Rightsizing Your Warehouse: A Strategic Approach

Optimized warehouse space calls for accurate inventory data, reliable demand forecasting, and a vision for smarter industrial racking.

Are you thinking about changing the layout of your warehouse to improve operations? Then congratulations—you’re already rightsizing!

So how do you cut through the noise and rightsize your way to real results? Before crafting a plan to rightsize your warehouse, let’s outline the crucial elements every rightsizing plan needs to succeed, regardless of size or the industries you serve.

Actionable inventory data

The most successful warehouses are the ones that extract powerful insights from their historical data and capitalize on them.

It is too bad that one in five warehouses considers “inadequate information systems support” a major issue. It seems as though many warehouse management systems, as well as the operations around them, simply aren’t collecting the data that powers informed decisions. And even if they are, the decision-makers in the warehouse can’t or aren’t accessing it.

To build the groundwork for accurate forecasting, another element of rightsizing your warehouse, which we’ll discuss later, a warehouse needs eyes on data like the following:

• Velocity reports to determine what stock moves and doesn’t.
• ABC analysis to gauge the value of goods based on popularity. 
• Batch tracking for quality control and loss prevention.

Whatever data you collect, remember to exercise best practices: gather data for a reason (not just because it’s available) and craft repeatable, sustainable systems for securely procuring that data and vetting it.

Accurate demand forecasting

Demand forecasting is all about balance: you must keep enough buffer stock to meet fluctuating demand, but only what will sell and not become dead stock. Strong, intentionally collecting historical data 

What key performance indicators can guide you to hitting your stock targets and maintaining customer satisfaction?

• Inventory turnover is the rate your warehouse turns over its inventory in a given time, usually within a fiscal year. Is your high turnover rate a sign of strong sales or insufficient stock? This square-one KPI can tell you a lot if you dig below the surface. 
• Fill rate is a measurement of how often you can meet customer orders with available stock. You should also consider similar metrics, such as your vendor and supplier fill rates, to track the reliability of your partners. Fill rates are also good indicators of overall customer satisfaction.
• Mean absolute percentage error (MAPE) measures the deviation from your warehouse demand forecasting models. The higher the percentage, the greater the average percentage difference between your forecasted value and the actual value. Warehouses may instead prefer to employ MAPE’s sibling formulas, mean squared error (MSE) and root mean squared error (RMSE), but the result is the same: are we hitting our mark, yes or no?

Smart Warehouse Racking Systems

Did you know that by selecting intelligently designed custom warehouse shelving, a warehouse can bake the best principles of rightsizing into its operations?

Think horizontally and vertically

Industrial vertical racking with mobile carriages gives warehouses lucrative options for reconfiguring their space. With multiple tiers and a collapsible aisle design, industrial mobile racks can increase a warehouse’s storage capacity without increasing its storage footprint or optimize its existing storage to make room for other necessary operations.

Reduce picking times

While you’re rightsizing your warehouse, it’s good to think about the placement of your highest-traffic SKUs. Every second saved by reducing picking and returning times on your most popular SKUs will add up fast to greater productivity at lower cost. And with the right warehouse racking installation expert, you can plot out the perfect layout to achieve that goal without ever having to venture down an aisle.

Save inch by inch

When it comes to rightsizing even the largest warehouse, never underestimate the power of small savings. Custom bins and racks that perfectly fit your unique inventory and equipment will squeeze every drop of savings from your installation.

Where does industrial shelving fit into your rightsizing strategy?

As you draft your plan for rightsizing your warehouse, or laying out a plan for constructing a warehouse from the ground up with rightsizing principles in mind, reach out to your local Authorized Montel Distributor for a free consultation.

They can talk with you about your rightsizing goals and recommend layouts and industrial racking solutions that can help you get the most out of your space. Ask about the free 2D and 3D renderings we can render of your ideal warehouse layout.