A recipe for an omnichannel warehouse storage system: Improving the storage efficiency by integrating block stacking and racking

Warehouses in multi-channel retailing are expected to possess storage capacity based on the purpose of operations. However, the inefficient use of storage capacity due to omnichannel retail restructuring, wherein mixed-storage items feature both online and offline, has prompted us to revisit the nature of existing storage systems (block stacking and racking). Most warehouses continue to improvise and undertake critical decision-making with regard to profiling balanced storage systems between block stacking and racking, including the efficient slotting of unit-load items across storage systems. This study aimed to establish a framework to systemically improve storage efficiency by achieving an optimum balance between block stacking and racking under inventory uncertainty – lot size and item dimensions. This study ingeniously proposes a two-stage stochastic programming model for robust optimisation during long-run profiling (redesign) and the multi-dimensional knapsack problem for achieving minimum space wastage during slotting (reshuffle). The study adopted a two-fold approach. First, the hypothetical directions for a balanced system, combining increases in buildings’ ceiling heights with its tendency to store low-volume, high-mix items, were examined. Second, the applicability of the two methods – redesign and reshuffle – was examined by considering a real-life case study and the life cycle of warehouse storage design. It was found that the reshuffling approach can resourcefully serve as a short-term solution for warehouses with imminent space issues. Redesigning also demonstrated a long-term space gain in floor space, thus minimising space wastage.