How to Design Warehouse Layout?

Does your warehouse struggle with limited space, low picking efficiency, or high operational costs? If so, you're not alone. Many warehouses face these exact same issues, and we're here to help you solve them!

The root cause of these problems often points to a single factor: warehouse layout. As a professional shelving manufacturer, we’re here to explain everything you need to know about it.

What is a warehouse layout?

First, you have to understand that a warehouse layout isn't just about filling your space with shelves. The placement of shelves and the width of aisles are both important factors. The core of a good warehouse layout is to maximize the efficiency of every square inch of your space.

A good warehouse layout is like a well-designed house—every room has a purpose, and the furniture is arranged in a way that’s both functional and easy to move around in. A bad layout is like a cluttered room, where you have to work hard just to find something or might even trip over things.

How does a warehouse layout affect warehouse operations?

Let's take a closer look at how a poorly designed warehouse layout leads to the problems we mentioned earlier.

Insufficient space

This is often just a symptom. The real issue isn’t that your warehouse is too small; it’s that the space isn't being used efficiently.

• Overly wide aisles: While wide aisles make it easy for forklifts to get around, they waste valuable storage space.
• Inefficient shelving: Shelving that doesn’t take advantage of vertical space, or that’s not suited for your specific products, creates a lot of “dead space.”
• Poorly planned zones: When the receiving, storage, and shipping areas are all mixed together, and goods are stacked randomly, the warehouse might look full, but a lot of the space is blocked and unusable.

Imagine you have a room with a high ceiling, but you only stack things on the floor, leaving all the space above empty. That's a huge waste, and the same applies to a warehouse.

Low picking efficiency

Picking efficiency is at the heart of warehouse operations and directly impacts customer satisfaction and costs. A poor layout can severely hinder it.

• Ineffective route design: If your pickers have to walk long distances or backtrack to complete a single order, their efficiency will be low. It’s like going grocery shopping and finding the bread in the west aisle, the milk in the east aisle, and the eggs in the middle—you have to walk back and forth multiple times.
• Poor placement of fast-moving products: If your best-selling, most frequently picked items (often called “fast-movers”) are placed in the back of the warehouse or on the highest shelves, it takes a lot of time and effort to pick them. It's like putting your most-used spices in the deepest part of your kitchen cabinet, where you have to move other items to get to them.
• Difficulty finding products: If your location labels are unclear or products are arranged without a system, the time pickers spend searching for items will increase significantly, which is even more wasteful than the time spent picking itself.

High operational costs

The two points above eventually translate into higher costs.

• Labor costs: Low picking efficiency means you need more people to do the same amount of work, or you have to pay them for overtime, which directly increases labor costs.
• Equipment costs: If your layout forces forklifts or AGVs (Automated Guided Vehicles) to travel longer distances, their energy consumption (for electricity or gas) and wear and tear will increase.
• Error costs: A disorganized layout leads to more picking errors, and the cost of returns and reshipments is much higher than the cost of getting it right the first time.

How to design a warehouse layout?

We follow seven steps when creating a warehouse layout plan.

Step 1: Start with data

Before you even start sketching, you need to become a “data detective.” Analyze your SKUs (Stock Keeping Units, or product types), historical order data, and future sales forecasts.

• Product dimension: How big are your products? How much do they weigh? Do they require special storage conditions, like refrigeration?
• Order dimension: Which are your A-list products (the fastest-moving items that make up 80% of your sales)? Which are your C-list products (the slowest-moving)? Are your orders for small quantities of multiple SKUs or large quantities of a single SKU?

Step 2: Plan your logistics flow

Just like designing a road network, the logistics flow determines how products move within the warehouse. A good flow should be like a one-way street, preventing products from moving back and forth. Common layouts include:

• U-shaped layout: The receiving and shipping docks are on the same side. This design maximizes space utilization and reduces internal transport distances. You can think of it like a race track with the start and end in the same place.
• I-shaped layout: The receiving and shipping docks are on opposite ends of the warehouse. This layout is perfect for FIFO (First-In, First-Out) processes, which is ideal for industries like food and pharmaceuticals that deal with products with expiration dates.
• L-shaped layout: This can be flexible and useful for certain building structures.

Step 3: Divide your space into functional zones

Divide your warehouse into different “functional zones,” each with a specific purpose.

• Receiving zone: Located near the receiving docks for unloading, counting, and quality inspection.
• Storage zone: This is the “heart” of the warehouse, where most of the products are stored. You’ll need to decide on a storage strategy based on product turnover rates.
• Picking zone: Usually located at the front of the storage zone, this is where you keep A-list products and other frequently picked items.
• Packing and shipping zone: Located near the shipping docks for packing, labeling, and loading.

Step 4: Optimize picking routes

Picking efficiency directly determines labor costs. The key is to design the shortest, most efficient picking routes.

• Golden locations: Place your A-list products in the easiest-to-reach locations for your pickers, usually at waist-to-chest height on the shelves.
• Picking strategy: Choose the right picking method based on your order characteristics, such as single-order picking, batch picking, or wave picking.

Step 5: Choose the right shelving and equipment

Different types of shelves are suitable for different storage strategies.

• High-density storage: If you need to maximize storage capacity, drive-in or shuttle racks can significantly reduce aisle space and increase space utilization.
• High-efficiency picking: If you have a high picking frequency, carton flow racks can automatically slide products to the picking face. Very Narrow Aisle (VNA) racking can save floor space by using high-level storage, and it improves efficiency with specialized forklifts.
• General storage: Pallet racking is the most common option. It provides direct access to any pallet and is highly flexible.

Step 6: Integrate technology

Modern warehouses need technological support. A Warehouse Management System (WMS) can help you accurately manage every location, optimize picking routes, and provide real-time data analysis.

Step 7: Maintain flexibility and scalability

A good warehouse layout isn't set in stone. It needs to be adjusted as your business grows and your product structure changes. By choosing modular shelving systems like the ones we offer, you can easily reconfigure or expand your layout in the future.

5 common mistakes to avoid when designing a warehouse layout

To help you avoid pitfalls, here are five common mistakes beginners make:

1. Thinking only about the present, not the future: Not leaving enough room for business growth.
2. Focusing only on the floor plan, ignoring vertical space: Neglecting the height of the warehouse and wasting valuable storage space.
3. Blindly pursuing automation: Investing in expensive automated equipment without a clear plan.
4. Ignoring employee feedback: Not listening to the opinions of frontline operators, which leads to a layout that looks good on paper but isn’t practical.
5. Not optimizing regularly: Letting the layout become stagnant after it's complete, which causes efficiency to decline over time.

Conclusion

When it comes to warehouse layout design, we always say, "There is no best layout, only the most suitable layout." Are you currently looking to purchase shelving for your warehouse? If so, we welcome you to contact us! We not only provide high-quality shelving, but also offer professional warehouse layout design services!