7 Things That Cause Warehouse Capacity Issues

The demand for warehouse space is on the rise. For business owners struggling to keep up, on-demand warehousing may offer an innovative alternative to expansion.

In 2018, logistic vacancy reached an unprecedented low of 4.6%. For warehouse managers, this figure likely comes as no surprise. With increased consumer focus on e-commerce as opposed to brick and mortar retail stores, and demand for fast shipping and returns higher than ever, warehouses are feeling the squeeze.

Warehouse managers are scrambling to do the most that they can to make room for widening inventory in a fixed amount of space. Some managers have even sought out solutions such as rearrangement, which may mean changing the layout of the warehouse entirely, narrowing aisles, or building vertical storage space that nearly touches the ceiling. While reorganizing may offer a temporary solution, implementing this strategy can interrupt workflow and can result in a less safe warehouse.

Take, for example, the narrowing aisles strategy: This only works if employees are able to safely navigate the space with forklifts. Creating narrower aisles can be a way to fit more products into the warehouse, but it may risk safety and will be costly if accidents occur.

Warehouse managers know that for a warehouse to operate efficiently, it must be organized, safe, and cost-efficient. The latter is why simply purchasing more warehouse space to increase capacity may not be the correct solution, either. If a business does not need all its warehouse space every single day of the year, this solution does not offer a favorable ROI.

So, what can be done to alleviate warehouse capacity woes? In this article, we will explore:

• 7 factors that cause warehouse capacity issues

• What on-demand warehousing is and how it can help

• How a logistics advisor can identify the best solution for you

7 Factors that cause warehouse capacity issues

Warehouse space is managed more efficiently than ever before. Modern techniques and technologies wring maximum storage value out of every square foot of space. Still, seven factors consistently compromise the ability to account for all storage needs.

1. Holidays

Historically, one of the leading causes of warehouse capacity problems can be predicted like clockwork: the holidays. Starting with Black Friday and the increasingly popular Cyber Monday and leading up to Christmas, warehouse managers need to prepare for holiday warehouse demands. The time crunch precipitating December 25 makes this a challenging — but fortunately predictable — time.

2. Other peak seasons

Unlike the holiday season, other peak seasons vary by industry. Peak shipping season is widely acknowledged to occur August through October. During these months, warehouse capacity demands grow. Individual industries may also experience their own peak seasons.

3. Inability to predict demand

Even the most veteran warehouse manager does not have the ability to predict the future listed as a skill on his or her resume. Logistics experts may use past data to predict future pain points in warehouse capacity, but the unexpected happens all the time. A period may have low demand for years, only to see a sudden spike no one could predict. Humanity’s simple inability to see the future can result in some of the most trying capacity issues.

4. Yearly fluctuation

Customer demand and inventory fluctuate throughout the year. Unlike with seasonal and cyclical shopping patterns, fluctuation is expected to occur in relation to warehouse space availability.

5. Weather disruptions

Weather disruptions, especially those that occur during the already demanding holiday season, can spell disaster for warehouse capacity. As a warehouse prepares to meet the increased needs of consumers during winter months, nasty blizzards can put a wrench in even the most efficient of operations.

Weather disruptions are certainly not limited to the winter months. Recent hurricanes and floods are evidence of this. No matter when they occur, they come with shipping delays. When items can’t move in freight, they must stay put. For warehouse managers, this means unexpectedly high volume on the shelves.

6. Warehouses in city centers

Warehouses in urban centers face challenges related to the existing infrastructure of the surrounding area. These buildings are not able to spread out, so they must either build up (not always an option due to zoning laws) or try to make the most out of limited warehouse real estate.

7. The Amazon effect

The growth of e-commerce has proven unstoppable. While this is great news for Jeff Besos, it has created, and will likely continue to create, hurdles for suppliers struggling to meet customer expectations. One-day shipping, two-day shipping, and instant shipping have forced suppliers to become nimbler and more aware of the importance of last-mile carriers. This also can result in overcrowded warehouses.

How on-demand warehousing can help

When solutions like warehouse reorganization or expansion prove unrealistic, overly expensive, or insufficient, more innovative solutions are necessary. On-demand warehousing allows business owners to utilize additional warehouse space as needed. This is especially helpful when dealing with situations that cannot be predicted, such as weather-related delays and unexpected demand.

In 2019, on-demand warehousing startup Flowspace raised $12 million in Series A investment. This platform automates warehouse need by connecting suppliers to available space across the country, so they can request what they need based on current inventory. This is not the only option for on-demand warehousing. Working with Resource Logistics Group can help you identify a wide range of solutions.

A logistics advisor can identify the right solution for you

If you’re interested in on-demand warehousing or have other questions about making your logistics streamlined, efficient and affordable, Resource Logistics Group can help. We assist shippers with transportation, warehouse and logistics concerns. We are experts at helping you understand logistics and finding you the best solution for your needs. Contact us to find the solution that’s best for your needs.