The Ultimate

Guide to
Warehouse
Layout
Optimization

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If you’ve been running a warehouse for a while, or this is your
first go at a new warehouse, the age-old question stands, “How
can I make this warehouse efficient or more efficient?”

Warehouse efficiency can play a big part in the success of your

operations. How fast you can stock the shelves, pick SKUs,
package inventory, and fulfill orders is based on how efficient
your processes are.

Strip efficiency down to where it starts. If your shelving is

inaccurate, your pickers slow down. If your pickers are slow,
items don’t get packaged. And if items don’t get packaged
quickly, it takes longer to fulfill the order. When you look at how
many orders you’re able to fulfill daily, the core of efficiency is
simply your warehouse layout.

Nailing down the details of your warehouse layout can be the

heart of the challenge. Over the course of this guide, learn about
the five core pieces of a successful warehouse layout. Before you
dig into your warehouse’s individual aspects, let’s start with a
floor plan.

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 There are five major areas
to consider when creating
a floor plan for your
warehouse.

1. RECEIVING

2. STORAGE

3. PICKING

4. PACKING AND SHIPPING

5. “FREE AREA”

Begin with where your

Create a Floor Plan inventory enters your
At the core of your warehouse layout, there’s a floor plan warehouse and the journey
blueprint. Before you start mapping this out, it’s important to order fulfillment starts:
to consider things like how many receiving, packaging, and
the receiving dock and area.
shipping areas you need, where to place your dead stock, and
how much space you need between racks for picking.

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Receiving
Receiving is where your warehouse layout starts. Without
receiving inventory, there’s no business to conduct. Think about
how many receiving areas you need for the volume of inventory
you have and where you should locate them so your workers
can take the least amount of steps possible. For example, if
Even dead stock should be shelved. There are reasons
you’re running a warehouse under 50,000 sq. ft. you probably
inventory will arrive when you don’t have use for it yet,
only need one receiving dock.
like when you receive Christmas decorations in March.
Create a place where dead stock lives so it doesn’t get
A receiving area is important for warehouses of all sizes, where
mixed in with all your other inventory.
all received items can be offloaded immediately to avoid clutter
and sorted for shelving.

How that receiving area is managed is important as well. Ask questions like:

Do items stay in receiving Are items being counted Are the items going to
until the appropriate and data collected before a forward location for
locations are determined? they are being racked? quick access?

All these questions need to be answered as you receive inventory and place it appropriately throughout your warehouse.

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Combination Docks Separate Docks
In a smaller warehouse, your shipping and receiving area In medium and large warehouses, your receiving areas will
probably share a dock. This can cause apprehension among look similar, with the only difference being inventory volume.
warehouse managers because you don’t want outbound In both sizes, your inventory flow will be fairly constant. Make
products getting in the mix with the inbound inventory. You sure your warehouse has separate docks, one for receiving
also want to avoid bottlenecks when workers are trying to and one for shipping.
load and unload trucks.
Creating a receiving area next to your dock still allows
inbound inventory to be efficiently stored without workers
However, for the sake of efficiency, there’s no real reason to on the dock disrupting truck unloading.
separate the two areas. With a small warehouse, combining
the docks will save time and steps for your employees to drop Once items hit the receiving area, it’s time to take them to
off and pick up orders, returns, and inventory. One way to stop storage.
mixups from happening is by adding a receiving area next
to your dock.
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Storage
The average inventory shrinkage is 0.2%, according to the
Warehouse Education and Research Council. Inventory
shrinkage is the loss of products from the time they’re
purchased from a supplier to the time it’s ready to be sold to
your customer. This can happen in a lot of ways — loss, damage,
equipment malfunctions — but it also occurs when items are
misplaced in your warehouse.

That being said, the placement of storage is an important

part of your warehouse layout. Your layout should reflect your
inventory. Consider each item’s velocity, or how fast it sells, to
create seamless and efficient on-floor operations.

High-velocity SKUs should have a separate storage area with a

daily amount of goods set aside near the packaging area. This
is called forward picking. Using this logic, your pickers only sift
through inventory aisles with relevant SKUs and don’t have to
pick the entire warehouse on a regular basis.

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If you have a warehouse management system (WMS), you
can streamline this process by using predictive analytics. This
process takes data from past picks to determine what item
velocity will look like from day to day. This helps you see what
items need to be stored closer to packaging and which low-
velocity items you can tuck away.

The racking method you take for high- and low-velocity

inventory is also important to overall layout efficiency. As your
items leave the receiving area, think about these things as you
determine where they should be placed on a shelf.

METHOD OF
WEIGHT
STORAGE

VELOCITY OF SEASONAL
PICKING VALUE

With your inventory and storage layout optimized, your

pickers should experience more efficiency on their route.

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Picking
Pick paths are the routes your workers take to gather inventory
off the shelves of your warehouse to fulfill an order. Depending
on the size of your warehouse, pickers may have a hard time
staying out of each other’s way, but on the flip side, picking a
whole warehouse can waste precious time.

Forward picking is an essential part of an efficient warehouse.

Without pulling daily amounts of high-velocity inventory off the
shelves and putting them in a central location near packaging,
pickers would need to scour your warehouse consistently.

Every step a worker takes in your warehouse costs money. The

fewer steps taken, the more orders fulfilled daily and the more
you earn. As you optimize your pick paths, think about the
shortest route between your storage and packaging area.

In a small warehouse, bottlenecks are sure to form without

proper pick paths. Prevent delays by making a linear path from
the receiving dock to storage, or from the forward picking areas
to packaging and shipping.

With this in mind, your workers won’t run into each other while
doing their job, streamlining overall traffic in your warehouse.

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Aisle Width
When you think about pick paths and different picking
methods, how you’ll be picking your SKUs. In a small warehouse,
picking will likely happen on foot or a small machine, so create
wide enough aisles to accommodate two-lane traffic.

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Keep aisle width in mind for medium and large warehouse floor
plans as well. It’s possible you may use larger machinery in a
big warehouse to reach higher shelves, so widen your aisles if
necessary to prevent bottlenecks.

The more you know about your inventory, the more efficiently
you can stage it in your warehouse for optimal picking. Once
you have a station for forward picking, place a packaging area
right next door.

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4
Packaging and Shipping
After your items are picked, the logical next step in your Like with your small warehouse, place your packing and
warehouse flow should be packaging. Don’t let packaging be shipping areas next to your final outbound shipping dock
an afterthought or a table you set up off to the side. Create location. The ship staging area next to your dock will act as a
a seamless path for inventory to be picked, packaged, and parking lot for fulfilled orders before they are sent away on the
shipped, without veering too far off the beaten path. appropriate truck.

In a small warehouse, this route may look like a circle, since Now that your floor plan is optimized for the entire order
your receiving and shipping areas may share a dock. Make sure fulfillment journey, it’s important to keep in mind the potential
to set up a large enough packaging area that it doesn’t get for future growth in your warehouse.
overcrowded. Once you have a packaging area set up close
to your shipping dock, you’ll need room for a shipping area
adjacent to the dock. This will prevent orders from piling up
before being sent out.

In a medium or large warehouse, you may need multiple

packaging and shipping areas to keep up with the volume
of orders being fulfilled. Since shipping is ultimately what
contributes to your bottom line, it’s important to create efficient
processes around it.

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5
Free Area
Hopefully, optimizing your warehouse layout creates more
efficient processes and brings in more business. If your
warehouse is at capacity, but your operations and number of
orders fulfilled continue to grow, it can feel overwhelming.

In a small or medium-sized warehouse, implement a “buffer”

zone or free space between your receiving and shipping area.
For the time being, this area can act as storage or extra space to
move more freely through the warehouse. But as the business
grows and changes, you can convert this space to extra packing
and shipping areas or extra forward picking room.

In a large warehouse, you may offer “value-add services.” This

may be item personalization, gift-wrapping, or selling a kit of
grouped items. In order to accomplish this in your warehouse,
you need a separate area to complete this service before
packaging.

Place this area off to the side if most of your orders don’t include
this service. However, if the majority of your orders do need this,
the best place to add it is between picking and packaging.

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How to Optimize
your Layout
Efficiently
Creating a layout manually requires you to measure each
aisle and make educated guesses on fulfillment needs. With
a robust warehouse management system, you can look at
your virtual warehouse layout, identify which items ship most
frequently, and your WMS will use those metrics to identify an
optimal picking methodology to get your warehouse operating
efficiently.

To understand what your warehouse layout should look like, it’s

helpful to first have visibility into your warehouse data.

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Data visibility includes When you implement a WMS, the metrics you need to optimize
your warehouse layout — and ultimately your order fulfillment
metrics on: — are at your fingertips.

• HIGH AND LOW- A WMS gives you the power to understand the best places
to put your inventory based on velocity, optimize your pick
VELOCITY INVENTORY paths, gain inventory data, and implement the right number
of shipping and receiving areas, and more, without having to
calculate it yourself.
• DEADSTOCK

Beyond initial optimization, tracking the results of your new

• DAILY ORDER processes and the related areas for growth is imperative to
FULFILLMENT keeping your warehouse healthy and eventually scaling to
match the growth of the business.

• EFFICIENT PICK
• PATHS Your WMS will provide continuous optimization data and
suggestions to the five core areas of your warehouse layout to
keep your warehouse running with maximum efficiency.
• BACKORDERS

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 How to Set Up and Benefits of Efficient
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Interested in taking a more in-depth look into how to optimize
your warehouse layout? Visit our blog and learn more about:
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