When a business runs out of room, the instinct is almost always the same: we need more space. Call the leasing agent, call the 3PL, start looking for square footage.
We work through this question with clients regularly, and more space isn’t always the answer. Sometimes it’s not a space problem at all — it’s a strategy problem.
Before you commit to more square footage, it’s worth checking a few things first. In this article, I’ll walk through the questions you should ask before you get more space.
First, check what’s actually taking up the space
Start with what’s in the warehouse. Obsolete inventory is one of the most common culprits, and it’s easy to miss if you don’t look at aged inventory reports regularly.
Think about your closet at home. You buy a new pair of pants, a new shirt, and the old ones just stay hanging there. A year and a half later, you look up and realize you’ve got things in there you haven’t worn once.
Inventory works the same way. Product comes in, gets stored, and if nobody’s tracking how long it’s been sitting, it just accumulates.
A good aging report will show you this — items that have been sitting for months, sometimes years, with no shipments against them. If a widget has been on the shelf for two years and hasn’t moved once, that’s not a space problem. That’s inventory that needs to be purged.
How the warehouse space is used matters as much as how much you have
Even when the inventory is legitimate, how you store it can take up far more room than it needs.
A furniture customer came to us with cut-and-sew fabric kits that needed storing. They were leasing space from us and handled their product. Everything was just being brought in and crammed onto the floor — nothing racked, no plan for how product would flow in and out. It was functional, but it wasn’t efficient.
If you put pallet racking in place, you can roughly double the number of pallets you’re able to store in the same footprint compared to floor-stacking. Same building, same square footage — significantly more capacity, just by changing how the space was organized.
If your warehouse is floor-stacked with no racking system, that’s worth a look before you assume you need a bigger building.
Where fast-moving inventory is placed in the warehouse matters
Beyond racking, there’s also the question of where you place specific items within the space.
Over time, you learn which SKUs move the most — the ones you’re shipping every day versus the ones that sit for weeks between orders. The fast movers should be in the most efficient picking locations. The slow movers can go in the back.
Get that backward, and operators walk farther than they need to for the items you ship constantly, while prime picking locations sit occupied by things that rarely move. Although it’s not a capacity issue, it does make your space work harder for you.
Packaging and pallet setup affect space more than people expect
This is one people don’t often think about.
We’ve received the same item packaged three different ways from three different shipments — one box that’s way oversized for what’s actually inside it.
A single pillow doesn’t need an enormous box, but it happens more often than you’d think, especially when product is coming from an overseas factory, and nobody’s checking what the packaging actually looks like on the other end.
Pallet setup matters too. At Stewardship, we keep a single SKU per pallet as a standard. When an operator goes to a location and pulls a pallet, they should know exactly what’s on it — not have to sort through eight different SKUs mixed together. Beyond the space it wastes, mixed pallets are also where shipping errors tend to happen.
Reorder systems prevent overbuying
A lot of space problems start further upstream than the warehouse itself — they start with reordering more than you actually need. Historical data is very helpful here.
If you received 150 units of an item on a certain date and didn’t run out until three months later, that tells you your actual reorder point. Without that visibility, it’s easy to overbuy “just in case” and end up storing inventory you didn’t need yet.
Setting up an efficient reorder process can make a big difference in how much warehouse space you need.
When you actually do need more warehouse space
None of this means expanding your warehouse is always the wrong call. Sometimes it is a capacity issue, and there are limits you can’t optimize your way around.
Dock space for staging incoming and outgoing product is one.
Aisle clearance for safety is another — you can’t store product all the way to the walls, and a warehouse that’s packed floor to ceiling with no working room isn’t just inefficient, it’s not safe to operate in.
If you’ve cleaned up the inventory, racked the space properly, and organized by SKU velocity, and you’re still out of room, that’s a sign you need more space, not a better system.
Questions to ask before you expand your warehouse space
Before you sign a bigger lease or call about more square footage, work through these:
- How much of what’s currently stored is inventory that hasn’t moved in months or years?
- Is your product floor-stacked, or racked to maximize the space you have?
- Are your fastest-moving items in your most efficient picking locations?
- Is your packaging sized appropriately, and are pallets organized by single SKU?
- Do you have a reorder system based on actual usage data, or are you reordering by guesswork?
- After all of that, do you still need more room for staging, receiving, and safe aisle clearance?
If you’ve checked all of that and space is still the answer, then that’s what you need. But a lot of the time, the fix is a better system for how you’re using what you’ve already got.
If you’re not sure which one you’re dealing with, that’s exactly the kind of thing we help clients work through — contact us, and we’ll take a look.
