If your facility is packed to the gills, you may feel like you’re staring down two very disruptive and expensive choices: building a new warehouse or relocating to a bigger building.

What if there was another way?

Well, there is. Optimizing your existing warehouse space is a less expensive solution that can also boost efficiency and safety. 

Many companies assume no amount of reconfiguration will make their current space work. But Scott Carlin, Chief Sourcing Officer/EVP Racking and Automation, points out that there are many “hidden” spaces in even the most jam-packed facility.

Carlin is a big believer in Lean principles, a business model that focuses on improving processes in order to eliminate waste and increase value. He approaches every project with this mindset and finds it extremely helpful for customers struggling with space constraints.

“Land is expensive, as is moving your entire operations from one location to the next,” says Carlin. "If you can find ways to free up space, improve your processes, and help your team be more productive, wouldn't that make a lot more sense?"

Carlin and the TFS team have helped clients across North America design and execute lean warehouse transformations, negating the need to build from the ground up.

Along the way, they’ve zeroed in on the common elements for successful outcomes.

For example, Carlin says it’s crucial to get buy-in from leadership. Some are reluctant to disrupt the status quo, while others may be skeptical about whether existing space can really be configured to work as well as a new space.

That’s why Carlin likes to build a business case demonstrating the benefits.

“Leaders can be reluctant to change, which is understandable—but it’s actually more disruptive to move your operations or build a new facility,” Carlin says. “Plus, done properly, a warehouse reconfiguration not only gives a company far more space, it increases efficiency, reduces waste, enhances the quality of their operations, improves customer satisfaction, and, ultimately, boosts profitability.”

Carlin says it’s also important to foster buy-in from mid- to lower-level employees. That includes the warehouse staff, who will ultimately have to learn and use the resulting processes and technologies.

“Everyone needs to be speaking the same language,” adds Carlin. “You’ll have a much easier time getting support for projects when everyone understands how they’ll benefit.”

Starting the journey

Any effective warehouse initiative must begin with a clear understanding of an organization's concerns, as well as current processes.

Value stream mapping is one of the first steps toward creating an optimization game plan. This is the exercise of documenting existing workflows and value streams across the operation (e.g., receiving, inventory management, fulfilling, shipping, etc.) and analyzing each to identify areas of waste (e.g., excessive movement, waiting times, overproduction, inventory buildup, or unnecessary transportation).

“Once you’ve done that, you can create a visual representation of the current processes to identify opportunities for improvement,” Carlin explains. “It helps leaders and company shareholders better understand their starting point.”

Also crucial: a cross-functional team to guide the optimization journey. Recruit employees from relevant departments, including those with expertise in warehouse operations, process management, data analytics, and beyond.

Don’t forget warehouse workers who understand how things work on the floor. Also consider including partners who can offer an impartial, “outsider” perspective.

Getting to work

What does warehouse optimization look like in practice? On a broad level, going “lean” means implementing skills, tools, and strategies that achieve the following goals:

1. Eliminating waste: Process mapping and validation exercises can find ways to reduce or eliminate the common causes of waste in a warehouse. Potential strategies can range from quick fixes (e.g., decluttering workspaces, clearing obstructions, adding signs to facilitate warehouse traffic, etc.) to more systematic changes (e.g., streamlining processes, implementing just-in-time inventory management and optimizing layout for efficient material flow).
2. Optimizing the layout: In the process of conducting a thorough review of your warehouse’s layout and storage configuration, you’ll often discover previously overlooked space.

Carlin says that once businesses have a good sense of the raw space, it opens up many potential improvements. For example, Carlin has helped customers rearrange storage areas, add vertical storage solutions, optimize inventory management practices to avoid overstocking, and use techniques like ABC analysis to more easily access high-demand items.

"There are so many overlooked and underutilized spaces in a typical facility," Carlin says. "For example, many companies have thirty-foot roofs but are only using nineteen-foot-tall racks, leaving 'dead space' from the top of their racking to the bottom of their ceilings."

That newly discovered space offers the potential for more storage levels, a new rack layout, or more appropriately sized forklifts. Of course, you’ll want to get an expert evaluation to ensure your current racking and material handling equipment can handle the increased loads.

3. Improving inventory: The last few years wreaked havoc on the traditional ways of managing inventory. For example, many companies shifted from just-in-time to just-in-case systems—and found themselves with a glut of inventory taking up space. For companies reluctant to go back to just-in-time, a blend of the two systems might serve to allay fears as the world returns to “normal.”

Whatever system you choose, any warehouse overhaul must utilize inventory tracking tools, barcode systems, or warehouse management software to streamline processes, reduce errors, free up space, and optimize stock.

4. Taking advantage of warehouse tech: Don’t overlook automation. Technology can not only help make the most of your newly discovered space, it can also increase safety and improve employee retention.

For example, automated racking, picking robots, conveyor systems, and automated storage and retrieval systems (ASRS) can efficiently tackle more repetitive or dangerous jobs.

And if your company, like many, lacks the data needed to make informed fleet management decisions, consider Computerized Maintenance Management Systems (CMMSs) or telematics.

Keeping the transformation on track

You can keep teams engaged throughout the transformation by encouraging a culture of accountability and collaboration. Consistently encourage and empower employees to share their feedback; build in moments for teams to assess the progress they’ve made to date.

“When I do a project, I like to include breaks—or quality gates—where we can stop what we’re doing, evaluate the impacts, and correct course if needed,” says Carlin. "Remember, this is a journey. Successful transformations don't happen overnight. They result from upfront planning, organization-wide collaboration, and an understanding of where and how lean practices benefit everyone."             

A warehouse move may seem like the best way to enhance operations. And yet, by working with optimization specialists like TFS, it's possible to transform the space you’re in into the one you want.

In other words, if you think you’ve outgrown your warehouse, a closer examination may disprove your belief. In fact, it’s very likely that you can “discover” enough space to avoid a disruptive and costly move to a new warehouse. However, any change—even a “lesser” change like a facility overhaul—must be carefully considered and implemented to ensure maximum success.

If you're being asked to drive more uptime and operational productivity in your facility—and who isn't feeling this pressure these days? — you'll be happy to learn about some overlooked areas of improvement right under your nose. Just three manageable—but meaningful — changes to your fleet management program can supercharge your warehouse productivity.

If it feels like fleet management is a battle between corporate management and facilities, that’s because it often is. But it doesn’t need to be.

In fact, both groups can “win”—and when that happens, so does the overall company.

Blake Tucker, Regional Vice President, TFS, has seen this struggle occur in many companies—and has tips on how to fix it. However, it’s important to first understand why corporate executives and plant managers have different priorities and perceived benefits of fleet management enhancements.

TFS employees visit thousands of facilities each year. That's how we know that even the most respected names in manufacturing and distribution—Fortune 500 companies with huge budgets—are struggling.

While these big companies have more advantages than most of their peers, they still deal with long MHE lead times, labor shortages, and extreme pressure from the C-suite. We often find that material handling execs have no idea how many MHEs they have overall, let alone in different locations. They've usually lost track of the expensive rentals they're using to fill the gaps while they wait for equipment. And forget about getting the data they need…

It's a mixed forecast for material handling stakeholders. On the one hand, prices are improving and equipment wait times are coming down. On the other, economic hardships and labor challenges continue to cloud the future.

How can facilities stay ahead? To find out, we went straight to Jason Laws, who estimates he and his team have spent countless hours talking with 10,000 material handling executives. In the process, Laws, TFS's Market Development Manager, has not only gained deep insights into the issues facing facilities, he has crafted solutions that increased uptime and saved money.

The only thing that’s remained constant in material handling during the past few years is change. That’s already continued in 2023 as economic predictions are already shifting from a definite recession to the economy remaining on a growth trajectory.  The advanced technology and social shifts in terms of workforce and consumer demand volatility make this a difficult management environment for facility leaders.