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How to Maximize Warehouse Efficiency with Professional Warehouse Layout Design

Almost half of your supply chain costs are behind the doors of your warehouse or distribution center. A sub-optimal warehouse layout design can be extremely costly. A recent study by McKinsey evaluated warehouse efficiency and found that most are operating 20% to 50% worse than industry leaders.

The study found that inefficiencies often were not because of a lack of technology or the particular types of materials that were being handled. Instead, they were because of poor warehouse design or inefficient workflows. The good news is that better organization can improve performance by as much as 50%.

This guide discusses the benefits of an efficient warehouse plan, how to create a warehouse setup project plan, the types of warehouse layout designs that create optimal working conditions, and some pro tips to improve your results.

The Benefits of Efficient Warehouse Layout Design

Your warehouse plan is key in whether you have an efficient, well-organized warehouse or a poorly functioning one. If your warehouse is disorganized, it can create delays and service issues, impact productivity and safety and cost you money.

When you create the best warehouse plan, you get several significant benefits, including:

• Reduced labor costs: Labor accounts for 50% or more of warehouse operational costs, so minimizing the time it takes for warehouse workers to accomplish tasks can result in significant cost reductions.
• More efficient operations: A well-designed warehouse setup project plan provides easier access to inventory, helps to make the storage, pick, pack, and shipping process more efficient, and reduces order fulfillment times.
• Better space utilization: Maximizing your storage capacity and storage density enables you to optimize your warehouse layout.
• Improved safety: Eliminating potential safety hazards and ensuring equipment and humans can co-exist in the workflow improves the work environment.
• Flexibility: The best warehouse layout design will meet your current needs while allowing you to evolve to accommodate business growth or seasonal changes.

What are the Four Factors of Warehouse Design?

When designing your warehouse layout, four factors should guide your decision-making, known by the acronym FAST.

F = Flow

Warehouse design should promote the smooth movement of people and goods with minimal spacing between acquisition and distribution wherever possible. Ensuring areas are close enough to enable a smooth workflow but not too close that they create clutter and bottlenecks can be a delicate balance.

The best designs will enable team members to work in an orderly fashion and move from one function to another with minimal movement and disruption.

A = Accessibility

A warehouse should easily access the materials and goods employees need to store and retrieve. Depending on your facility, you may be processing orders in pallets, cases, units or all three. You need to incorporate design principles to accommodate your needs and track inventory.

S = Space

Space allocation is crucial. You need appropriate storage density to maximize space while maintaining efficient flow. Overly dense storage can hinder efficient flow, including storage and picking, and fail to utilize existing space efficiently, which adds to additional costs.

T = Throughput

Throughput accounts for the flow rate of materials as they pass through the warehouse. Higher throughput produces greater efficiency and effective inventory turnover. Throughput considers the velocity you need to achieve and accounts for the size, shape, weight and fragility of the items you are processing.

What Are the Four Phases of Warehouse Layout?

The warehouse setup project plan experts at Conesco have more than 250 years of combined experience designing and installing high-performance, efficient warehouses. Our team uses a four-phase approach to construct a customized warehouse plan that meets your company’s unique needs.

Phase One: Initiation

Before you can design the space, you must clearly understand what you need to accomplish, your current and future plans and what problems you are trying to solve. If you have an existing warehouse, it is smart to observe operations and get input from the warehouse personnel to hear their frustrations.

Look for key warning signs such as:

• Disorganized flow or inventory
• Bottlenecks
• Inefficient storage density
• Poor space utilization
• Excessive travel time
• Safety issues

If you are designing a new facility or re-organizing your current facility, it is best to start with a blank slate. It is always best to start with the end goal in mind in any design.

Phase Two: Warehouse Planning

In the planning phase, you want to think about the six basic workflows that occur in nearly every warehouse facility:

• Flow from receiving to racks/storage
• Paths for forklift drivers/pallet jacks
• Walking paths for pickers
• Outbound flow for picked orders
• Movement of returned products
• Flow of orders to outbound shipment areas

Your design must allow for a smooth and orderly transition from each workflow to the next. Your goal is to maximize each step of the order fulfillment process to eliminate inefficiency.

In the planning stage, you map out your layout, considering flow and equipment use. This is the right time to look at the impact of adding automation and storage racking solutions to maximize inventory storage spaces.

We often see warehouses struggle in the warehouse layout design phase because team members may not have adequate expertise or industry knowledge about different solutions. This is one place where the experts at Conesco can provide significant value. We have designed and built many facilities of all sizes and work with industry vendors and partners to implement best practices and cutting-edge strategies to minimize and streamline operations. If you are looking to improve your warehouse plan, we can help.

Phase Three: Execution

With a plan in place, you need to procure the right equipment. Equipping a warehouse can be expensive, but there are ways to keep your costs down. For example, when you work with a company like Conesco, we have bulk buying power due to the large number of installations we do. This can help reduce costs for pallet racks, mezzanines, conveyors and other warehouse equipment you need.

We can also help reduce costs further by suggesting high-quality used equipment. Because we modernize facilities and help companies liquidate equipment, we have access to used equipment with plenty of life left.

You also want a clear plan for installation. How this occurs will depend on whether you are equipping a new facility, shutting down an existing facility for a changeover, or whether you need to handle implementation in phases to maintain operations. This is another reason you want to work with experienced warehouse planners with significant field experience to help you design the right installation schedule to minimize downtime.

Phase Four: Closing

As you wrap things up and begin operations, it is a good time to test your workflow and consider whether you need to make any adjustments before going into full-scale operations. At the same time, you want to evaluate the entire process and make notes about what you can improve for future warehouse setup project plans.

You also need to document processes and train warehouse workers on the most efficient use of your new warehouse layout design.

What is an Ideal Layout for a Warehouse?

The ideal warehouse plan enables you to move inventory efficiently through your operation from intake to storage to pick, pack, and ship. Things will be organized and orderly to accommodate workflow, minimize inefficiencies, and reduce travel time and congestion.

The best warehouse layout design will:

• Analyze workflow and pick paths to minimize travel distance and wasted motions.
  Pro Tip: Place high-velocity pick areas close to packing and shipping areas.
• Organize inventory and storage to match demand.
  Pro Tip: Utilize methods such as an ABC analysis to classify inventory when designing a warehouse plan.
• Allow room for growth, leaving space for adding inventory, equipment or workstations in the future.
  Pro Tip: 85% to 90% of capacity is considered maximum space optimization, leaving room for surging or seasonal demand.
• Create wide aisles for forklifts and order pickers. More than 100 workers are killed yearly, and nearly 100,000 are injured in forklift accidents.
  Pro Tip: Consider mirrors, spotters, telematics and proximity sensors to avoid collisions.
• Manage storage density without sacrificing worker accessibility.
  Pro Tip: Optimize vertical space with pallet racking or mezzanines to maximize available cubic footage.
• Arrange departments and zones efficiently.
  Pro Tip: Group-related functions like receiving, put-away, picking, packing, shipping and damaged goods.
• Consider flow patterns and traffic to minimize workflow, travel time and unsafe operations.
  Pro Tip: When developing your warehouse setup project plan, map your layout and your workflow to look for potential bottlenecks or crisscross operations.
• Optimize lighting, ventilation and utilities for visibility and airflow to improve safety and productivity.
  Pro Tip: Use high-efficiency LED lights for uniform lighting with reduced energy consumption.
• Incorporate ergonomic design practice into layout and equipment choices to reduce strain on workers.
  Pro Tip: Deploy automation, such as conveyors, co-bots or automated storage and retrieval systems (AS/RS) to reduce manual labor.

What is the Typical Layout of a Warehouse?

Typically, warehouses are designed in one of three ways. Which one you choose depends on your operations and your building constraints. U-shaped layouts prioritize efficient workflows. I-shaped warehouses are simple and easy to expand. L-shaped layouts are generally employed due to space or building limitations.

Each type of warehouse layout has advantages and disadvantages that you should consider. Here are some of the most common warehouse layout examples.

U-shaped Warehouse Design

A U-shaped warehouse layout design is the most common and typical choice for newly constructed warehouses. Receiving and shipping are on the same side of the facility to accommodate loading and unloading, but at opposite ends. Storage resides in the middle between the two docks.

A U-shaped warehouse design makes it easy for supervisors to visually monitor most of the facility, allows workers to move quickly within the facility, and organizes pick slots and packing stages near shipping offering smoother order fulfillment.

There are some disadvantages. For example, if shipping and receiving are too close together, it can create congestion. There can also be congestion at the bottom of the U-shape unless adequate space is provided and dynamic routing is employed.

I-shaped Warehouse Design

An I-shaped warehouse plan is more common for larger warehouses that need to handle higher production volumes. The I-shape incorporates the full length of the warehouse with a systematic flow from receiving at one end and shipping at the other. It can model an assembly line as inventory goes from shipping to storage to picking to shipping.

The advantages of an I-shaped warehouse design include simple workflows and orderly traffic. It is also easy to divide materials and inventory into zones or departments and scale easily by adding additional length to the facility.

An I-shaped warehouse does require space for loading and unloading on opposite ends of the I, which may not be ideal or available for many warehouse facilities. Disadvantages may also include adding travel time for large facilities and the need to have separate docks and equipment for loading and unloading shipments.

L-shaped Warehouse Design

Less common are L-shaped warehouses. You typically see L-shaped designs when the warehouse itself is L-shaped, with shipping on one side of the L and receiving on the other end of a 90-degree angle.

It is an efficient way to use an L-shaped design and easy to add cross-aisles to connect the two legs of the L. You can also create distinct zones within the warehouse. However, it requires significant space for efficient operation and may be more challenging to optimize storage density and maximize pallet racking. Traffic flows can also get congested where the two sides of the L come together.

A Well-Designed Warehouse Plan Creates a Competitive Advantage

An optimal warehouse layout design can produce significant efficiencies to streamline operations, save money and improve output. Whether you are looking to improve efficiency in your warehouse or looking to automate warehouse operations, leverage the expertise of the Conesco team to maximize your operation.

Conesco is an industry leader in material handling and warehouse design. Call the warehouse plan experts at Conesco today at (303)-690-9591 or contact us online.