Business is Growing! Do We Need a Bigger Warehouse?

Good news—business is growing and you need a bigger warehouse.Bad news—business is growing and you need a bigger warehouse.
How can this situation be both good and bad? Well, if you are running out of space in the warehouse, then that can be a sign of genuine growth. On the other hand, a shortage of space might also indicate storage mismanagement. This blog takes a look at some of the ways you can determine why you are short on space and whether or not you really do need to move into a larger warehouse.

Is Available Space Used Wisely in Your Current Warehouse?

Before you start searching for a new warehouse, take a look around the one you’re in and make sure all of the available space is being used. Is your warehouse racking system—also known as materials handling systems—maximizing space and augmenting the organization of your warehouse? Are the shelves filled or do you see empty spaces? Maybe there’s a better way to arrange inventory.

Don’t forget to look up, too. Perhaps your warehouse has a lot of vertical space that is currently unused. If you really are running out of floor space, then consider moving up rather than out.

Review your inventory to know what products sell consistently—those should remain within easy reach near the floor. Slower selling items, however, could be stored in a vertical system.

How Efficient is Your Warehouse?

In an efficient warehouse, things move like a well-oiled machine. Workers are not crowded in one area, while in another they have room to spare. There aren’t traffic jams to slow productivity, and filling an order doesn’t require making too many trips around the floor.

Rather than incur the cost of moving, you may want see if you can better optimize the layout of your current warehouse. Here are some tips:

  • Prioritize high-traffic areas so they don’t get congested
  • Products that are commonly purchased together should be stored near one another
  • When orders are filled, make sure all of the items in one area are picked before moving on to another area
  • Orders should be arranged so that the last stop of a picking run is the one closest to the shipping area

Choosing the Right Warehouse

If you’ve done everything to ensure the best use of space in your current warehouse but there still isn’t enough room for inventory, then it’s probably time to move. Choosing the right warehouse is crucial to safeguarding the continued profitability of your company.

Primary considerations are where a warehouse is located and the space offered. A good location will allow you to conveniently receive goods and ship orders to customers. Therefore, consider the type of transportation routes needed—highways, railways, airports or waterways—and choose accordingly.

Once you’ve narrowed down location, the next important factor is warehouse space. Don’t only consider square footage and volume, but also the layout. Does it suit the way your business operates? Will you be able to optimize the processes that keep inventory moving in and out of the warehouse? Do you need a rear load or cross-dock facility?

You’ll want to select a warehouse that strikes a balance between accommodating business development and having too much space for too long. Let’s face it—moving is laborious and costly. So, before beginning the search for a new warehouse, analyze figures that signal potential growth.

Other factors to consider when looking for a new warehouse include:

  • The type of products that will be stored and their characteristics, i.e. perishable or non-perishable goods, hazardous or non-hazardous, etc.
  • The quantity, weight and volume of items in your inventory
  • The length of time products will be stored
  • The frequency of deliveries and shipments
  • Security needs for the building, its contents—equipment, machinery and furnishings—and vehicles
  • Utilities required including electricity, water, Internet access and phone

Finally, don’t trust everything you read. A warehouse that looks great on paper should still be visited in person. Have your commercial real estate broker take you to see the building so you can check the integrity of the structure, evaluate the roads as well as points of entry and exit, and assess whether there are maintenance concerns or damaged areas in need of repair.