Warehousing space - How much do you really need?

Find out how to decide on your space requirement when opting for flexible storage facilities.

Warehouse storage space is valuable, and underutilizing your capacity will result in a waste of investment. It is a good idea to consider the area you require from your warehouse partner and how well you can utilize our space requirement. 

Depending on your goods, clients, and sales type, warehouse space requirements may vary. It can vary depending on your customers, whether for B2B or B2C audience. You also need to decide on space under immediate and long-term requirements. What is the cycle time of incoming and outgoing shipments? You will want to keep some extra space as a buffer when the demand is high. Demand forecasting would help decide the amount of extra space during the peak seasons when the sales go more elevated than usual.

Considering all the above factors, the usable inventory space should be able to store goods. Of course, if you need a workspace, machinery, bathrooms, and other non-storage utilities, they would require additional space.

How do I calculate the storage capacity of the warehouse?

A few simple calculations will help understand the warehouse's storage capacity. 
Find out the total square feet of the warehouse. 

The space may include utilities that are non-storage in nature. The non-usable area may be required for processes like packing and unpacking and special equipment depending on the goods or space for the office. These must be subtracted from the total area to show your inventory space clearly.

The height of the warehouse and the racking system will determine how high up you can store your products. 

The usable floor space multiplied by the usable height will give you the warehouse's storage capacity. A warehouse with a high roof gives you room to grow upward. The pallet racking system comes in various sizes, 12ft and 16ft being the most common. Suppose there is a height difference among the racking system in the warehouse. In that case, it must be considered when doing the calculations, as it will make a difference in your utility space.

Let us try to understand this better with an example.

Suppose we have a warehouse of 1000 sq. ft, with a uniform height of warehouse of 30 ft., and we need 300sq ft for non-storage requirements.

Usable Storage Capacity of Warehouse

The usable storage capacity of the warehouse gives an estimate of the spaces available for your racks and pallets when you consider a particular warehouse.

Usable storage capacity = Total warehouse space – non-usable space
= 1000-300
= 700 sq. ft
In cubic feet, we multiply this usable space by the height of the warehouse
Usable storage capacity = 700x30
= 21000 cu ft

Potential Storage Space

The potential storage space gives the actual real-time capacity of the warehouse. The type of product and its size and weight decide the amount of storage space it utilizes. 
There would never be a 100 percent warehouse storage utilization; that is a hypothetical situation. The practical storage capacity that we can aim for would allow the storage and movement of goods in the most efficient manner. 
The size of the inventory and the estimates of the stored product can give an idea of the amount of space you need from your warehouse partner.

Storage Choices

Goods should be stored in such a way that it allows for easy picking, packing, and shipping of orders. 
Racking is the most common method of storing goods in a warehouse. Pallet racking saves space by utilizing the vertical length of the warehouse. But care should be taken to maintain adequate aisle width to move goods. A good warehouse will have at least 18 to 24″ space between the ceiling and your product. There is enough room for pipes, sprinklers, or trusses below your ceiling height.

Single stacking and block stacking are storage practices with minimal investments, but they use floor space for storage. In single stacking, the goods are placed side by side, whereas, in block stacking, the goods are placed one above the other. The method still cannot use the vertical height of the warehouse to the fullest as there are chances of the goods toppling over and getting damaged. 

Boxes and Containers

Storing goods in boxes and containers gives a better estimate of space requirement, as it is easy to calculate the box's volume. We can then determine the maximum number of boxes that can be stored in the warehouse space. 

SKUs and warehouse space

SKU data must be considered in warehouse design as your order fulfillment's overall layout and movement are as important as the storage space. The number of SKUs that your facility can handle, the design specs, and the convenience of the location of the docking station all have a role to play in warehouse space requirements.

Type of products and their storage requirement

The products' storage requirements, whether it requires a climate-controlled environment, quick-moving goods, or are non-dated, can all impact the design of the warehouse. There would be different packing and handling methods and even different technologies involved. 
The need to incorporate different types of storage must be accounted for from the very earliest moments of planning, simply because it will impact your inventory cube requirement.
Different storage requirements will also impact your workflows—how you handle, package, and transport your goods. This will, in turn, influence the technologies your warehouse design consultant may recommend.

Sales Growth 

The prospect of your long-term sales also needs to be considered when deciding on your warehouse space requirement. 
Are you expecting your business to grow in stock number or price in the coming year? 
Are there seasons when you have a high demand for your goods and would require more storage space?
Will your warehouse partner be flexible enough to provide the extra space when you need it? 
These questions will help you decide the right amount of warehouse space from your warehouse partner.

Calculating the space will help you understand your requirement. But it also matters that your warehouse partner uses the area efficiently. The warehouse layout, location, inventory flow, flexibility, and how scalable it would be to meet your future requirements are all important for warehouse space.

Cargoz can find you multiple warehouses, so you can choose what works best for your business. Cargoz also offers WMS to help you efficiently optimize your warehouse space. 
Are you looking for a warehouse in the UAE? Call us now.

Warehousing space - How much do you really need?
Cargoz March 2, 2023
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