Space utilisation

How space utilisation is worked out

There are two sums and you want both, because they answer different questions.

Position occupancy is occupied locations divided by available locations. It is quick, your system already knows it, and it answers the practical question: is there anywhere to put the next pallet.

Cubic fill is the volume of goods divided by the volume of the space they sit in. It is harder to get at, and it answers the expensive question: how much air are you paying to store. A position occupied by a pallet stacked to half the height of its opening counts as full on the first sum and half empty on the second.

A third figure is worth keeping beside them: how much of the floor is storage at all. Aisles, staging lanes, the packing area and the returns bench are all necessary and none of them hold stock, and the split between storage and everything else is a design decision rather than an accident. There is a warehouse space calculator on this site for working through the numbers.

There is no good number, and the ceiling is not 100

This is the one metric in this set where more is not better beyond a point. Above roughly 85 to 90 per cent of pallet positions, a warehouse starts to run out of convenient places to put things. Put-away journeys lengthen, pallets go to a second-choice location and get moved again later, and the pickers walk further because the fast movers could not be slotted where they belong.

So a site at 97 per cent occupancy is not efficient. It is full, and the cost of being full shows up in the labour figures rather than here. Read this metric next to throughput and labour hours, and treat a rising occupancy with falling productivity as the same event seen twice.

In practice

The warehouse has 6,000 positions, 5,100 occupied, so position occupancy is 85 per cent.

Now measure the cube. The clear opening of a position is 1.8 metres, and the average pallet in the building stands 1.1 metres high, so an occupied position is 61 per cent full. Multiply that by the 85 per cent occupancy and the racking is holding goods in about 52 per cent of its own volume.

That remaining 48 per cent is the cheapest storage available, and the ways in are mostly beam heights set to the wrong profile, a single rack configuration for products of very different heights, and part-emptied positions reserved for one item. Before renting a second building, that is the figure to attack. The numbers here are an illustration.

What moves the figure

• Slot sizes against real pallet heights. One beam configuration for the whole building guarantees wasted height on most of it.
• Honeycombing. Positions half emptied and held for a single item. Allowing two items in one position cures it and costs picking accuracy, so it is a trade rather than a fix.
• Aisle width against the truck fleet. Narrower aisles with the right truck convert floor into positions, and are a capital decision rather than a housekeeping one.
• Dead and slow stock. The long tail occupies prime positions it has not earned. See dead stock.
• How much stock you hold at all. Space utilisation and days of inventory are the same question asked by the warehouse and by finance.
• Peak planning. Overflow space rented for eight weeks is usually cheaper than a building sized for November all year.