Planning for warehouse capacity has become particularly important in the context of tight warehouse supply constraints in many markets. The assumption cannot be made that growth capacity can be sourced at short notice, and planning horizons for new builds tend to be 3 to 6 years.
What is Warehouse Capacity Planning?
Warehouse capacity planning involves forecasting the amount of space required to store inventory efficiently while meeting business needs. Warehouse capacity planning is crucial for optimising business operations, reducing costs, and ensuring the seamless flow of goods in and out of your business. Proper planning in this area helps businesses accommodate inventory fluctuations, seasonal and volatile demand, and future growth, ultimately maintaining a smooth supply chain.
Planning capacity leverages the data within the supply chain to build up requirements SKU by SKU, and in regulated industries, it needs to extend beyond simple pallet capacity to considerations of:
- Material flows and marshalling requirements
- Pickface and replenishment
- Temperature requirements: ambient, 2-8, freezer, -40, -70
- Special storage requirements for hazardous and chemical materials
- Decanting to non-wooden pallets, controlling physical flows, and environmental conditions
- Quality inspection requirements, samples, and testing
- Management of non-conforming and quarantined products
- Management of expiry dates
- Definition of hand-over requirements for products to and from manufacturing
- Regulatory requirements: what is required to be stored on site?
- Management of material requirements in variable manufacturing processes
- Managing non-BOM components and material requirements for testing and validation
- Allowing for redundancy in material policies across batches and, in some cases, storage areas
- Balancing the risk of supply with product lifecycle and expiry concerns
- Waste flows
In capital-intensive, manufacturing processes, the warehouse can often be seen as a soft target to enable manufacturing process expansion. Over the last few years, we have seen an increased awareness that well-designed warehouses, materials, and waste flows are critical to the effective functioning of manufacturing operations.
Our approach is data-driven, building an initial baseline of the current physical infrastructure and flows. We establish an understanding of how effectively the current space is used and how the existing sourcing and planning practices compare with the theoretical expectations of the inventory on hand. Frequently this provides insights into opportunities to improve current space utilisation and ensures that capacity plans are grounded in the current reality of the business.
From there, we leverage forecast data to model the future requirements across the multiple factors above, creating a data-driven capacity model that can be taken forward as the needs of the business change. We also develop a digital twin of the facilities to highlight material flows and model KPIs including travel distance, space utilisation across key processes, potential for congestion, and the utilisation of MHE and labour through the operation.
If you are planning your future warehouse and material flows, contact us for an initial discussion on how our tools and approach can support your site materials and capital needs.
How to Calculate Warehouse Storage Capacity
Calculating warehouse capacity requires understanding the total storage area and how it’s used. To accurately calculate warehouse capacity, you can follow these steps:
Step 1: Measure Total Warehouse Area
Calculate the total square footage of your warehouse (e.g., 150,000 sq. ft.).
Step 2: Deduct Non-Storage Areas
Subtract space used for offices, restrooms, and loading areas (e.g., 30,000 sq. ft.).
Formula: Usable Space = Total Sq. Ft. – Non-Storage Space
Example: 150,000 sq. ft. – 30,000 sq. ft. = 120,000 sq. ft.
Step 3: Calculate Storage Capacity
Multiply usable space by stack height to get storage capacity in cubic feet.
Formula: Storage Capacity = Usable Space x Maximum Stack Height
Example: 120,000 sq. ft. x 30 ft. = 3,600,000 cubic feet
This process helps you assess and optimise warehouse space based on your specific needs, such as SKU count and operational requirements.
How to Optimise Your Warehouse
Optimising your warehouse involves improving space utilisation, refining workflows, and leveraging technology to boost efficiency. Here are some key strategies to optimise your warehouse and improve efficiency:
- Maximise Vertical Space: Use taller shelving units and vertical racking systems to store more products without minimising your floor area.
- Reduce Aisle Widths: Narrower aisles can optimise the storage capacity in your warehouse, allowing you to store more inventory.
- Implement Warehouse Management Systems (WMS): A WMS improves inventory tracking, reduces errors, and enhances order fulfilment speed through real-time data management.
- Streamline Workflows: Design efficient layouts for your workflow that minimise travel time and reduce bottlenecks.
- Adopt Automation: Consider automating repetitive tasks like picking and packing with conveyors, robotics, or automated guided vehicles (AGVs), ASRS (Automated Storage Retrieval Systems), AMRs (Autonomous Mobile Robots) to improve accuracy and reduce labour costs.
- Optimise Inventory Levels: Regularly analyse inventory to ensure you’re stocking the right products in the right quantities, minimising excess while meeting demand.
- Cross-Docking: If feasible, it’s recommended to implement cross-docking to move goods directly from receiving to shipping, reducing storage needs and speeding up distribution.
By combining one or more of these strategies, your warehouse can operate more efficiently, save costs, and better meet customer demands.
Why is Warehouse Capacity Planning Important?
Effective warehouse capacity planning ensures that storage resources are used efficiently, minimising costs associated with underutilised space or overstocking. It helps businesses avoid bottlenecks, manage peak periods, and scale operations as needed, ensuring that customer demands are met without compromising service levels.
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