system, there are many pallet rack systems to choose from to optimize your warehouse storage space.

Some of these include:

• Pushback pallet racking systems
• Drive-in pallet racking systems
• Pallet flow racking systems
• Carton flow racking systems
• Cantilever racking systems

Using pallets as load bearers and storage is an effective practice and can save your company thousands of dollars in real estate and storage space. It also will improve productivity and employee efficiency, as pallet racks make organizing and retrieving goods simple and fast.

Warehouse management is ultimately an exercise in efficiency. A business’s facility operates at its best when errors are minimal, delays and disruptions are eliminated and productivity is maximized with a smooth flow of inbound and outbound activity.


The implementation of any single or combination of changes discussed will create additional space in a warehouse, but every warehouse has specific operational requirements that must be addressed. If space is the only concern, labor efficiency, safety and throughput will suffer and create even greater problems. Companies can make a lot of improvements but must realize that no change made is the ultimate solution. Change is constant. Uncovering ways to optimize existing warehouse operations while preparing for business changes must become primary concerns for company management. The flexibility to handle both long-term projections and short-term need is what make operations world-class.


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About the Author: Jonathan Goh has substantive years of experiences in the field of warehousing and shipping, specifically in the sector of technology programmable devices. He is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Jonathan completed the Diploma in Logistics and Supply Management (DLSM) course in March 2018 at SIPMM Academy.