Storage Optimization in a Warehouse - An Overview

Storage optimization can bring in significant cost reduction due to high utilization of warehouse space, the key warehouse resource. Moreover it is driven by the principle “When placed right taking it away is easier and efficient”. How we decide on the optimal location for putaway is key to the success of storage optimization.

There are different types of storage allocations possible in a warehouse. Each of these have their own merits and demerits. This article is to illustrate the guiding principles and the merits and demerits of those strategies.

1. Dedicated Storage:

Each location inside the warehouse is assigned to specific item meaning only that item can occupy in a particular location. This method reduces picking errors to a large extent and easier to handle things inside a warehouse. The main disadvantage is space optimization is very less as a location dedicated to an item cannot accommodate another item. If that particular item is out of stock the location remains vacant. The number of locations needed inside a warehouse increases drastically in case of dedicated storage method. This method provides high travel time efficiency as we can place the fast moving items close to the shipping dock doors. Usually forward pick areas inside the warehouse have dedicated storage. The location assignment is based on slotting principles. Only the fast moving items are placed in the forward locations and hence chances of low space utilisation is less.

2. Random Storage:

At the time of putaway, the locations are randomly chosen for the putaway of the items. Each eligible location has equal probability of occupying a specific load. This method provides high space utilization but poor travel time efficiency as the fast moving item can be placed in the rear side of the warehouse and the slow moving item closer to the dock doors.

3. Closest Open Location Storage:

In this method, the location is chosen based on which is the closest location eligible for storage at the time of putaway. Over a period of time the travel time efficiency reduces significant as the slow moving items keeps occupying the closest locations. This method provides high space utilization.

 

4. Class Based Storage:

In this method, the items are segregated in different classes such as A, B and C class items. A class items are fast moving items. B class items are medium moving items and C class items are slow moving items. The classification is done based on Pareto principle (80:20 rule). The locations inside the warehouse are divided into three zones. A class items are stored in ‘A’ zone and ‘B’ & ‘C’ class items are stored in their respective zones. Inside a zone the items can be stored randomly are based on put travel sequence of each location. This method offers high travel time efficiency. Space utilization is comparatively less when compared to random storage method. The space utilization is constrained by the item class. For example a location earmarked for ‘B’ class items cannot accommodate ‘A’ class item.

5. Full Turn over Storage:

This method is driven by Dynamic slotting principles. Items are stored based on their turn over volumes. A very fast moving item is stored close to the dock door and the second item based on the turnover is stored in the next location. As the turnover of the items changes the storage assignment also gets changed. This method is highly data intensive and come with hassles related to frequent change of location. Nevertheless this method offers the highest travel time efficiency and space utilization when compared to other methods.