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Understanding storage

08 October 2014

SEC Storage MD Steve Watts tells HSS editor Simon Duddy that great benefits can be gained from fully understanding how storage should work for your business.

SEC Storage outlines the finer points you must bear in mind if you want to make the most of any planned warehouse storage project.

Simon Duddy: How important is it to strike a balance between efficient storage and fast retrieval?

Steve Watts: The term ‘efficient storage’ could mean different things to different people – efficient storage to me is the most effective utilisation of the cubic space available based on a combination of factors and it can vary hugely from one client to the next.


Some people may feel that a warehouse that is 95% full is an efficient use of space, however, it does not necessarily follow that this is an efficient operation and may require a substantial amount of stock management to achieve this capacity. In other situations a much lower percentage utilisation of space could prove to be a hugely more cost effective operation. The balance between efficient storage, stock management and retrieval is extremely important.

For example, we are currently working with an online retailer who is offering over 10,000 line items on next day delivery from a stock of 1.5m items. The order profile is an average of under 3 items per order with over 15,000 orders per day. The existing warehouse is using fixed bin picking location which require constant replenishment. Albeit that the use of space is effective, it requires a huge amount of resource to replenish the stock and pick the orders. The actual unit cost per item is excessive and servicing the orders is becoming more labour intensive and difficult.

We have identified that operating a random stock location system, which is picked until cleared, will have huge operational benefits. This will save on replenishment and improve the access to stock for pickers but at best will only ever be approximately 70% full. However, add to the mix good IT management and a conveyor and we believe that we can increase the item picked per person employed from 60 per hour to 300 per hour.

Another example, we worked with a leading snack food manufacturer who was looking to increase the overall storage capacity within their warehouse. Although the number of pallet spaces required at peak could be achieved within a narrow aisle racking solution offering 100% effective accessibility, we identified that this would not necessarily be efficient operationally. Once we profiled the stock and analysed throughput they opted for a wide aisle double deep system which has proven very effective and offers versatility and flexibility to the operation whilst still maintaining very high levels of cubic efficient use of space.

Striking a balance between efficient use of space and operational efficiency is hugely important.

SD: How can a company improve space utilisation?

SW: In the first instance always have a focus on what the business is trying to achieve in terms of service levels to the customer and not be seduced by pure maximum use of space.

Always consider your stock profile, the actual number of lines and depth of stock – look at the average stock turn within the warehouse.

Try and avoid having too many variable location sizes – I try to standardise to a maximum of 3 – small, medium and large. These can of course vary but should be able to hold ALL potential stock variables. In a perfect world I would try to establish 1 size fits all however accept this is not always possible. Limiting variables is key.

In a large number of businesses the 80/20 rule applies (80% of volume applies to 20% of lines). This is remarkably consistent. If this is true then don’t be concerned about separating stock by activity i.e. keep your fast moving items together. Many businesses still keep products in groups or styles. Be prepared to challenge this!

Always be prepared to do it differently – just because you have always done it like that doesn’t mean you shouldn’t challenge it or change it!

SD: At what stage of warehouse acquisition or construction should you consider storage options?

SW: It never ceases to surprise me how many people will embark on this without actually considering the effective use of the cube. Often decisions are made based on very little evaluation – "My warehouse is full and I am planning on doubling the business in the next 5 years so I need a warehouse twice the size.” This often is just not the case.

Warehouses are not cheap – the cost of a warehouse will dwarf the cost of the fit out over its expected life so maximising the potential cubic use of space is crucial. This may well reduce the actual footprint required and therefore cost of the warehouse, plus associated business costs. To me planning the warehouse to fit the business needs should be done before the acquisition process is even embarked upon. This will enable you to focus on exactly the right size facility. It is easy enough to factor certain variables such as height. It is also a good time to understand the other implications the fit may have on the building.

Being involved early in a new build has huge advantages and can significantly impact on return on your investment, so I would recommend that you plan the design at the beginning.

SD: Any final tips for our readers?

SW: Be brave and be prepared to completely "rip it out” and start again. Although this is rarely necessary! Gains can often be achieved with simple modifications or changes in MHE but the important thing is to remember warehouses are not cheap and nor are people. The more effective utilisation of the cube and the more efficient you can become will often provide significant return on investment very quickly.