2.1 Warehouse layout

Warehouse layout is the arrangement of the areas, storage systems, aisles and equipment inside the warehouse building, showing where each activity takes place and how goods move from receiving to dispatch. While warehouse design decides the building itself, the layout decides how its floor and height are used. A good layout shortens travel, avoids congestion, protects goods and makes the best use of the space paid for.

Example: a Kenyan distributor of building materials draws its layout to show the receiving dock, an inspection area, block-stacked cement near the doors, racked tiles and paint further in, a picking area, a dispatch marshalling area and the stores office, with arrows showing the route of goods.

Main areas of a warehouse layout

• Receiving area: Docks or doors where goods are unloaded, counted and checked against delivery documents.
• Inspection and quarantine area: A marked space where goods wait for quality inspection, and where rejected or doubtful goods are kept apart.
• Storage area: The main area where goods are kept in bulk stacks, racks or shelves until needed.
• Picking area: Where items are selected for orders, often close to dispatch for fast-moving lines.
• Packing and marshalling area: Where orders are packed, labelled and grouped by route or vehicle before loading.
• Dispatch area: Docks or doors where goods are checked out and loaded.
• Support areas: Offices, document rooms, battery charging, equipment parking, staff facilities and a secure cage for high-value items.

2.1.1 Characteristics of a good warehouse layout

The characteristics of a good layout are the features that can be seen when a layout works well. They are used to judge a proposed layout or to find the faults in an existing store.

• Straight, one-way flow: Goods move from receiving through storage to dispatch with no back-tracking and no crossing of incoming and outgoing goods.
• Short travel distances: Fast-moving items are stored nearest to the picking and dispatch areas, so that most movements are short.
• Clear and adequate aisles: Aisles are wide enough for the handling equipment, marked on the floor and kept free of goods.
• Good use of cube: Both floor area and height are used, with racking or stacking up to the safe clear height.
• Easy access to every item: Each location can be reached without moving other goods, and every location has an address that matches the stock records.
• Separation of special goods: Hazardous, high-value, perishable and quarantined goods have their own marked areas.
• Visibility and supervision: Supervisors can see the main activities, and the office overlooks receiving and dispatch.
• Safety: Fire exits, extinguishers, walkways and emergency routes are marked and never blocked.
• Flexibility: Areas can be resized and racking moved as the product range or volumes change.

2.1.2 Principles of a good warehouse layout

The principles of layout are the rules that a stores manager applies when planning where things go. Following them produces a layout with the characteristics described above.

• Principle of flow: Arrange areas in the order of activities, receiving, inspection, storage, picking, packing and dispatch, so that goods move forward in one direction.
• Principle of popularity: Place the items that move most often closest to dispatch and at waist height, and slow movers further away or higher up. ABC analysis of issues is used to rank items.
• Principle of similarity: Store items that are usually issued together near each other, so that one trip can pick a whole order.
• Principle of size and weight: Store heavy and bulky items near the floor and close to the docks, and light, small items on shelves and higher levels.
• Principle of compatibility: Keep apart goods that can harm each other, such as chemicals and foodstuffs, or goods with strong smells and absorbent goods.
• Principle of space utilisation: Use the full height and keep aisles to the width needed by the equipment, without wasting floor space.
• Principle of safety: Plan for safe movement of people and equipment, fire separation and clear emergency exits.
• Principle of flexibility: Leave room to rearrange and expand the layout without disrupting operations.
• Principle of minimum handling: Plan so that goods are handled as few times as possible, preferably as unit loads on pallets.

2.1.3 Types of warehouse layouts

Warehouse layouts are named after the path that goods follow between the receiving and dispatch docks. The choice depends mainly on the shape of the building, the position of the docks and the volume of goods moving through.

2.1.3.1 U-flow layout

In a U-flow layout the receiving and dispatch docks are on the same side of the building. Goods are received, moved into the storage area and then come back towards the same side to be dispatched, so their path forms the shape of the letter U.

Advantages:

• Docks, dock staff and equipment can be shared between receiving and dispatch, which makes good use of them.
• Fast-moving items can be stored near the docks, giving very short travel for most movements.
• The building can be extended on the three sides away from the docks.
• Security is easier, because there is only one side of the building for goods to enter and leave.

Disadvantages:

• Incoming and outgoing goods may become congested at the docks when both are busy at the same time.
• Received goods must be kept clearly separate from goods awaiting dispatch to avoid mix-ups.

Example: a medium-sized regional warehouse of a Kenyan hardware distributor with one long loading front and a yard on one side uses U-flow, with deliveries in the morning and dispatch loading in the afternoon.

2.1.3.2 Through flow layout

In a through flow layout, also called straight-line flow, goods enter at receiving docks on one side of the building and leave through dispatch docks on the opposite side. They move in a straight line through the storage area.

Advantages:

• Receiving and dispatch are completely separate, so there is no conflict between incoming and outgoing vehicles and goods.
• The flow is simple and easy to control, which suits high volumes and cross-docking.

Disadvantages:

• All goods, including slow movers, must travel the full length of the building, which increases travel distance.
• Docks on two sides need two yards and more security points, and make it harder to extend the building.
• Dock staff and equipment cannot easily be shared between receiving and dispatch.

Example: a distribution centre of a Kenyan beverage distributor that receives full truckloads from the factory at one end and dispatches route lorries from the other end uses through flow.

2.1.3.3 Inverted T

In an inverted T layout the docks are on one side, as in U-flow, but the storage area is arranged in the shape of an upside-down letter T. A main central aisle (the stem) runs from the dock side into the building, and at its far end it meets a cross aisle (the bar) that serves storage areas on both sides. Goods received at the docks move along the stem to their storage zone and return along it to dispatch.

Advantages:

• It keeps the advantages of shared docks found in U-flow while giving more storage zones served from one main aisle.
• Fast-moving items can be placed along the stem near the docks and slow-moving or bulk stock in the wings of the bar.
• Different product groups can be given their own wing, which helps separation and control.

Disadvantages:

• The central aisle carries all traffic and can become congested at busy times.
• Goods stored at the ends of the bar have long travel distances.

2.1.4 Optimal utilization of warehouse space

Optimal utilisation of warehouse space means storing the largest quantity of goods that the building can safely hold, while still keeping every item accessible and the flow efficient. Space costs money in rent or capital, so unused height, wide empty areas and badly packed locations raise the cost of storing each item. However, filling every corner is not optimal either: a warehouse that is too full slows down receiving and picking and causes damage.

Ways of achieving optimal space utilisation

• Use the height: Install racking or stack goods up to the safe clear height instead of storing only on the floor.
• Choose the right storage system: Use pallet racking, drive-in racking, mobile shelving or mezzanine floors according to the goods and the number of lines.
• Size aisles to the equipment: Narrow aisles with suitable reach or narrow-aisle trucks store more than wide aisles planned for counterbalance forklifts.
• Match locations to goods: Size each bay or shelf to the load stored, so that little space is left above or beside the goods.
• Use random (floating) location where suitable: Allow any item to be put in any free location, recorded in the system, instead of keeping fixed empty places for each item.
• Dispose of obsolete and surplus stock: Remove dead, damaged and expired stock so that its space can be used for active goods.
• Use standard unit loads: Pallets and cartons of standard sizes stack and fit racks better than loose goods.
• Review the layout regularly: Re-slot items as their movement changes, so fast movers stay near dispatch.

Measuring space utilisation

Space utilisation shows how much of the usable storage space is occupied.

Space utilisation (%) = Space occupied by goods ÷ Usable storage space × 100

Example: a warehouse has 1,200 pallet locations, of which 930 hold goods.

Space utilisation = 930 ÷ 1,200 × 100

= 77.5%

2.1.5 Key performance indicators for a warehouse layout

Key performance indicators (KPIs) are measures used to judge how well the layout supports warehouse operations. They are calculated regularly and compared with targets and with past results, so that problems such as congestion or long travel can be found and the layout improved.

• Space utilisation: The share of usable floor area or storage locations occupied, as calculated in 2.1.4. Very low values show wasted space; very high values warn of congestion.
• Cube utilisation: The share of the total storage volume (floor area times usable height) occupied by goods, which shows whether the height is being used.
• Travel distance or time per pick: The average distance or time a picker covers per order line. A good layout keeps this low.
• Picking productivity: Order lines or units picked per labour hour.
• Dock-to-stock time: The time from unloading goods to their being put away and available in the records.
• Order cycle time: The time from receiving an order or requisition to dispatching the goods.
• Order picking accuracy: The percentage of orders picked without errors in item or quantity.
• Damage rate: The value or number of items damaged in handling compared with the total handled, which reflects aisle widths, congestion and equipment.
• Cost per unit handled: Total warehouse operating cost divided by the units or pallets handled.
• Dock utilisation: The share of available dock time actually used for loading or unloading.

Example of order picking accuracy: in a month a warehouse dispatches 2,400 orders and 36 are returned with picking errors.

Order picking accuracy = (2,400 − 36) ÷ 2,400 × 100

= 2,364 ÷ 2,400 × 100

= 98.5%