The Hidden Costs of Honeycombing
When working with our clients, we like to tour their facilities to find opportunities to increase efficiency, reduce costs, and optimize their operations. One common issue we run into is honeycombing, which is essentially dead space – horizontally or vertically – in a warehouse that results in hidden operational costs.
To be more exact in learning about this recurrent situation found in warehouses and fulfillment centers, honeycombing can result in three scenarios: (per Supply Chain Visions):
- The practice of removing merchandise in pallet load quantities where space is not exhausted in an orderly fashion. This results in inefficiencies due to the fact that the received merchandise may not be efficiently stored in the space which is created by the honeycombing.
- The storing or withdrawal of supplies in a manner that results in vacant space that is not used for storage of other items.
- Creation of unoccupied space resulting from the withdrawal of unit loads. This is one of the significant hidden costs of warehousing.
Honeycombing is a measure of how well a fulfillment center is using its capacity utilization. As expressed as a percentage of open space within a storage system, utilization plays a crucial role in understanding how much product should be stored.
As a guide, we typically aim for an 85% utilization. Anything above 85% can become operationally inefficient from having a lack of available locations. Anything under means you probably have too much free space that can otherwise be used to store additional products.
Typically, honeycombing is most common in dense storage systems, particularly with drive-in and drive-thru racks, which have deeper lanes with fewer picking access opportunities. However, honeycombing is also found – and is potentially more costly – in pushback, pallet flow, or other deep lane storage configurations.
Honeycombing can also be incredibly costly when we look at the food and beverage industry. Temperature-controlled storage is expensive, and managers are always looking at ways to reduce costs for storage. If their storage area is not designed correctly or optimized, the company is continuously wasting money cooling a room that is not effective in storing products.
Effective design and inventory management are required to keep costs down and operations profitable. There must be a strategy to hit that magic utilization ratio – and some analysis behind the storage design. With a simple, smart, and strategic approach to looking at honeycombing within your facility, we can help guide you to your goal of optimized storage.
If honeycombing affects your operations – and it is a good bet that it does – we would love to learn more about your operation and provide solutions that can help you reduce your costs and increase your cubic storage capacity. Give us a call today!
