When it comes to warehouses, space is a fundamental consideration. With that in mind, today we take a closer look at warehouse space utilization, from a basic definition to an example of how to calculate this indicator.
What Is Warehouse Space Utilization?
As the name suggests, warehouse space utilization is a metric that shows you how efficiently you are using your warehouse space.
It is important to bear in mind that while storage is the main purpose of a warehouse, there are other functions that take up space, with one of the most important being the activities of the workers who operate the warehouse.
Most warehouse professionals aim for 22-27% of warehouse space utilization. This strikes a good balance between storage and the space workers need to handle materials efficiently.
How To Calculate Warehouse Space Utilization?
Here’s how to calculate warehouse space utilization, step by step.
This is just the theory, but don’t worry: in the next section you will find an example that illustrates the process.
- Measure the total floor area of the warehouse
- Subtract any non-storage space (such as offices, meeting rooms, and bathrooms)
- Multiply the result by the clear height of the warehouse to determine warehouse capacity
- Tally up the volume of all the products stored in the warehouse to determine inventory cube size
- Divide warehouse capacity by inventory cube size and multiply the result by 100: the result is your warehouse space utilization
An Example of How To Calculate Warehouse Space Utilization
Now, let’s translate this into a concrete example. For example, let’s say that you have a warehouse that is 600 feet wide and 400 feet long with a clear height of 27 feet of clear height and 10,000 square feet of non-storage space (inventory cube size is 150,000 cubic feet)
- First, we determine the warehouse’s total floor area (600 x 400 = 240,000 sq. ft.)
- Now, we subtract the non–storage space (240,000 – 10,000 = 230,000)
- We multiply the usable area by the clear height to find warehouse capacity (230,000 x 27 = 621,000 cubic feet)
- Now we divide warehouse capacity by inventory cube size (150,000 / 621,000 = 0.24)
- Finally, we just multiply the result by 100 to express warehouse space utilization in percentage points (0.24 x 100 = 24%)
Disclaimer: This material is for general information and educational purposes only. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.
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