Explore 10 Ways to Optimize Your Warehouse Space Utilization

One of the primary challenges that owners of small-and-medium-sized businesses often face is managing inventory in the store or warehouse. Having limited space can add to this challenge. However, you can improve your store/warehouse space utilization.

To improve efficiency in your store/warehouse operations, you can use the 85%-limit rule. When your store or warehouse hits approximately 85% of its total occupancy, you are technically out of space. If you go beyond the 85%-limit, your store/warehouse can become congested. And congestion may hinder seamless flow of goods. For example, in a congested space, you may need to invest more time and labor to find the desired goods.
Storage space utilization

How do stores/warehouses run out of space?

You can run out of space at your store or warehouse when your business is booming. To meet the market demand, there may be a need to continuously restock your products. However, this might lead to overstocking.

Dead or obsolete inventory can be another reason for a space shortage at your store/warehouse. When some products become outdated or aren’t sold, they become dead inventory. According to studies, about 20-30% of the inventory owned by well-established businesses is dead or obsolete. Such products take up unnecessary space and cause congestion. These products can be moved to a less-congested area to ensure overall efficiency.

If you don’t have sufficient space for inventory in your store or warehouse for any reason, you can use different ways to increase your storage capacity without expanding your facility.
Warehouses capacity

Ways to improve your store/warehouse space utilization

To maximize your store/warehouse space utilization, you may need to first thoroughly understand your storage profile. You can do this by gathering quantifiable data related to your store/warehouse capacity and utilization. You can start analyzing rack and shelving configurations, inventory management, storing and picking method, and product packing and shipping system. You can also analyze inbound and outbound product flow and seasonal peak trends.

After doing a thorough analysis, you will have the details and data required to identify different opportunities for your store/warehouse space utilization.

To help you, we have compiled a list of methods to optimize warehouse utilization:

1. Extend your racks vertically

You may check whether you are thoroughly utilizing all the vertical space in your store or warehouse. You can investigate how much cubic feet of vertical space is available and how your racks can be extended. Ensure your rack extension design does not affect your fire suppression sprinkler system. By extending your racks vertically, you can increase your storage capacity and efficiently use the same.

2. Install a mezzanine

Installing a mezzanine is one of the cost-effective solutions that can help you increase your storage space. But, before adding a mezzanine floor, you may need to identify the unused vertical space in your warehouse. You may also need to decide which goods can be relocated to the mezzanine. You can consider moving your dead inventory to a mezzanine. By doing this, you can maximize your inventory storage.

3. Reduce aisle width

You can reduce the aisle width in your racking area which can increase product storage. Usually, a wide aisle ranges from 10-12 feet. You can consider reducing your aisle width to five or eight feet and add more racking. By doing this, you can increase your available warehouse storage.

4. Use underutilized space

You can find underutilized space on racks filled with unprocessed inbound or outbound products and slow-moving goods are placed. You can use this space to maximize warehouse space optimization for smaller or slower-moving goods that do not need to be frequently replenished.

5. Use trailers for short-term needs

For temporary storage needs, you can consider storing your products in trailers. Many retailers use trailers to store seasonal products. You just have to pay a demurrage charge for using a trailer for short-term storage needs. This can be one of the alternatives to expensive building expansion.

6. Try to condense pallets

By condensing your pallets, you can store more products within the same area. For example, the use of half pallets enables faster unloading and loading. They also help to reduce the space required for storing inventory.

7. Fix the position of goods

Find out where the obsolete and fast-selling goods are stored in your warehouse. You can make sure that all fast-selling items are placed in the most accessible locations. By fixing the position of goods, you can increase productivity when it comes to product loading and unloading. This can also result in optimal warehouse utilization.

8. Use off-site location to store extra goods

Instead of overstocking your primary warehouse, you can consider using an offsite storage facility to store excess inventory. This may help you free up space at your primary warehouse and support the fulfillment operation. By using an offsite location, you can segregate your total stock into more accessible and manageable groups.

9. Change storage medium, if necessary

You can research and figure out which storage system is ideal for your warehouse. There are different types of storage mediums.

- Floor stacking: In this option, pallets are stacked in rows on the floor.
- Drive-in racking: In this option, pallets are placed on rails.
- Selective racking: In this case, racks are placed against walkways or back-to-back.
- Double-reach racking: In this case, you can put racking both two rows deep and back-to-back.
- Pallet flow racking: In this storage medium, pallets flow down using wheels or rollers.
- Push-back racking: When push-back racking is used, pallets are placed on mobile carts. These carts then glide on rails.

10. Consider drop-shipping

You can use some form of drop-shipping if you frequently store and ship large goods. Drop-shipping is a practice where you directly ship an item from the supplier to the end customer. This method can help to move in-house inventory and boost warehouse space optimization.


Expanding your current warehouse or moving to a new space can be both expensive and time-consuming. Therefore, you can address your warehouse space issues before things spiral out of control. You can start by freeing up space or adding new equipment. You can also use trailers or off-site storages depending on the requirement. All of these efforts can help to ensure space utilization in your warehouse. And with this, you can ensure inventory visibility and accelerate the delivery of goods to the customers.
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