As a warehouse owner, you know that having an efficient and well-ordered warehouse is key to keeping your business running smoothly.
In the world of inventory management and eCommerce, every inch of space in a warehouse is valuable, and wasted time is measured in seconds, not minutes.
However, keeping a warehouse maintained and organized can often be the hard part.
Plus, there are questions about how to organize your warehouse for maximum efficiency and profitability.
Even the most competent business owners can feel overwhelmed, throw their hands up in defeat, and resign themselves to assuming they’ll always have a messy warehouse.
Thankfully there are ways to run your warehouse and not let it run you. In this post, we’ll explore some warehouse set up ideas for how to structure and set up your space for long-term organization and profitability.
23 Warehouse Setup Ideas and Best Practices
- Communicate with employees
- Invest in the right tools
- Create a warehouse diagram
- Develop standard operating procedures (SOPs)
- Train employees on best practices
- Use pallet racks
- Label everything
- Implement an inventory management system
- Use heavy-duty shelving
- Create designated spaces for packing, processing, and shipping
- Audit your warehouse regularly
- Utilize a mezzanine
- Use efficient aisle patterns
- Follow the 80/20 Rule or Pareto Principle
- Use as much vertical space as possible
- Reduce SKU quantities
- Use cross-docking
- Keep your floor clean and clear
- Improve your forecasting accuracy
- Utilize cantilever racks
- Install conveyor belts
- Install warehouse-sized boxes, hoppers, and barrels
- Use the right type of packaging
1. Communicate with employees
One of the most important aspects of warehouse organization is clear and consistent communication with employees. Everyone should know their roles and responsibilities within the warehouse, as well as how their job fits into the bigger picture.
This goes a long way to eliminating time and motion waste, as well as optimizing the biggest expense in most businesses: payroll.
In addition, regular updates on changes or new procedures will help to ensure that everyone is on the same page and working towards the same goal.
2. Invest in the right tools
There are many different warehouse tools available on the market, and the right ones will depend on the specific needs of your business. However, some essential items that every warehouse should invest in include:
- A robust inventory management software
- RFID tags or barcodes for tracking inventory
- Protective packaging materials
- Carts, dollies, and other material handling equipment
- Label makers and labeling supplies
The right tools will save time and prevent errors in the long run, so it’s important to invest in them upfront.
3. Create a warehouse diagram
One of the best ways to increase efficiency in a warehouse is to create a detailed floor plan or diagram. This will help employees quickly find what they need and put it back in the right place when they’re finished.
In addition, a well-designed warehouse layout can help to optimize traffic flow and reduce congestion.
There are many different software programs available that can help you to create a warehouse diagram. Once you have one, hang it up in a prominent place where everyone can see it.
Some popular options include:
- Google Drawings
Many of these are free or have free trial periods, so you can try out a few before settling on one. An efficient warehouse setup also allows you to scale your warehouse over time without needing major training or organization updates.
4. Develop standard operating procedures (SOPs)
Another way to increase efficiency in your warehouse is to develop standard operating procedures (SOPs) for all repeatable and mission-critical tasks.
SOPs are step-by-step instructions for how to do something, and they help to ensure that tasks are completed correctly and consistently every time.
They can be used for everything from restocking shelves to shipping orders and can be tailored to the specific needs of your business.
As a general rule of thumb: if you perform a task more than twice in your warehouse, you should create an SOP for that particular task.
The value of SOPs cannot be overstated, especially in the world of small businesses, where the main stakeholders are guilty of holding all critical information in their heads.
Of course, there’s the old “what if you get hit by a bus?” sentiment, but SOPs also make training new employees much easier and allow you to record and analyze the shortcomings of the business.
Never were SOPs more important than in the dangerous, complex environment of a warehouse. To get started, study the SOPs of other businesses in your industry and then customize them to fit the needs of your own warehouse.
5. Train employees on best practices
One of the most important things you can do to ensure that your warehouse runs smoothly is to train your employees on best practices.
This includes everything from how to use the inventory management system to proper lifting techniques and ergonomics.
SOPs and training are two sides of the same coin. Once you’ve developed SOPs for mission-critical tasks, it’s important to train employees on how to follow them correctly.
This will help to ensure that everyone is on the same page and working towards the same goal.
In addition, regular training sessions will help to identify any areas where employees are struggling, so you can make changes to the SOPs as needed.
Finally, don’t forget to include a section on safety in your training sessions. Accidents can happen in any workplace, but they’re especially common in warehouses.
The best way to train employees is through a combination of classroom instruction and on-the-job training.
Classroom instruction can be used to cover the basics, while on-the-job training allows employees to get hands-on experience with the tasks they’ll be performing on a daily basis.
Investing in employee training is one of the best things you can do to improve efficiency in your warehouse.
6. Use pallet racks
One of the more practical ways to increase efficiency in your warehouse is to invest in pallet racks.
Pallet racks are storage racks that are designed to hold pallets, and they can be used to store just about anything.
They’re a great way to organize your warehouse and make it easier for employees to find what they need.
In addition, pallet racks can help to reduce the risk of accidents because they eliminate the need for employees to climb on top of shelves to reach items.
There are a few different types of pallet racks, so be sure to do your research before making a purchase.
The most popular type is the selective pallet rack, which offers the highest degree of flexibility.
Another option is the drive-in pallet rack, which is more compact and allows for higher-density storage.
Finally, there’s the push-back pallet rack, which is ideal for businesses that have a lot of turnover.
No matter what type of business you’re in, there’s a pallet rack that’s right for you.
7. Label everything
One of the simplest ways to increase efficiency in your warehouse is to label everything.
This may seem like a no-brainer, but you’d be surprised how many businesses don’t take the time to do it.
Labels help employees to find items quickly, and they can also help to prevent mistakes.
For example, if you have two products that are very similar, labels can help to ensure that employees pick the correct one. In addition, labels can be used to track inventory levels. This is especially important if you rely on just-in-time delivery.
If you don’t have a lot of experience with labeling, there are a few things you should keep in mind.
First, be sure to use durable labels that won’t fade or fall off over time.
Second, make sure the labels are legible from a distance.
And finally, don’t forget to label the shelves and racks in your warehouse. This will help employees to find what they’re looking for more quickly.
Check out our full guide on warehouse labeling best practices for more details.
8. Implement an inventory management system
If you want to take your warehouse efficiency to the next level, you should consider implementing an inventory management system.
An inventory management system is a software platform that helps businesses to track their inventory levels, orders, and deliveries.
It also streamlines and automates a lot of the tedious tasks associated with inventory management (while mitigating human error).
To learn more, check out our blog on what an inventory management system is and why it’s important.
If you want to scale your business, it’s essential to invest in a robust inventory management solution sooner rather than later. Check out all the ways SkuVault can help you get more products out the door and win more business.
9. Use heavy-duty shelving
All it takes is one accident to make the necessity of warehouse safety very, very real.
If you’re looking for a quick win to increase the safety (and efficiency) of your warehouse, you should consider investing in heavy-duty shelving.
Heavy-duty shelving is designed to hold more weight than standard shelving, and it’s also more durable.
This means that it’s less likely to tip over or collapse, which can obviously prevent a lot of accidents.
In addition, heavy-duty shelving is typically more expensive than standard shelving.
However, it’s important to remember that the cost of an accident (from a worker’s comp, insurance, or even litigation perspective) will far outweigh the cost of preventative equipment.
10. Create designated spaces for packing, processing, and shipping
Remember the old adage, “a place for everything and everything in its place”? This mindset can certainly benefit warehouse owners, especially when trying to develop organized systems and processes.
One simple way to make this a reality is to create designated spaces in your warehouse: one for packing orders, one for processing returns, and one for shipping.
This will help to keep your warehouse organized and prevent employees from getting confused about where they should be working.
It also cuts down on motion waste by having all essential materials for each station within arm’s length.
11. Audit your warehouse regularly
“Inventory audit.” These two words can strike fear into even the most battle-hardened and experienced warehouse owners.
Nobody likes audits, but there’s no way around them: if you’re going to have an organized and efficient warehouse operation, you need to perform regular inventory audits.
Audits don’t have to be painful, though.
The key is to have a good inventory management system in place (see tip 2). With the right software and a reliable barcode inventory system, you can automate a lot of the audit process and make it much easier for yourself and your team.
Plus, you don’t have to stay up all night and count everything in one go. You can utilize cycle counting to spread the task out over time.
12. Utilize a mezzanine
If you have a high warehouse ceiling, one way to make better use of your space is to utilize a mezzanine.
A mezzanine is an elevated platform that’s usually located in the middle of a room. It’s often used to create additional storage or workspace.
In a warehouse setting, a mezzanine can be used to create additional storage space for inventory.
It can also be used as a workspace for employees, such as pickers and packers.
If you have a high warehouse ceiling, utilizing a mezzanine is a great way to make better use of your space. Not only will it create additional storage space, but it will also help improve your warehouse’s overall efficiency.
13. Use efficient aisle patterns
One of the terms you’ll hear thrown around a lot in the warehousing world is “motion waste.” Motion waste is basically any movement in the warehouse that doesn’t contribute to the ultimate goal of getting product out the door.
One way to reduce motion waste is to use efficient aisle patterns when setting up your warehouse.
There are a few different types of aisle patterns that you can use, but the most important thing is to make sure that your aisles are wide enough for your forklifts or pallet jacks (whatever type of material handling equipment you’re using) and that they’re laid out in a way that allows for the most efficient movement of product.
The logical flow of your aisles should follow the picking, packing, and processing workflow of your team.
For example, let’s say an eCommerce business selling custom glassware stocks products on the North side of their warehouse.
They follow the aforementioned tip about setting up designated stations for processing and shipping and decide to set up their shipping station on the North side and their packing station on the South side.
Now, each and every time an employee goes to pick a product, they have to walk all the way across the warehouse to the packing station, then all the way back to the shipping station. This is obviously not very efficient, and it’s going to lead to a lot of motion waste.
With a little planning and foresight, they could’ve swapped those two locations so that after picking the product, the employee would only need to take one trip across the warehouse rather than two.
It seems small, but let’s say that trip takes the employee an extra 30 seconds per product. If you’re shipping a few dozen products a day, that adds up to several minutes. Over the course of a work week, you’re looking at at least an hour of wasted time.
Now, multiply that by two or three other employees and extrapolate those hours over the course of a year. You’re looking at some serious waste now!
That’s why motion waste and setting up logical warehouse layouts and aisle flows is such a big deal: it really does directly affect your bottom line.
14. Follow the 80/20 Rule or Pareto Principle
You may have heard of the 80/20 Rule, also known as the Pareto Principle. This rule states that, in any given situation, 80% of the effects come from 20% of the causes.
In a warehouse setting, this rule can be applied to products: typically, 80% of your revenue comes from 20% of your products.
This is important to keep in mind when setting up your warehouse because you’ll want to make sure that you’re allocating the majority of your space to your most popular and best-selling items.
There’s no need to dedicate an entire aisle or section of your warehouse to slow-moving items when you could use that space for items that sell like hotcakes.
Not sure which items are your top sellers? Look at your sales data from the past few months and see which products have been bringing in the most revenue.
These are the items you want to make sure have a prime location in your warehouse.
There are a few different ways to do this, but one common method is to set up your warehouse so that your fastest-selling items are closest to your packing and shipping stations.
That way, when an order comes in for one of those items, it can be quickly and easily picked, packed, and shipped with minimal effort.
Another method is to use ABC analysis, which is a method of inventory categorization. Items are broken down into three categories:
- A items are your top sellers and make up the majority of your revenue
- B items are your mid-level sellers that contribute to your bottom line but aren’t your bread and butter
- C items are your slowest sellers
Once you’ve categorized your items, you can set up your warehouse so that your A items have the prime locations, while your C items are stored in a less accessible area.
Of course, every business is different, and you’ll need to figure out what method works best for you and your products. But the important thing is to make sure you’re giving your best-selling items the attention they deserve.
15. Use as much vertical space as possible
If you’re running out of room in your warehouse, one way to free up some space is to start using your vertical space.
Think about it: most warehouses are set up so that everything is stored at ground level. But if you have high ceilings, why not take advantage of that extra space and start storing items on shelves or in mezzanines?
Not only will this free up some much-needed floor space, but it can also help you become more organized and efficient. For example, if you have a lot of small items that are often used together, you could store them on the same shelf, so they’re easy to find and grab when you need them.
Or, if you have seasonal items that you only need once or twice a year, you could store them on a high shelf or in a mezzanine, so they’re out of the way but still easily accessible when you need them.
Using your vertical space is a great way to make the most of your warehouse and ensure that you’re using your space as efficiently as possible.
16. Reduce SKU quantities
Another way to reduce clutter and free up space in your warehouse is to reduce the number of SKUs you have on hand.
This may seem counterintuitive – after all, wouldn’t more inventory mean more sales?
One way to reduce the number of SKUs you have on hand is to streamline your product offerings. For example, if you sell clothing, you may want to reduce the number of sizes and styles you offer.
Instead of having a size for every type of body, you could carry a few standard sizes that would fit the majority of people. Or, instead of having a different style for every type of occasion, you could carry a few versatile styles that could be dressed up or down.
By streamlining your product offerings, you can reduce the number of SKUs you have on hand without drastically reducing your sales.
Another way to reduce the number of SKUs you have on hand is to stop carrying slow-moving items. If an item hasn’t sold in six months, there’s a good chance it’s not going to sell at all. So why keep it in your warehouse where it’s taking up valuable space?
An excess number of SKUs also adds unnecessary complexity to your inventory management system.
Instead, get rid of slow-moving items and make room for new, more popular items. This will help you reduce clutter and make better use of your space.
17. Use cross-docking
Cross-docking is a warehouse strategy where incoming products are sorted and shipped out immediately, without being stored in the warehouse.
This may seem like a risky strategy – what if you need to make a return or exchange?
While there is some risk involved, cross-docking can be a great way to reduce waste and save space in your warehouse.
For example, let’s say you own a clothing store and you just received a shipment of shirts.
Normally, you would unload the shirts from the truck, sort them by size and style, and then store them in your warehouse until they’re needed.
With cross-docking, you would unload the shirts from the truck and sort them by size and style. But instead of packaging them and storing them in your warehouse, you would keep them in a temporary holding area to more easily ship them directly to customers.
Pro-Tip: This technique pairs well with the just-in-time inventory management technique.
This way, you wouldn’t need to use any warehouse space to store the shirts, and you could start selling them immediately.
Cross-docking can be a great way to reduce waste and save space in your warehouse. However, it’s important to only use cross-docking for items that are likely to sell quickly. For more information see our post on eCommerce cross-docking.
18. Keep your floor clean and clear
Another way to reduce clutter and make better use of your warehouse space is to keep your floor clean and clear.
This may seem like a no-brainer, but you’d be surprised how many warehouses are cluttered with unnecessary storage items, boxes, and other junk.
Not only does this make it difficult to move around and find things, but it also makes your warehouse look unprofessional. Plus, it makes the already volatile warehouse environment even more dangerous.
Here are a few tips for doing so:
- Get rid of unused storage items, boxes, and other junk
- Organize your inventory, so it’s easy to find what you’re looking for
- Keep aisles and walkways clear
- Label everything clearly
By following these tips, you can reduce clutter and make better use of your warehouse space. See other ways to stay organized in our post on how to manage warehouse inventory.
19. Improve your forecasting accuracy
Success in business, especially the warehouse business, often hinges on how accurately you can predict the future.
Since Elon Musk hasn’t invented a way to time travel yet, the next best solution is accurate forecasting and analytics.
Accurate inventory forecasting is essential for any business, but it’s especially important for warehouses.
When you have a good idea of what you’re going to sell in the future, you can plan your sales confidently and more intelligently set reorder points.
You can also better predict revenue, which in turn will help you understand how much capital you have to invest in more inventory (or other business improvements).
If you know that a certain product is going to be popular in the near future, you can stock up on that product and avoid running out of stock. This not only helps ensure that you’re able to meet customer demand, but it also helps prevent missed sales opportunities. All of these things serve to reduce waste and improve efficiency in your warehouse.
So how do you go about forecasting the future? Simply put, you need historical data. While it’s not always a surefire predictor of the future, it’s the best we have to go on.
Once you have historical data, you need to analyze it to find patterns.
You can use Excel or Google Sheets to do this, but that requires a lot of manual work. Inventory management systems often have built-in forecasting features that make the process much easier.
SkuVault, for example, uses machine learning algorithms to automatically detect patterns in your data.
It then uses those patterns to predict future sales and create actionable insights that help you improve your business.
Overall, accurate inventory forecasting can help improve your warehouse efficiency and increase your revenue. It’s an essential skill that all eCommerce business owners and warehouse managers must learn.
20. Utilize cantilever racks
If you have a lot of long, bulky items like lumber or pipes, cantilever racks can be a great way to save space and increase efficiency in your warehouse.
Cantilever racks are designed specifically for storing long, bulky items. They have arms that extend out from the uprights, providing a place to store your items without taking up a lot of space.
Plus, cantilever racks make it easy to access your inventory since there’s no need to move around other storage items to get to what you need.
If you have a lot of long, bulky items, cantilever racks can help you save space and increase efficiency in your warehouse.
21. Install conveyor belts
If you’re really looking to take your efficiency to the next level, conveyor belts are a great way to move inventory around your warehouse quickly and easily.
They can be used to transport items from one location to another or from one stage of the manufacturing process to the next.
Conveyor belts can also be used to sort items by size, shape, or weight.
And since they automate the process of moving inventory around, they can free up your employees to do other tasks.
If you’re looking for a way to increase efficiency in your warehouse, conveyor belts are a great option.
Check out our post on loading dock types to see if your warehouse setup can work easily accommodate conveyor belts.
22. Install warehouse-sized boxes, hoppers, and barrels
If you’re looking for a way to increase storage capacity in your warehouse, installing larger storage containers can be a great solution.
Warehouse barrels are a great way to store large items in your warehouse. They’re cylindrical in shape and can be easily accessed since they’re on wheels.
They come in a variety of sizes, so you can find one that fits your needs. And since they’re made of plastic, they’re weatherproof and rust-proof.
Warehouse hoppers are a type of container that is used to store small items. They come in a variety of sizes and can be easily accessed since they’re on wheels.
They’re made of plastic, so they’re weatherproof and rust-proof. And since they’re stackable, they take up very little space in your warehouse.
23. Use the right type of packaging
When you’re shipping products out of your warehouse, it’s important to use the right type of packaging. This will help to ensure that your products arrive safely at their destination.
There are a variety of packaging options available, so it’s important to find one that will work best for your specific products.
If you’re shipping fragile items, it’s important to use packaging that will protect them from breaking. One option is to use bubble wrap.
This will help to cushion your products and keep them safe during transit. If you’re shipping heavy items, it’s important to use sturdy packaging that won’t collapse under a heavy load.
There are a variety of warehouse set up ideas to increase efficiency in your space. By using the right storage solutions and shipping methods, you can ensure that your products arrive safely at their destination.
And by automating your warehouse operations with a dedicated inventory management system like SkuVault, you can free up your employees to do other tasks and mitigate human error in your operations.
To learn more about how SkuVault can help you increase the efficiency and profitability of your warehouse, schedule a demo today.