Case study

Can Your Warehouse Overcome Rate Challenges and Thrive?

Last November, it was confirmed by the UK Government that the RHL business rate relief scheme was to be extended until spring 2025. The continued support to the retail, hospitality, and leisure (RHL) sectors is welcome news, however not all industries will benefit, including the warehouse industry which falls outside the scope for qualifying businesses.

As a local authority tax on commercial and industrial properties, the rateable value of an individual property will depend on its size, location, and the type of business activities the property accommodates. The rateable value is determined following a market-based rental evaluation carried out by Valuation Office Agency (VOA). The findings are passed to the local council which follows government guidance to calculate the rateable value. For any properties receiving relief or reductions, the local council is reimbursed by the Government.

Why is the warehouse excluded from the relief scheme?

The beneficiaries of the scheme include shops, cafes, bars, gyms, and various other establishments categorised as “social infrastructures.” These businesses are deemed essential to community well-being, employment, and the broader economy all while being particularly sensitive to the economic downturn.

The warehouse falls within the “industrial properties” category and is perceived as more robust with fewer vulnerabilities. Consequently, the warehouse industry is excluded from consideration for the business rate relief scheme. Despite attempts to urge the Government to acknowledge disparities and recognise the significant role of the warehouse in supporting “social infrastructures”, no fair conclusion has been reached, prompting warehouse operations to explore alternative cost saving opportunities…….

Large distribution warehouse in operation

Alternate Methods to Save Costs in the Warehouse

Business rate reductions may not be a reliable avenue for cost saving in warehouse operations, but that doesn’t imply that expenses can’t be reduced, or money can’t be saved through other means. Knowing where to focus will uncover numerous possibilities to enhance overall cost-effectiveness.

The size of your warehouse space has great influence on value assessments that help determine rates value. Therefore, it’s worthwhile looking at how space utilisation can be improved, considering that you are incurring charges based on its size. Effective space utilisation will help to mitigate the impact of none-negotiable rates by minimising operational costs, avoiding unnecessary costs, increasing the potential for higher revenue, and ultimately improving overall profitability.

The path to achieving optimised space and layout include the following steps:

Step 1. Evaluate vertical space.

Efficient utilisation of warehouse space extends beyond floor space and encompasses the maximisation of vertical space by using it to its full potential. The ceiling height of a tall warehouse may present an ideal opportunity to enhance usability by integrating various tiers or layers, in the form of….

A vertical racking extension – If unused space exists between your topmost rack and the ceiling, there could be an opportunity for improved utilisation through a vertical extension of the racks to integrate additional levels within the same row. This task can be approached in different ways and ensuring the safest option and best outcome would demand the involvement of specialists. Vertical racking extension projects are a routine undertaking by WSL. Our expert team has accumulated extensive knowledge and experience, making them a dispensable resource. The execution of your vertical racking extension will rely on the following factors:

  • The types of goods presently stored.
  • The capacity of the existing frames.
  • The availability or obsolescence of the current components.

Understanding the above will help to determine whether to…

  • Extend from the top – This is to add length directly to the top of the current racking frames using matching components, a viable option if there is excess capacity in the current frames and the matching parts are available.
  • Extend from the bottom – If the frames have no excess capacity, then the racks can be extended by adding heavy duty length to the bottom and although this is a more complex route, it is still a viable option providing the parts needed are still in circulation.
  • Partial disassembly and reconstruction – If the current system has become obsolete, the vertical extension can be achieved by a partial dismantle of the current system for which the parts are used to add height to the remaining structure. Following this, new racking is employed to replace the dismantled rows to ensure manufacturer consistency for individual structures.

Vertical racking extension project

Another viable option could be to implement a narrow aisle racking configuration, which consists of ceiling height racks, but also the rows are brought closer together, leaving a much slimmer aisle width between the racks. This system utilises both floor and height space at the same time because the much slimmer aisle width means more rows can be added. There is the very narrow aisle (VNA) racking option if you’re looking for an even denser storage configuration whilst maintaining access to every pallet. There are several factors to consider hen contemplating a narrow aisle racking system, such as the condition of the floor surface, handling equipment compatibility and whether it’s the most efficient solution for your operation. Consulting with a warehouse layout and racking design expert at WSL will help you determine the most suitable solution for your needs.

Narrow Aisle Racking

Heightened shelving – It’s not just palletised storage that can go to ceiling height, a shelving system can too. As shelved products are hand loaded and picked, you might be asking how access would be achieved if shelves were built to ceiling height….?

  • Walkways at multiple levels can be incorporated – Elevated walkways provide a beneficial function at levels above the ground floor. By using incorporated staircases, operators can access the shelves they require safely and with ease. There is also the option to add lifts which are particularly useful for transporting goods on trolleys to support the put away and picking process and chutes can be used to move goods to the lower grounds much faster to enhance operational speed.
  • Use the man-to-goods method – incorporating a walkway at multiple levels may not be the most viable solution for your operation. It could be that access frequency is low which is common in archive storage for example. Specialist forklift trucks (FLT) known as the man-up truck consists of a small, secure platform on which the picker stands as the FLT operator lifts the platform, transporting the picker to the required shelf.

Multi tier shelving system

More levels of floor space with a mezzanine floor – The internal space of any property with adequate height space, including a warehouse can gain an additional floor level through a warehouse mezzanine floor installation. This is an upper-level platform purposed to provide extra usable floor space without the buildings original structure undergoing any modifications. As a bespoke solution, a mezzanine floor is designed to fit perfectly within the space and incorporates a safe load bearing for the activities it will be supporting. Once manufactured, the components are delivered to the site before being assembled at its intended location. Depending on the space available and the needs of the business, a mezzanine floor can be a large platform or just a small one. It can consist of one single level or multiple levels. WSL design and manufacture bespoke mezzanine floors in-house which makes complex or very specific requirements much easier to meet, so its worth speaking to a member of our design team if you are considering a mezzanine floor installation.

Multi tier storage mezz being constructed

Could a warehouse mezzanine floor lead to higher business rates?

This is a good question, particularly when managing none-discountable business rates. While installing a mezzanine floor could potentially impact rateable value, the effects of an individual installation varies depending on several factors. For instance, if the mezzanine is solely used for storage, it might not significantly alter the property’s rateable value, as it could be viewed similarly to other removable storage structures such as pallet racking. However, if the mezzanine is designed to enhance customer experience with amenities like public stairways, lifts, or escalators, it could influence the rateable value differently.

Rates may apply to mezzanines based on their size, usage, access, features, and revenue impact. To understand how your mezzanine might affect your business rates, it’s best to consult your local council, as guidelines can differ between regions.

Regardless of business rates considerations, investing in a mezzanine floor often proves its value through increased productivity and efficiency. So, while the impact on rates may vary, the benefits in terms of business performance are likely to outweigh any rate adjustments.

Storage mezzanine

Step 2. Revise the current warehouse layout.

In a typical warehouse there are numerous activities being carried out at any one time. You have pickers picking, packers packing, forklifts forking, and everything in between. This calls for a very organised structure and the layout of the warehouse crucial role here. With a well thought out warehouse layout there is less chance of collisions and congestion. Instead, the duties of each department are carried out speedily and without hindrance which leads to a streamlined operation and satisfied customers whose orders arrived as expected. This improves the overall profitability of the business which makes overheads including business rates much more manageable.

Congested warehouse

When done properly, warehouse layout improvements should result in increased efficiency, better use of space and enhanced safety measures. At WSL, our design experts can help you achieve the most optimal layout for your operation.

The process will begin with a careful analysis of your current layout, where problematic areas such as bottlenecks, insufficient workflows, wastes space and safety issues are identified.

Understanding your goals is the next step, as clear goals will help guide crucial decisions. Its important that you express the results you are striving for with the new layout, whether that’s improved efficiency in order picking, increased storage capacity, more efficient picking, or improved safety.

We’ll then consider ways to maximise the space by improving utilisation of both floor and height space whilst implementing shorter travel distances by organising goods in order of their speed of movement.

Efficient workflows plans will be created where storage areas and packing stations will be arranged in such a way that they follow a logical sequence in which travel time would be reduced and a smooth operation is facilitated.

Improved material handling methods will be suggested if required. This could include more suitable FLTs, chutes, lifts, pallet gates or conveyors.

The plans will incorporate safety measures, and these may include floor markings, signage, safety barriers and guide rails.

The new layout design will be devised with flexibility and scalability in mind, to ensure evolving needs can be accommodated. A futureproof mezzanine floor or adjustable pallet racking are both examples of solutions that can be altered easily to support growth and heightened demand in the future.

At WSL our goal is to seek ways in which to optimise your warehouse layout to enable improved productivity, reduced costs, and boost efficiency overall.

Team planning session for a new layout

Step 3. Improve Inventory Management

Improving inventory management within the warehouse is a straightforward decision as it can result in cost savings and enhanced profitability. The likelihood of misplaced, damaged, or expired goods becomes minimal, and the picking process becomes more streamlined, accurate and swift, leading to increased customer satisfaction levels. This generates operational efficiency which leads to a boost overall revenue, and this can make overheads, including business rates more pocket friendly.

Ensure clear and concise signage and labelling – This will provide direction to pickers and simplify the task of locating and retrieving items. With items clearly labelled, pickers are less likely to receive the wrong item.

Prioritise demand patterns – For any items which are commonly picked together to fulfil one order such as a hat and scarf, cups, and saucers, make sure they are stored closely together. This will minimise travel and shorten the time it takes to fulfil the order. For low turnover stock or out of season items, these shouldn’t take primary storage locations. Instead, move these items to the furthest picking locations to allow the most frequently picked to take the most accessible storage locations.

Undertake periodic stock taking – Understanding your stock levels always will minimise the risk of stock outs or overstocking goods that have become difficult to sell resulting in lost revenue from either wastage or a reduced sell price. It will also help to detect any issues with theft that could benefit from increased security or patterns in damage or wasted items. Depending on the size of the warehouse and volume of goods you could opt for small section stock taking on a daily, weekly, or monthly basis combined with an all-section annual stock take.

Reduce manual processes – Labour constitutes a significant and inevitable expense in warehouse operations, yet strategies exist to manage and decrease these costs. A streamlined warehouse operation reduces the likelihood of unnecessary labour expenses. Alongside simplified layout and clear labelling for enhanced navigation, automation can play a role in minimising labour costs. This doesn’t necessarily entail fully robotic warehouses; rather, it could involve utilising natural forces like gravity or implementing dynamic storage systems that can assist in specific tasks, allowing operators to complete other important tasks.

Assisted stock rotation – To manually check dates on goods during placement or retrieval will certainly add time onto the talk in hand. When picking from a storage solution that works on a First-in First out (FIFO) basis, the picker had direct access to the goods in date order, because the systems accept and store the items in date order. Storage systems operating the FIFO method include:

Pallet live racking

Commonly used for stock rotation in warehouses, here’s how pallet live racking works for stock rotation:

  • Gravity Flow Principle: Pallet live racking operates on the principle of gravity fed movement. Pallets are loaded onto one end of inclined roller or wheel tracks within the racking system. Due to the incline and gravity, pallets move along the tracks toward the picking face at the opposite end.
  • First-In, First-Out (FIFO) Principle: Pallet live racking is often utilised for products that follow the FIFO principle. Older stock is loaded onto the system first, and as new stock is added, it pushes the older stock along the tracks toward the picking face.
  • Stock Rotation: To facilitate stock rotation, operators load pallets onto the system in such a way that newer stock is placed behind older stock. As pallets move along the tracks toward the picking face, the oldest pallets are accessible first for retrieval. This ensures that older stock is used or shipped out before newer stock, minimising the risk of expiry.
  • Continuous Flow: Pallet live racking systems offer a continuous flow of goods, as pallets are constantly being moved along the tracks by gravity. This results in efficient and seamless stock rotation without the need for manual intervention.
  • Efficient Space Utilization: Pallet live racking maximises warehouse space utilisation by eliminating the need for aisles between racks. This allows for a higher storage density compared to traditional selective racking systems.

Pallet Live Racking system

Carton live shelving

This is a storage system used for smaller items, such as cartons or boxes. Here’s how carton live shelving works for stock rotation:

  • Gravity Flow Principle: Carton live shelving operates on the same principle as pallet live racking. It consists of inclined roller or wheel tracks installed within shelving units. Cartons or boxes are loaded onto one end of the tracks, and due to the incline and gravity, they flow toward the picking face at the other end.
  • First-In, First-Out (FIFO) Principle: Older cartons are loaded onto the system first, and as new stock is added, it pushes the older cartons along the tracks toward the picking face.
  • Stock Rotation: Like pallet live racking, stock rotation is facilitated as operators load items onto the system in order of their arrival and in doing so, the older items are pushed towards the front to be picked first.
  • Continuous Flow: A continuous flow of goods created by the rollers and gravity enable fast paced operations to keep at speed without the delays of manual stock rotation.
  • Efficient Space Utilisation: Compared to traditional static shelving, carton live shelving consists of deeper shelves on a slight slope with no walkway between rows, making it an excellent way to maximise space.

Carton Live shelving

Drive-through racking.

Designed for high-density storage of palletised goods, drive-through racking works by allowing FLT’s to drive directly into the storage lanes, accessing pallets stored within the racks.

Here’s how drive-through racking works for stock rotation:

  • Entry and Exit Points: Drive-through racking systems typically have entry and exit points at opposite ends of each storage lane. This setup allows a FLT to enter from one end, access pallets within the lane, and exit from the other end.
  • First-In, First-Out (FIFO) Principle: The FLT can access pallets from both ends of the storage lane which promotes a systemised process where pallets stored earlier are easily retrieved first.
  • Stock Rotation: To facilitate stock rotation, newer pallets are typically placed behind older ones within the storage lanes which allows the older ones to be retrieved first, minimising the risk of stock remaining in the system having passed its shelf-life date.
  • Efficient Use of Space: Perfect for warehouse spaces with limited footprint, the drive-through racking is without an access aisle between rows, and instead it offers deep storage.

Overall, these storage systems offer an efficient solution for stock rotation in warehouses where high-density storage and FIFO principles are both important considerations.

Compact Drive in Drive through racking

Speak to WSL!

Improving revenue potential so you can manage business rate values and other overheads with ease, requires just three ingredients and all are in reach with WSL! Lean on our expertise and commitment quality and safety as a Full SEMA Member to help you improve space utilisation, implement an optimal layout, and manage inventory effectively!

Contact us today! Call 0113 2045350 or email sales@wslmail.co.uk

For a more general information on business rates visit the Business Rates section on the Gov.UK website.

Get started

Discuss Your Project

Our service is completely client-centric. We provide all manufacturer types, as well as fitters, engineers and inspectors; which means that not only can we deliver your entire project from start to finish, but that we can provide a fully bespoke solution for your individual needs. Get in touch to find out more.