How to Boost Warehouse Capacity and Productivity
Sep 19, 2025
Discover practical strategies to increase warehouse capacity, improve productivity, and lower costs in your supply chain operations.
In the fast-paced world of e-commerce, retail, and supply chain management, warehouse efficiency is non-negotiable. Yet, warehouses across the industry are facing mounting pressures - from increased storage demands to inefficient workflows. With many businesses running out of space, the obvious solution may appear to be renting larger facilities. However, as this insightful guide will demonstrate, there are far more cost-effective and sustainable measures that can yield impressive results.
Here, we unpack expert-backed strategies on optimising warehouse capacity and productivity, offering practical steps for professionals seeking to future-proof their operations.
Why Warehouse Capacity is a Critical Issue
The challenges stemming from warehouse inefficiencies extend far beyond lack of space. According to the video, failing to address these issues leads to rising costs, declining service levels, and an inability to implement necessary improvements. These inefficiencies can manifest in various ways, such as gridlocked aisles, increased labour costs, and even the need for costly off-site storage.
The good news? By implementing targeted improvements, businesses can achieve measurable results, including:
15–20% increase in capacity through operational enhancements.
4–7% boost in labour efficiency by eliminating inefficiencies.
5–8% improvement in service levels, providing better customer satisfaction.
Let’s delve deeper into the practical steps you can take to achieve these outcomes.
Identifying the Root Causes of Capacity Issues
Before implementing solutions, it’s essential to understand the causes of warehouse inefficiencies. The video highlights several recurring culprits:
1. Excess Stock (SLOBS – Slow, Obsolete, and Excess Inventory)
Warehouses often stockpile slow-moving or outdated goods, unnecessarily taking up valuable storage space. This issue is compounded by poor forecasting, which leads to an imbalance in stock levels.
2. Ineffective Purchasing Policies
Large, infrequent supplier orders may lead to lumpy inventory patterns, creating surplus stock that clogs up your warehouse.
3. Lack of Planning for Growth
Many businesses lease or build warehouses without accounting for long-term growth. This leaves them scrambling to accommodate expanding inventory within limited space, often within just a few years.
4. Inefficient Layouts
Poor racking configurations, wide aisles, and suboptimal use of vertical space all contribute to underutilised warehouse capacity.
Practical Solutions to Warehouse Optimisation
Now that we’ve identified the problems, let’s explore short- and long-term solutions to increase warehouse efficiency without breaking the bank. These strategies cover everything from reconfiguring layouts to adopting new storage technologies.
Short-Term Fixes for Immediate Impact
1. Slotting for Optimised Picking
Slotting involves reorganising inventory so that high-demand items are stored closer to dispatch areas, reducing travel time for pickers. Think of it like arranging your refrigerator: the items you use most frequently are placed in the most accessible spots. Implementing slotting can enhance picking productivity by up to 15% and improve space utilisation.
2. Adjusting Aisle Widths
Switching to narrower aisles with specialised equipment, such as articulated forklifts, can unlock as much as 30% additional capacity. As highlighted in the video, this strategy involves rearranging racking incrementally during weekends to minimise disruption.
3. Clearing Excess Inventory
Perform a thorough audit of your stock. Identify and remove slow-moving or obsolete items to free up space. For example, one analysed warehouse was found to have $10 million in excess stock, with some items holding over 24 months’ worth of cover. Implementing stricter inventory management policies could drastically reduce this surplus.
Long-Term Solutions for Sustainable Efficiency
1. Maximising the Cube
Warehouses often fail to utilise vertical space effectively. Investing in systems like mezzanine floors or high-density racking can significantly boost storage capacity within the same footprint. Mezzanine floors are particularly useful for small items, while vertical lift machines are ideal for high-density storage.
2. Embracing Automation
While automation isn’t universally suitable, it can play a pivotal role in warehouses handling large volumes and a wide SKU range. Solutions such as shuttle racking systems or automated picking lanes can improve both capacity and speed of operations.
3. Hybrid Layout Design
Combining multiple storage solutions - such as automated systems, traditional racking, and mezzanines - can optimise the flow of goods and accommodate diverse inventory types. A well-planned hybrid warehouse layout ensures space is used efficiently, and faster-moving goods are prioritised.
4. Improving Flow and Velocity
Evaluate the flow of goods through your warehouse. Faster product turnover reduces the time items spend in storage, effectively increasing capacity. Analysing peak activity periods for receiving, picking, and dispatch can help balance workloads and improve efficiency.
Critical Insights on Labour Productivity
While the focus is primarily on capacity, it’s impossible to ignore the role of labour efficiency in optimising operations. Labour represents a significant portion of warehouse costs, with 60% of costs typically tied to receiving, put-away, picking, and packing activities. Streamlining these processes through better layout design and efficient workflows can significantly reduce costs and improve productivity.
Key Takeaways
Here are the most actionable insights to address warehouse capacity and productivity challenges:
Implement Slotting: Organise inventory so that frequently picked items are stored near dispatch zones, improving picker efficiency and space usage.
Audit Inventory Regularly: Identify and eliminate slow, obsolete, or excess stock to free up storage space.
Adjust Aisle Widths: Switch to narrower aisles using specialised equipment to gain up to 30% more storage capacity.
Maximise Vertical Space: Use mezzanine floors or vertical lift systems to make full use of a warehouse’s height.
Plan for Growth: When designing or leasing a warehouse, ensure it can accommodate at least five years' worth of business expansion.
Adopt Hybrid Layouts: Combine traditional racking with automation and high-density storage solutions for optimal efficiency.
Focus on Flow: Improve the velocity of goods moving through the warehouse to reduce time in storage and enhance productivity.
Automate Where Relevant: For high-volume operations, consider automation to streamline repetitive tasks and maximise space.
Balance Workloads: Use data to analyse peak periods and even out receiving and dispatch activities across the week.
Conclusion
Warehouse capacity and productivity issues are among the most pressing challenges in today’s supply chain landscape. From addressing excess inventory to leveraging automation, there are countless opportunities to optimise your operations. The key is to focus on solutions that not only tackle immediate issues but also set the stage for future growth.
By implementing these strategies, businesses in the e-commerce, retail, and supply chain sectors can unlock significant cost savings, improve service levels, and future-proof their operations against the ever-growing demands of the industry. Take action now to transform your warehouse into a model of efficiency and productivity.
Source: "How to Improve Warehouse Capacity & Productivity" - Supply Chain Secrets, YouTube, Aug 16, 2025 - https://www.youtube.com/watch?v=181edZwpuDo
Use: Embedded for reference. Brief quotes used for commentary/review.