Expert guide to warehouse layout and planning

It’s the process of designing and organising your warehouse’s physical space. The aim is to create a layout that ensures the most efficient flow of goods through and maximises your team’s productivity and safety.

Why your layout matters 

It definitely pays to spend time optimising your layout to ensure you’re not wasting any space and thereby increasing storage costs.

Failing to optimally place specific zones can slow down the fulfilment process. For instance, if your fastest moving items are located far away from your picking and packing stations.

While keeping costs down and boosting efficiency are key imperatives, so too is the safety of your warehouse team. How you position zones, the width of aisles, the types of shelving you’ll use and the routes staff will take need to be seen through the lens of minimising hazards.

Core components of layout planning

Before you start your planning, keep these higher-level goals in mind to guide your thinking:

• Maximise use of space: Ensure you use every square inch of your warehouse. The more you utilise, the lower your storage costs.
• Enhance efficiency: Think about creating the most logical, obstacle-free path for goods to flow through your warehouse
• Ensure safety: Ensure your team has sufficient aisle space, equipment is properly placed and your layout complies with safety obligations
• Look forward: As your business grows, will your layout accommodate increased volumes or varying types of goods? 

Regulatory considerations 

Your legal duty to ensure a safe workplace will have a critical influence on your layout planning. The location of workstations, shelving and equipment should be carefully considered to help prevent hazards.

Unsafe equipment or structures, falling objects, slips and falls aren’t the only dangers to your team. You also need to factor in toxic substances and loud noises they may be exposed to.

An important aspect of maintaining safety is traffic management. Australian warehouses are legally required to eliminate (or if that’s not possible, minimise) traffic hazards, which can involve cars, trucks, vans or mobile equipment.

This obligation means you need to factor traffic into your plan of warehouse layout. Are there aspects of your layout that could increase risk of collisions? Are there any poor visibility zones? Are walkways clearly marked and is there safety signage throughout your warehouse?

You can learn more about managing warehouse traffic hazards in SafeWork Australia’s guide.

Let’s look at the ways a plan of warehouse layout can differ depending on your business type:

3PL and multi-client operations

Given they service multiple clients, third-party logistics (3PL) providers need to ensure their layout offers flexibility and scalability.

It needs to take into account the fact that clients may need to store more or less products depending on seasonal changes, or may vary their product types (or their dimensions).

An important consideration for 3PL warehouses is whether to designate storage for individual clients, or shared storage where items from multiple clients are stored in the same aisle or rack.

This latter strategy provides better utilisation of space, and with a 3PL warehouse management system, you can track every item’s location.

Another key 3PL strategy is to use dynamic rather than static zoning, which offers the ability to allocate space for client products based on real-time needs.

For instance, if a client has a surge in demand, you can temporarily allocate a larger picking zone for them.

eCommerce order-assembly workflows

eCommerce warehouses can hold a wide variety of items, so layout must ensure storage flexibility. This includes having a mix of pallet racking for bulk goods, shelves or bins for smaller items and high density pick and pack locations for fast-moving products.

Layout should support the use of technology that can process a high volume of orders, like barcode scanners or automated conveyors and autonomous mobile robots. 

With higher return rates for eCommerce outfits, it’s a good idea to have a dedicated space for processing returns. 

Small warehouses 

For small warehouses, it’s all about maximising space. This could mean prioritising tall shelves, narrow aisles or adding a mezzanine or platform to create more space.

Fast-moving products should be positioned near packing stations and placed close together on shelves. 

Here we look at the business needs and operational factors you’ll need to balance when planning your design:

Balance cost, service level and flexibility

While storing as much inventory as possible will help reduce costs, this must be weighed against the need for efficiency and flexibility. High-density storage in a small space can make it harder for pickers to retrieve items, thereby increasing labour costs.

There are also pros and cons to having a static or dynamic layout. A static layout means you may not have the flexibility to adjust to seasonal demands, but it will translate to lower costs.

Meanwhile, a higher cost dynamic layout can allow you to adjust the size of packing zones or storage areas, for instance, so you can easily scale with increasing demands. 

Storage capacity vs. travel time

Taller racks, narrower aisles and denser shelving can help you maximise the use of warehouse space.

However, this comes with a tradeoff – longer travel times for pickers and packers. They need easy access to items, which means having wider aisles and more space between racks. 

Safety and ergonomics impacts

Minimising occupational hazards to prevent the injury of team members should be top of mind when creating your plan of warehouse layout.

There are tradeoffs to consider between enhancing productivity and ensuring safety. For instance, narrow aisles and densely packed picking areas will improve the former, but they could cause accidents or physical strains.

Ensure workstations are the right height for staff, have adjustable seats and minimise their need to bend over or reach. Also, make sure walkways are clearly marked, that there’s enough space for using equipment and all areas of your warehouse have proper lighting.

Let’s look at the key ways you can create a layout that maximises the accuracy, labour output, space utilisation and throughput of your operations: 

Warehouse flow shapes 

The most common layout used by warehouses is the U-shaped design. This is where areas for goods receiving and dispatch are located next to each other at the front of the warehouse, and pass through in a ‘U’ shape. The key benefits of this design is that it minimises handling and cross-traffic.

Another common layout suited for larger warehouses is the I-shaped design. This is where goods receiving and dispatch areas are on opposite sides of the warehouse, with goods flowing through in a straight line. This design helps maximise throughput while minimising congestion.

The L-shaped design, where the receiving area is on one side of the warehouse and dispatch is on the adjacent side, is another option. This design is particularly suited to smaller warehouses.  

Picking strategies 

The picking and packing process is typically the most costly part of operations. Therefore, it’s essential your layout is optimised for your chosen strategy, which could include:

• Discrete picking: The most basic picking method, where pickers pick one item at a time. It’s best suited for warehouses with low order volumes.
• Batch picking: Reduces picker travel time by retrieving items for several orders in one go
• Zone picking: Pickers are designated different zones. An order is passed through each zone until all items are added.
• Wave picking: Combines aspects of batch and zone picking. Orders are released to pickers in waves at particular times during the day. 

Storage systems 

The types of storage to consider when planning your layout include:

• Racks and shelves: This commonly used storage can hold a variety of items and provides staff with good accessibility. However, it’s not always the most space-efficient.
• Pallet racking: Provides flexible, high-density and low-cast storage for palletised items
• Mezzanines: Offers a second level of storage without expanding your warehouse footprint
• Bins and totes: These provide movable storage for small items.

Aisle layouts 

Here are the common aisle layouts to consider:

• Wide aisles: 3 to 3.6 metres wide that can accommodate forklifts, easy access and two-way traffic, but can reduce storage density
• Narrow aisles: 2.4 to 3 metres wide that allow you to store more goods, but require specialised forklifts
• Very narrow aisles: 1.5 to 1.8 metres wide, these maximise storage even more but require investment in specialist equipment.   

Let’s explore the key limitations and risks to consider when planning your layout:

Space, throughput and equipment footprints

Making the most of limited warehouse space means getting the right balance between the size of your storage, picking, packing and shipping areas. A common mistake is assigning too much space to storage and thereby limiting workflow efficiency.

You must also think about the space taken up by equipment. For instance, forklifts or conveyors require charging areas and safety clearances.

If adequate space isn’t provided for equipment, or it’s not shared optimally between different areas, warehouse throughput will suffer. 

Layout design cross-traffic and congestion risks

Layouts must be designed to avoid or minimise traffic bottlenecks between your receiving, shipping and picking zones.

Cross-traffic not only hampers efficiency, but also increases risk of accidents and can lead to non-compliance with legal traffic management obligations.

Over-buying unnecessary equipment

Over-buying is a completely avoidable way to quickly rack up costs. Equipment like a conveyor, racking or forklifts that aren’t necessary for your warehouse's volume of orders can introduce unneeded complexity and take up space. 

Compliance complexity

Australian warehouses are legally obliged to comply with a range of regulatory requirements. Work health and safety (WHS) laws in each state and territory require putting measures in place to avoid workplace hazards related to manual handling, traffic management and aisle widths.

WHS laws also have several fire safety requirements, like unobstructed emergency exits, smoke detectors, sprinklers and fire equipment.

Safe storage, handling and labelling of hazardous materials must be ensured under the law, and there are also structural requirements for your warehouse.

Let’s get into the most essential best-practice strategies to optimise your layout for productivity, cost-efficiency and safety:

1. Outline end-to-end workflow before drawing your warehouse design

Ensure you map the journey an item takes through your warehouse, from the moment it's received to dispatch.

This will help you understand if there are any potential bottlenecks or hazards as well as any opportunities to reduce the travel time of items. Mapping your flow of goods helps you design your layout through the lens of efficiency, with a view of assisting the most logical flow.

2. Create a plan of warehouse workstations and zones

Think about your warehouse’s zones for receiving, storage, picking and packing, shipping and processing returns. Where will these be most optimally located?

For example, it’s a good idea to locate your picking zone closest to best-selling items. Also, consider the width of aisles and walkways, ensuring there’s enough space for equipment like forklifts.

It’s also a good idea to organise your inventory into different zones, so your team will know where to find specific items. You could have zones for different product categories, based on their size, material or whether they’re fast or slow-moving.

3. Optimise storage density 

While maximising use of space is critical, it must be balanced with the need to provide accessibility to stock.

Tall shelves or mezzanines can help get the most out of vertical space, while narrower aisles can help you store more. Meanwhile, pallet racking provides efficient use of space for large, uniform items.

4. Align picking and packing to order profile 

Think about the picking strategies we covered earlier; which of these best suit the orders your warehouse is fulfilling? Your layout should be designed to accommodate your strategy.

If you’re servicing a high volume of single item orders, discrete picking might be best. Meanwhile, high-volume, multi-item orders may necessitate wave or batch picking.

5. Use tech to assess current state 

Modern warehouse management software like Access Mintsoft can help make your layout planning and operations far more effective and efficient.

It gives you a real-time view of your layout, inventory, workstations and zones, and provides powerful automation to eliminate manual tasks and optimise space. Mintsoft can help you:

Gain a real-time view of inventory

This includes the weight and dimensions of specific items, as well as metrics like turnover rate and picking frequency. This insight makes it much easier to plan the type and volumes of storage you’ll need.

Optimise warehouse space

Mintsoft’s advanced location management feature allows you to view aisle-by-aisle capacity via an interactive grid, assign specific product lines to particular stock locations and divide picking tasks into specific zones to maximise efficiency.

Monitor the flow of goods

Mintsoft automatically tracks the flow of goods through your warehouse, providing real-time updates and recommendations to make the process faster.  

Enhance walking routes

Mintsoft offers an app to facilitate barcode scanning that suggests optimal routes for pickers to take. The app also enables barcode scanning for goods-in processing and transferring stock, making these processes far more accurate and efficient.

6. Creating a post-go-live continuous feedback loop

An essential part of the layout planning process is setting warehouse KPIs (key performance indicators). By tracking these, you can measure the impact your layout is having on operations, spot bottlenecks and issues, and continually enhance your setup.

For instance, to track how long it takes for stock to move through your warehouse, you can use the order cycle time KPI. Or to see how your layout contributes to effective picking and packing, you can use the picking accuracy rate KPI.

A successful warehouse design means taking a step-by-step approach to planning. Here we outline four key phases:

Initiation — Identify problems to solve

Think about the areas of your operations that need improvement. Are there bottlenecks in your packing stations? Do you need to lower picking costs? Or utilise space better to store more stock? Create clear, measurable goals that focus on your pain points.

Planning — Define warehouse design project scope and deliverables 

Establish what your warehouse design project will encompass. Are you designing the layout for your entire warehouse, or just a specific zone? Which stakeholders will your planning need to involve?

Outline the deliverables and timelines of your project. For instance, in addition to your new layout, you may need to create a new standard operating procedure for picking and packing.  

Planning — Capture requirements and constraints

You’ll need to:

• Gather data about your order profile, including the weight, dimensions and turnover rates of different products and the average size of your orders.
• Get the measurements of your warehouse space
• Identify project constraints like budget, your available time and compliance requirements (like WHS obligations).

Planning — Draft equipment list, costs and milestones

This includes equipment for transporting goods like forklifts and pallet jacks, as well as ladders, trolleys and waste bins. Think about the best locations for this equipment to optimise flow of traffic.    

Also, consider if your layout can be enhanced by cutting-edge warehouse technology. This can include automated guided vehicles and autonomous mobile robots that move across your warehouse carrying stock. 

Execution — Implement layout changes and stage equipment

To minimise disruption to operations, you can implement your layout changes in phases. These can include:

• Putting in place or relocating shelves and racks, starting with one zone or aisle at a time
• Implementing equipment and ensuring it’s staged in particular locations
• Transferring inventory to new shelves or racks
• Configuring your warehouse management system to align with your new layout
• Providing staff training on any new workflows.

Closing — Gather feedback, lessons learned, plan enhancements

Choose KPIs to monitor the effect of your new layout on your operations. It’s also best practice to monitor qualitative data; namely feedback from your team.

Discussions about your layout could be added as an agenda item at meetings, or you could canvas their thoughts via online surveys.

Not only ask your team how your layout helps increase efficiency and productivity, but also if there are ways to improve processes and if it’s causing any issues. Make sure to get feedback on any safety or hygiene concerns.  

Let’s look at four key steps to creating a layout that balances efficiency, safety and scalability: 

1. Draw your warehouse layout and floor plan

Work out how you can facilitate the flow of goods as efficiently as possible, from receiving and storage to picking, packing and shipping.

Start by clearly understanding the dimensions of your warehouse, the location of entrances and exits, as well as fixed features like columns and loading docks. Visualise the most efficient routes for warehouse staff to convey goods.

Creating a map showing the different zones and walking routes through your warehouse will help you work out their most optimal locations. 

2. Plan traffic and workflows 

Map out how staff, equipment and products will move through your warehouse. Use arrows to map the flow and test different workflow shapes, like the U or I-shaped flows.

Consider creating separate pathways for people and equipment like forklifts to help minimise bottlenecks. Think about where your fast-moving items should be placed to ensure easy access for pickers.

Also, think about where your busiest intersections are and how these can be improved to help traffic flow.

3. Select picking method and storage types 

Think about how much stock you’ll need to hold – today and in the future as you service more orders. Determine the types of items you’ll store, their dimensions, weight, shapes and if any are fragile or hazardous. 

Will you store perishable items? For these, it’s a good idea to use a FIFO (first-in, first-out) strategy where staff prioritise picking items that expire first. Consider the picking methods we discussed earlier, and which best suits your order profile.

Determining these factors will help you work out the optimal forms of storage, which can include:

Racks: To store palleted, high-volume goods for easy access by forklifts

Shelves: Mobile or static varieties, ideal for smaller, hand-picked items

Bins and totes: For lightweight items

Cold storage: For perishable goods

Floor stacking: Storing pallets on top of each other on the floor. 

4. Test plans on the floor 

It’s a good idea to see the positioning of your new shelves, aisles, zones or equipment prior to installing them. You can do this by marking their outlines with tape on the floor, so your team can walk through the new routes.

You could run your team through mock scenarios to see how they interact with new fixed assets or zones. This helps you spot blind spots, awkward equipment locations or bottlenecks.

So, what do you need to check-off while designing your layout? Here are the key elements:

Workflow-optimised design

Ensure your layout facilitates the logical flow of goods through your warehouse, from receiving to dispatch. 

Equipment space accounted for

Is there enough space for forklifts, pallet jacks, ladders and bins to be used efficiently and safely?

Room for growth

Does your layout allow for adding more stock or new equipment in the future?

Unobstructed, safe employee movement

Does your design satisfy legal safety obligations? Ensure it prevents staff from straining or injuring themselves and minimises risk of traffic collisions. 

Discover more about this powerful warehouse management system and how it’s helping over 600 businesses worldwide maximise efficiency. Or get a first-hand look by booking a no-obligation demo with our team today.