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Warehouse Space Utilization: The Definitive Guide.

Warehouse Space Utilization

A warehouse is a massive building that is used to store goods. The warehouse ensures smooth loading and unloading of the goods. Today we will discuss in great detail the topic “Warehouse Space Utilization”

The term warehouse dates back to the 1300s century Britain. The more space the warehouse capacity utilization will be done, the better it is for the business.

The use of maximum space in the warehouse cuts down the storage cost of a warehouse. Sometimes, the use of maximum space makes it easier to handle the stored goods. There are various ways through which warehouse space utilization can be done.

One way to optimize warehouse space is to use the vertical space of the warehouse. Another way to the available space in the warehouse utilization is to use the maximum flooring area.

While warehouse space utilization, warehouse safety should be kept in mind too. The warehouse space should not be too congested for the workers and the products to move. In this article, we will discuss the following things:

After reading this article, you will have a clear idea about warehouse space utilization. We will also elaborate on some tips that are related to warehouse space optimization.

After reading this article, you can implement the idea of warehouse capacity utilization in your warehouse. This article will be especially beneficial for the following group of people:

What Is Warehouse Space Utilization?

Warehouse space utilization or warehouse capacity utilization measures how effectively you’re using the total area. Companies that can successfully utilize their warehouse space, can cut down their storage costs.

If a warehouse has 20,000 square feet of space available in it. Now, how much of the warehouse space is specifically used for the storage purpose will be warehouse space utilization.

There are various methods through which you can calculate warehouse space utilization. We will discuss these methods in the next section of the article.

narrow aisle racking
narrow aisle racking

Why Is Space Utilization Important In A Warehouse?

Space utilization is important for any warehouse. Now, we will elaborate on some of the reasons why space utilization is important for a warehouse:

To Cut Down The Cost

Properly using the available space of a warehouse helps a warehouse to cut down the business cost. As properly doing warehouse capacity utilization helps to keep a lot of goods in a small amount of space.

For instance, two warehouses named “A” and “B” has the same available space of 20,000 square feet. Now, warehouse “A” effectively uses the warehouse’s space and its warehouse utilization rate is 25%.

Warehouse B’S space utilization rate is only 15%. Now, if the same amount of products were to be stored in these two warehouses; Warehouse “A” would effectively store the goods. On the other hand, Warehouse “B” may need more space to store the products.

As warehouse “B” will need more space to store the products, it will increase the cost of the business.

But, warehouse “A” can effectively decrease the cost of the business through warehouse space utilization. Because it will not new need any new facility to store the goods. Instead, they can store the goods by warehouse space utilization properly.

To Effectively Manage The Goods Of The Warehouse

Generally, it is easier to locate, manage, load, and unloading of the goods in a smaller space. The bigger the warehouse space is, the more difficult it is to manage the products.

If warehouse storage solutions like mezzanine floors and pallet racks are installed; vertical space can be used too. Using the vertical space makes it easier to effectively manage the goods most of the time.

To Increase The Efficiency Of The Warehouse

When you are properly utilizing warehouse storage space, then the overall efficiency of the warehouse will increase. The workers will be able to work more effectively in an environment where warehouse storage optimization is ensured.

teardrop pallet racking

These are some of the reasons why warehouse space utilization is important.

What Is A Good Warehouse Utilization Rate?

The 22%-27% warehouse utilization rate is a very good warehouse utilization rate. But why is 25% a decent utilization percentage? Isn’t it supposed to be closer to the entire capacity of the warehouse-like 90%?

The quick response is no. Instead, a storage utilization above 27% or lesser than 22% would suggest a potential problem with the warehouse’s architecture and construction.

A utilization rate above 27% would probably indicate that your personnel is finding it challenging to move between areas of the warehouse. They are finding it challenging to pick and refill things, which would lead to high labor costs.

In contrast, it may happen that the storage facility’s overall storage capacity is lesser than 22%. of the size of the storage cubes. That indicates that the warehouse’s design was done in a way that may be wasting valuable storage space.

Do You Need The Warehouse Space Optimization?

Yes, of course. You need warehouse space optimization to decrease the cost of your business and manage goods in the warehouse efficiently.

How To Calculate Warehouse Space Utilization?

Your area and layout must be optimized if you want to build a successful warehouse design. It’s important to precisely calculate your warehouse’s space use. In this section, we will give a detailed description of “How to calculate warehouse space utilization?”

First Step: Find Out The Total Area Of Your Warehouse

Sometimes warehouse managers calculate the size of the warehouse by using a blueprint and calculating the entire square footage. This strategy does not take into consideration spaces that cannot be used for storage purposes.

As a result, this strategy will not assist you in optimizing your warehouse. Instead, you need to start with the total square footage. Next, take the area devoted to offices, or other non-storage spaces into account.

For your storage space in cubic feet, multiply the leftover square footage by the clear height of the warehouse.

The distance between a warehouse’s floor and any object hanging overhead is known as the warehouse space’s clear height. Warehouse managers must take the warehouse area’s clear height into consideration as it affects-

Second Step: Calculate The Inventory Cube Size

Remember that the racking spaces where the inventory is kept are part of the inventory cube size. The length, width, and height of the heaviest load in each space should be multiplied by the footprint of the storage area.

The inventory’s cube size will be determined by adding that cubic volume for every area.

Third Step: Calculate The Size Of The Storage Cube In The Warehouse

You must ascertain the size of your actual storage cubes. First, determine the overall vertical storage capacity of each pallet rack by measuring its individual footprint.

The actual size of your current storage cube can then be calculated by multiplying the capacity of every rack by the grand total of pallet racks you have.

Fourth Step: Now Calculate The Total Warehouse Utilization Space

The last step is to compare the dimensions of your inventory cube size and warehouse cube size. To determine how effectively you are using your available storage space, divide your inventory cube by the number of storage cubes on your warehouse shelves.

Always keep in mind that your warehouse’s entire storage capacity is simply an estimate. For effective material management, use the area for your racks, and leave empty room for people to move around.

This is how you can calculate warehouse space utilization.

10 Tips For Warehouse Space Optimization.

As an owner or manager, you have to face difficulties while making the best use of the available space. Optimization of warehouse space also means making the warehouse ideal for better workflow and efficiency.

It is a very important part warehouse if you want to hit a good bottom line in business.

So, let’s show you some tips which you can implement in your facility and make the best use of the space:

1. Optimization Of Warehouse Layout Design

So, how do you optimize the physical layout of your warehouse facility? First of all, start with calculating the workspace available to deal with. You need to have a clear idea about the warehouse metrics.

warehouse mezzanine layout design

Calculating The Total Warehouse Size

You can start by analyzing the total warehouse size. To know more about this, read the previous section on, “How to calculate warehouse space utilization?”

So, make sure you know your storage space, this will help you with perfect storage planning.

Proper Storage System

Having a good warehouse layout and planned storage system will reduce travel time effectively. If the workers take longer times to maneuver goods, it will affect product distribution.

Optimized Use Of Aisles

Not having the aisles properly optimized will cause damage to your warehouse functions. All you have to do is clear the wasted space of the warehouse. It will increase the aisle’s number and therefore you can use more pallet racks for storage.

Defined Location

One of the biggest characteristics of an optimized layout is defined locations. Make sure you have all the locations of storage, sorting, office, and shipping defined on a map. It will help the workers to work more flexibly and keep the workflow running.

The utilization of warehouse capacity completely depends on your storage system and the layout of the facility.

Moreover, it can also rely on the characteristics of the products. Once you establish an optimized warehouse layout, it will automatically enhance the in-house operations. You can try the Pareto principle in such cases.

There is no alternative to a good storage system in the automatic warehouse logistics industry. No matter how much storage space you have left, you can’t have good feedback if not properly organized.

It is important to have organized storage system to have the full potential of the warehouse facility. So, let’s show you some cool ideas that can increase the efficiency of your workflow-

Using Ceiling Height

Well, ceiling height can be an excellent idea while you are designing the layout of your warehouse. Distribution centers and businesses often misuse this space. Sometimes warehouse managers don’t optimize the ceiling height.

Rather they are interested in filling the space horizontally. Using the ceiling height can maximize the cubic storage space relative to it.

You can go for mezzanine floor and pallet racks which can make use of the ceiling height. This equipment can help you to take advantage of every space. Moreover, establish single-story functions in the warehouse vicinity like picking and distribution.

Mezzanine Floor

As we mentioned earlier, move single-story functions to lower ceiling space. For example, the picking and distribution or packing section should be located in a high area. This is where you should consider installing a mezzanine floor.

The mezzanine floor offers additional space vertically. The good thing is mezzanine floor is a very cost-efficient storage solution.

mezzanine floor

It also offers you to optimize the height space. You can easily install or dismantle any mezzanine floor and relocate it for other purposes. In such a way, your business won’t be clogged in a single layout.

Pallet Racks

For maximum warehouse storage utilization, install pallet racks in different parts of the facility. For example, you can place a pallet rack at the dock door where you can put the slow-moving products. Since dock areas are very busy, you can limit the access at off-hours.

Make sure you have different sizes of pallet racks. Variety in pallet racks is important for maximum storage optimization.

2. Finding The Right Equipment

Finding and using the right equipment for your warehouse is very crucial. With the right equipment and using it to its fullest, you can maintain warehouse operations. There might be thousands of equipment out there in the market, but you are limited in space.

Different type of products requires different handling equipment. Like, you need to buy equipment that doesn’t affect your aisles.


A forklift is a very common piece of equipment that is widely used for warehouse operations and material handling. If you need to transport and maneuver bulky items, forklifts are perfect for this job. Forklift increases efficiency among workers as well as quick operational times.

Don’t forget to go through the forklift safety practices, the last thing you want is an accident in your facility.

Pallet jacks

A pallet jack is another handy and quite cost-efficient piece of equipment widely used in the warehouse logistics industry. They are mainly used to move small and delicate items over a short distance.

pallet jack

There are two types of pallet jacks- electric pallet jacks and manual pallet jacks. It mainly depends on your choice of which one to go with.

3. Increasing Space With The Correct Rack System

A great way to optimize your available warehouse space is to invest in the correct rack system. The right shelving or rack system makes difference in the warehouse. You need to find the right one based on the characteristic of the products you will stack in the future.

The right shelving system offers an ergonomic environment for the workers and a better SKU per station. Everything aside, let’s take a look at different pallet rack systems-

Shuttle Racking

A very dense storage solution that offers great flexibility to warehouse operations. The shuttle racking system is the one you need if you are against tough challenges as it provides great productivity.

If you require high-density storage combined with high flexibility, a shuttle racking can be a great choice. 

Selective Pallet Racks

Selective pallet racking is a cost-efficient rack system. If your forklifts or pallet jacks require easy access to the rack system, then this one is the answer. It has great storage capacity and offers easy access to stacked products.

Double-Deep Pallet Rack

Double-deep pallet racks are created by placing the second row of pallet racks behind the first row. Because of this, the aisles between two racks are increased up to 65-70 percent with additional floor space.

But, you will need deep-reach lift trucks to have easy access to this double-deep pallet system.

Drive-In Rack

This one is quite a unique storage system. The items are stored deeply in lanes and they are densely stored. The forklift is the only material handling equipment that can be used here.

drive in pallet rack system

It enters the rack for storing or retrieving them. If your warehouse is having large shipments or operations, drive in racking is a good solution. 

4. Avoid Congestion

Congestion can be an obstacle that can take a toll on the production speed and workflow of the employees. It can be quite tough for a distribution center when it hits about 85 percent of its occupancy.

Technically, you are out of space here. And, it is true for every other area such as shipping or receiving.

So, what will happen if the limit goes beyond 85%? Well, the simple answer is it will create congestion, and congestion slows down the work rate. For this, you have to do extra work to make room for products that you don’t have space for.

For instance, you need to relocate product A to make room for product B. You will end up using staging space that is generally used for incoming items. When the distribution center is congested, it will cost you extra time and labor to make up the mess.

5. Use The Vertical Space Of Your Warehouse

You can take advantage of the vertical space available in your warehouse facility. You can use it to increase storage space. That will be a win for warehouse capacity utilization.

Follow these steps to ensure the proper use of vertical space in the warehouse:

6. Keep The Floor Clean

No matter what racking or storage system you follow, your floor is the most valuable space out there. It’s the easy-to-access thing in the facility.

Keep the floor clean by removing debris. It should be cleaned as a safety hazard. Useless debris most of the time occupies valuable space. Conduct regular cleaning and sweeping in the facility to keep the floor clear for better warehouse utilization.

If there is any unused item talking up the floor, try selling it. The same can be said for unused pallets. Evaluate their usage and check whether they can be used later. If not then sell it. No need to keep unnecessary stuff in the facility.

Keeping your floor clean will ensure that goods and workers can easily move from one place to another. So, to increase the efficiency of the workflow, you need to clean the floor too. Removing debris from the floor also helps to prevent accidents.

7. Design A Floor Plan That Promotes Growth

As a manager or owner, you should know that the design of the warehouse is very important. Designing is an important factor for better warehouse capacity utilization.

Moreover,  warehouse optimization greatly relies on an efficient warehouse layout. You need to put all the puzzles together while designing a floor plan. If the floor plan is perfect, it will promote the growth of productivity and business. 

Make sure the picking operation is located within the product storage section. Keep the unassembled parts close to the assembly section. Never keep the floor space cluttered. Make sure your current layout can meet your needs.

Warehouse racking layout plan

8. Create A Separate Picking And Packing System

Picking and packing are vital parts of a warehouse operation. They are like two sides of the same coin. Let’s talk about the picking part-


This one is a vital procedure in your facility. If the picking is well-maintained and accurate, the business will run well automatically. Incorrect picking will hamper the reputation of the company. You will lose both time and money in the process. Here are some tips to avoid picking mistakes-

You need to study your buyers to optimize the picking procedure. It will help you to find new ways. You can also your products through picking.


This one should be done with care and in minimum time. Just remember one thing, the more time it will take to pack, the more it will take delivery. If you don’t have a proper and optimized structure of packaging, it will hamper your business.

Packing thousands of items without a plan is not a good thing for warehouse efficiency. Always stick with two to three types of the standard packaging process. This will help the pickers to arrange and load the order more quickly.

9. Establish Safety Protocols

You need to follow the Occupational Safety and Health Administration AKA OSHA standards in your warehouse. Although, OSHA is only mandatory in some states of the USA; warehouses located in other countries can follow OSHA codes too.

Safety should be the main priority of the facility. Not following the regulations correctly can end up you fighting with a lifetime lawsuit.

A major part of an optimized warehouse system is securing the safety of the workers. There are some things you can do to ensure the safety of the people-

Safeguard From Safe And Falls

Slips and falls from high space are major issues in warehouses. Most of the time it causes life-threatening fatalities.

But, the good thing is this type of incident can be easily prevented. Installing anti-slip lanes, better equipment to reach high levels, and forklifts can ensure against such accidents.

Installing Proper Lights

Keep all parts of the warehouse lit properly. If the lighting is good, the flexibility and workflow of the workers will increase automatically. Low light can create mistakes while packaging or sorting.

10. Conduct an Inspection Of Your Warehouse

Another thing you can do for warehouse space optimization is to inspect the warehouse with a qualified inspector. Conducting a regular inspection of a warehouse will point out the loopholes and increase efficiency.

A qualified inspector can also suggest measures related to warehouse capacity optimization. Read pallet racking inspection to know a great detail about warehouse racking inspection. contact Mracking to do a manual inspection of your warehouse.

We know an efficient warehouse storage system can boost the functionality of the warehouse facility. If the layout of the warehouse can be standardized, it can streamline the production rate and offer better on-time delivery.

An optimized warehouse improves vital warehouse metrics such as accurate orders and faster shipping time. Not having the space of your facility optimized can affect the production rate, workflow, and delivery rate.

So, this is everything you should know about warehouse space optimization. contact Mracking to manufacture a perfect warehouse storage solution for your company.

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