Space Utilization and the Rule of 4
When planning warehouse storage solutions, two conflicting challenges often arise: maximizing storage density while optimizing space utilization.
![Deep lane storage in dense pallet racks](https://www.warehouseiq.com/wp-content/uploads/2010/12/Shuttle_in_racks.jpg)
Traditional deep lane storage in pallet racks prioritizes storage density, yet this can sometimes result in underutilized space. Warehouse managers frequently adopt drive-in, push-back, or pallet flow racks to increase storage density, only to discover that lanes are operating at just 60% capacity.
The “rule of 4” offers a solution by enhancing both storage density and space utilization up to 87.5%. Here’s how it works:
For SKUs (Storage Keeping Units) with an average of 4 pallets on hand, selective racking proves to be the most effective storage method due to its efficient space utilization.
Consider a scenario where 4 pallets are stored individually in selective pallet racking. In this setup, operators can pick case quantities from any pallet until it is emptied, optimizing both accessibility and storage efficiency.
- When you first store all 4 pallets you have 100% space utilization of the 4 storage slots.
- Once the pallet is fully depleted of case quantities, the space utilization is now at 75%.
- Therefore, on average, 50% of the time the pick slot (one pallet position) is half depleted
- That one pallet represents 25% of your storage of the entire SKU, so
- 50% of 25% is 12.5% of your total quantity on hand of that SKU.
- On average 12.5% of your space dedicated for the SKU is empty, so
- Your space utilization for the storage of that one SKU is 87.5%
Pretty good, right? Maybe this is the best you could hope for. Higher utilization of storage space would mean too many aisles. Lower utilization of space would mean too much empty racking.
To achieve the same space utilization in Double Deep, you would need 8 pallets on hand.
Double deep racking is a full pallet storage medium. (Push-back is suggested for case picking). So assuming that of the 8 slots used by any particular SKU, one pallet would be missing, the storage utilization would be 87.5%. If the second pallet is removed, then a different SKU could be stored in the double deep slot.
What about drive-in racking? How many pallets would you need on hand to achieve 87.5% space utilization? Assuming you have 4 deep and 4 high drive-in racking, you would need 64 pallets on hand. Here is the reason:
- To get all the pallets on the bottom row, all rows above need to be cleared in the 4 deep run.
- To get to all pallets on the top row, all rows on the bottom need to be cleared in the 4 deep run.
- Therefore, on average, the 4 deep 4 high bay would be 50% filled or depleted.
- So utilization would be 50% on average
- To get to 87.5% storage utilization for the SKU in the storage media, 3 other rows would need to be filled
Remember! We are discussing these racking types as storage media. Drive-in is useful for staging where pallets are loaded and unloaded regularly.
Now, when designing your racking system,
- run a velocity report and look at the average pallets you have on hand of your SKUs.
- Perform the 80-20 rule to discover the 10% of your SKUs that represent the 50% of your volume.
- Take the a pallet quantity on hand and divide it by 4.
- Look for commonality.
Here are recommendations based on inventory volume:
- If your high-volume inventory typically consists of 4 pallets, single selective racking is recommended.
- For 8 pallets, consider double deep racking.
- If you have a larger quantity of pallets, push-back rack, drive-in, or pallet flow systems may be more suitable options.