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Warehouse Organization: Layout & Design

By
Bradley Johnson
Table of Contents

Given the rapid pace of eCommerce growth, it’s no wonder warehouse organization, layout, and design is a hot topic. It takes time to design a warehouse floor plan that suits your business and keeps operations efficient.

Instead of feeling like you have to reinvent the wheel, there are proven approaches for warehouse organizational success. Read on to learn about warehouse organization best practices and which layout fits your business best. 

Warehouse Organization

Before you can get a proprietary system developed for your location, you need to know what is warehouse. Once you have the right warehouse picked out, running it in an organized fashion is a priority.

Organizational excellence allows staff to get their work efficiently (see what is a warehouse associate for more info). Best practices for warehouse organization make your life easier when it comes to order processing, order fulfillment, and running a profitable business.

How to Organize a Warehouse

Organizing a warehouse is a simple process once you know what you’re doing. Every warehouse should have an area for receiving, staging, inventory, picking, packing, shipping, and office work.

Think about everything involved in starting an eCommerce business. Do you need more than one dock each for receiving and distribution? How much space do you need for unloading pallets? What should your picking and packing station look like? Each of these questions should be answered before you draft warehouse designs. 

Warehouse Organization Ideas

If you’re having trouble coming up with warehouse organization ideas, it helps to look at existing warehouses. Look at businesses that sell what you sell, or at least similar products. You can always tweak your warehouse’s layout as your business grows, but it’s important to have a reliable layout from day one. 

Let’s look at a few different types of warehouse organization charts and what they contain. 

Warehouse Organization Chart

The warehouse organization chart you use will depend on what you need the warehouse to accomplish. Some warehouses are for storage only, while other warehouses include a production area.

If your business uses raw materials inventory to develop finished goods inventory, your optimal warehouse organization layout may be a U-shape. This approach has receiving docks on one side of a building, with shipping docks on the opposing side. 

If your warehouse receives merchandise inventory, an I-shaped layout may be optimal. With this design, all products flow in a straight line from receiving to shipping, with inventory and packing in the middle.

If you have a small warehouse, you’ll need to think even more creatively. You can place inventory against each wall that isn’t a receiving or shipping dock, with an island of important products in the middle. Use an ABC inventory analysis to keep things efficient.

Store A products close to the front of the warehouse, B products in the middle, and C products towards the back. This structure makes it simple for pickers and packers to access any area they need without walking through the entire warehouse. 

Inventory Organization

Having a robust inventory organization plan is one of the many advantages of warehousing. This involves the equipment, storage areas, signage, labels, and warehouse management process flow for the products you sell. 

Knowing how to organize inventory in your warehouse requires attention to detail. Here are four simple steps you can implement today:

  1. Ensure a smooth putaway process. This is everything that happens between delivery drivers unloading pallets to products being put on shelves. Timely putaway also keeps your receiving staging area clear. 
  2. Apply SKU numbers and product labels. Employees need to be able to easily scan a product and bring it to the packing station. This also helps workers quickly locate the right shelf.
  3. Prioritize the placement of your most profitable goods. You can conduct an ABC inventory analysis to see what kinds of products are generating the most money for your business.
  4. Establish a fixed restocking schedule. It’s easier to handle restocking on a set schedule, rather than feel like you need to catch up on a daily basis. Plus, new shipments still take time to be processed and delivered. 

Best Way to Organize Inventory in Excel

If you’re not ready to adopt a warehouse management system or start using a warehouse inventory management software, Microsoft Excel is a great place to start. The much-loved software provides features with which you can customize your reports and add visual elements like graphs. 

The best way to organize inventory in Excel is to have a list of all current inventory. Plug the data into your Excel sheet as you go along. Be careful not to make mistakes with similar-looking info, like SKUs and categories. 

There are multiple column headers your inventory sheet should include:

  • Date of received stock
  • Product name 
  • Product category
  • SKU
  • Unit cost
  • Starting, received, and ending inventory
  • Inventory usage
  • Sales over one month (example)
  • Cost of goods sold (COGS)
  • Inventory usage in dollars
  • Variance (dollar amount or percentage) 

If you want to save time and effort, download BlueCart’s warehouse inventory Excel template. You can further customize this template for your business’s needs. 

Inventory Organization Ideas

If you’re still lacking ideas for your inventory management process, there are different ways to change things up. One approach is moving your products out of bins and onto shelves, or vice versa. Sometimes it’s difficult to see what improvements can take your operations to a new level until you try them. 

A second approach is restructuring your shelving units to accommodate the back-and-forth movement of pickers and packers. Ensuring your staff can move safely but quickly to different areas of the warehouse is a boon for efficiency.

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Warehouse Layout & Design

The exact warehouse layout your business uses depends on your needs, but there are principles that guide all successful warehouses. Here are five of the most important ones: 

Maximizing Flow

Every warehouse should strive to move products as efficiently as possible from point to point. This is called flow, and when it’s optimized, your warehouse will run effortlessly.

Flow is crucial to warehouse layout and design because it sets you up for success from the start. If inbound or outbound shipments are chronically late, work with your wholesale supplier or wholesale marketplace (respectively) to see what can be changed.

Utilizing Space Efficiently

It may feel tempting to use as much of your warehouse for storing products as possible. Surprisingly, many of the most efficient warehouses only use about 22-27% of their total space for inventory. Remember that your inventory aisles should be about 12 to 13 feet apart so forklifts can easily drive through. 

Using Budget Well

Warehouses are designed to store and handle products, complete office work, and ship products to customers. As such, your warehouse shouldn’t have unnecessary features or equipment. It may look nice, but unless it directly translates to more profit, it won’t help. 

One example of a necessary expense is warehouse labels. From heavy equipment to the smallest inventory shelf, labels provide fast identification for all the objects in your warehouse.

The Right Equipment

Your warehouse equipment should be included in the design before the building is constructed. Whether your warehouse equipment is mobile or stationary, make sure the layout doesn’t leave room for surprises. 

Warehouse Layout Design

A warehouse layout design is the floor plan of your warehouse that’s created at scale. It also clearly outlines the functional areas of your warehouse, their purposes, and any free space. The warehouse layout design you use depends on your products’ needs and the amount of anticipated monthly product volume. 

Different Warehouse Layouts

There are three different warehouse layouts that have become common over the years. Most eCommerce businesses utilize one of these three layouts because they’re designed for optimal efficiency. Let’s look at the three types:

  • U-shaped

A U-shaped warehouse layout is the most common. This features receiving docks on one side of the building, with the unloading area, dynamic and static shelving, and packing area forming a U through the building. The U is completed as it reaches the shipping staging area and distribution docks. All goods flow in the direction of the U, with the only exception being defective or returned products. 

  • I-shaped

The I-shaped layout works well for large warehouses or companies that handle a large amount of orders. This structure is similar to U-shaped warehouses, but with receiving and shipping on opposite sides of the building. I-shaped warehouses offer visual simplicity for the product flow. 

  • L-shaped

An L-shaped warehouse layout is designed to increase visibility and cross-departmental communication. Shipping docks are placed on one side of the L with receiving docks on the other. Inventory, staging areas, and any offices are then placed in the corner opposing the L. 

Warehouse Racking Layout

Warehouse racking is the equipment used to store and handle goods in a warehouse. The warehouse racking layout at your facility is crucial to warehouse inventory management success. It may seem like a minor detail, but it can make a huge difference when done right. 

First, decide what type of material and brand you’ll purchase. Durability should be a factor, but usability and customizability are also important. This is often referred to as modular racking. 

Second, map out your warehouse with racking included (at scale, of course). If it turns out your building size can’t accommodate your preferred shelving, you’ll need to consider other options. It will also reveal if your shelving could obstruct any docks, hallways, or doors. 

Third, plan for growth. Decide on a warehouse racking layout that maximizes your existing space, but makes it easy to expand as your profit increases. Usually, the best way to do this is by setting up racks in lengthy rows. 

Warehouse Shelf Layout

Warehouse shelves can be arranged in a variety of ways. There are three main approaches to pick from:

Vertical. Many businesses use a vertical warehouse shelving layout. This is because it maximizes the amount of floor space workers have for other tasks. Vertical storage is also common for businesses that sell shelf-stable products. 

Horizontal. All shelves are horizontal platforms by nature. However, your type of business may be better suited to additional shelving that’s spread out wide, rather than tall. Horizontal storage units are also great for temperature-controlled or fragile products that need additional care. 

Both. If your space is large enough, your warehouse shelving layout can be multiple rows of tall shelves. This is useful if you do a lot of inventory tracking or share warehouse space with another company.

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Warehouse Layout Optimization

Even once your warehouse has been up and running for a few months, there are always areas for improvement. Optimizing your warehouse layout comes down to a few objectives: 

  • Ensure staff have adequate space to complete their work. Nothing will jam up your operations faster than unloading pallets while a different delivery is staging them in the same area. Whether it’s receiving, shipping, storage, or office space, everyone should know where to handle each activity. 
  • Run visual spot checks of your shelves and bins from time to time. Your warehouse management system (WMS) may be keeping all of your numbers in line, but that doesn’t mean shelf space is efficient. If shelving can be reduced somewhere, make it happen.
  • Set up a regular cleaning schedule. Warehouse environments can be notorious for debris floating around, like strapping coil, shrinkwrap, and packing peanuts. Maintaining a clean environment prevents delays and keeps employees focused.
  • Survey your staff for improvement ideas. As the owner of a business or warehouse manager, you don’t have the same perspective as employees working in the warehouse each day. Consulting them for warehouse layout adjustments can reveal small changes that lead to big results. You may also need to bring new leadership aboard, which is easy with the right warehouse manager job description. (Remember to include an appealing warehouse manager salary, too.) 

Completing Your Layout

Now that you know how to plan a warehouse layout, it will be easier to verify your design. Don’t be afraid to make necessary adjustments before or even after building. Warehouses run well when the design and equipment is suited for the complex needs of your business.

Frequently Asked Questions About Warehouse Organization

It’s easy to see how safety and clarity are central to warehouse organization. To take it one step further, we compiled some of the most commonly asked questions about warehouse organization. Take a look at our answers below: 

Why is layout of warehouse important?

Warehouse layout design is crucial because it has a direct impact on business efficiency. Strong warehouse organization leads to faster order fulfillment, less walking time, lower inventory holding costs, and greater safety.

Your warehouse layout should take several factors into account, such as ABC inventory, operational safety, rack labeling strategy, and emergency exits. Warehousing staff should be able to easily locate and retrieve the products they need, perform their work, and finish it in a timely manner without risking injury. 

What are warehouse requirements?

The needs of your business will dictate your warehouse requirements. However, there are several necessities for every product warehouse, including the following: 

  • Product shelving
  • Dock doors
  • Primary and optional secondary entryways
  • Emergency exits and corresponding emergency exit plan(s)
  • Clear and safe stack height (the maximum safe height up to which products can be shelved)
  • Warehouse management process flow
  • Daily opening and closing procedures, including safety protocols
  • Safe and effective product storage materials, including for any cold or wet goods