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E-commerce trends like same-day delivery, fast fashion, and fast-moving inventory have created a demand for inventory storage space near urban areas. This has made space utilization a key business driver at large distribution centers and warehouses.

The primary objectives of a warehouse are to a) use space optimally, b) allow for efficient material handling, and c) provide the most economical means of storage. These can be achieved by:

  1. Optimal use of space
  2. High utilization of equipment
  3. Minimum reliance on labor
  4. Focus on operational safety

Storage practices have a major impact on the operating metrics of a warehouse and – on a broader scale – of the company. Thus it is critical to allocate the optimal proportion of storage space to the most valuable and high velocity warehouse inventory.

ABC analysis is a simple framework to identify those items in the warehouse that are the most important and should, therefore, consume most of the space and attention in terms of stock takes and inventory management. This empowers warehouse stakeholders with real-time insights into managing inventories and utilizing space even during peak season.

Consequences of Inefficient Space Utilization

Sub-optimal utilization of warehouse space coupled with poor inventory management can result in:

Consequences of Inefficient Space Utilization

  1. STOCKOUTS: A stockout, or out-of-stock (OOS) event, is when an inventory item is exhausted and thus demand remains unfulfilled.
  2. OVERSTOCKING: Overstock, or excess inventory, is the result of poor management of stock demand or material flow in process management. Excessive stock is also associated with loss of margin due to additional capital tied up in the inventory as well as wasted storage space.
  3. DEADSTOCK: Deadstock refers to unsold items lying in the warehouse for a long time. Deadstock is detrimental to any business because it not only takes up valuable space but can also result in obsolescence, spoilage, or theft – causing financial losses.

Ensuring Maximum Warehouse Space Utilization

Following are a few techniques to optimally utilize warehouse space for inventory storage:

  • Real time data: Real time updates of the inventory help warehouse managers predict and plan effectively.
  • Very Narrow Aisles: One of the easiest ways to maximize warehouse space is to narrow these aisles and thus increase the number of pallet locations.
  • Vertical Maximization: Overhead space in many warehouses is underutilized. Making the racks taller directly increases the volume available for pallet slots.
  • Door Use: Combining receiving and shipping docks can free up space and streamline receiving and shipping.
  • Putaway Time: The length and time it takes for products to travel the path from receiving to storage should be minimized.
  • Pick Paths: It’s important to identify the optimal path depending on the shipping frequency of the product.

The above techniques require changes in existing operational processes as well as the warehouse infrastructure. Thus, such implementations might take a lot of time and not be possible for some warehouses (e.g. rented facilities).

Instead, warehouse owners and managers can now leverage new technologies and introduce automation with minimal infrastructural changes.

Inventory Drones for Optimal Space Utilization

Autonomous drones in warehouses can help track real time inventory changes and provide warehouse managers with the latest pallet location data – which can then be used for efficient planning of order fulfillment.

Benefits of Inventory Drones:

1. Empty-bin detection

A fleet of drones can be deployed in a few clicks to identify empty bin locations across all aisles, which can be then utilized to store new inventory.

Benefits of Inventory Drones

2. Put-away audits

Besides cycle counting, warehouse operators can run drone missions to check the accuracy of put-aways done by material handlers. This reduces the chances of misplacing valuable pallets or cases.

3. WMS Integration

WMS integration with an inventory drone solution can enable real-time variance analysis between the pallet inventory data collected by the drone(s) and the WMS data. This helps in identifying and resolving inventory discrepancies in a large warehouse or DC.

Other useful features of inventory drones include the ability to track down inventory to a specific pick location and also provide video/image visibility of inventory across multiple warehouse locations.
The above features are now available in FlytWare to help warehouse managers get a real-time digital twin of the warehouse and maximize space utilization.

Cost Mitigation

Warehouses often lose money by sending out wrong shipments, inaccurate inventory counts, and human errors in picks and put-aways. Each time a wrong shipment goes out, a business must pay $22 on average in labor costs and customer impact. (Source)

A warehouse management system working with inventory drones can address these inefficiencies quickly and cost-effectively. Optimizing warehouses with aerial inventory automation can allow companies to make the best possible use of expensive real estate.

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