The Most Efficient Warehouse Layouts for Businesses in 2023

If you rely on warehouse storage for your eCommerce shop or shipping company, it’s worth learning about warehouse layouts.

But why does layout matter? 

After all, you probably have other important things to do, like processing orders and handling customer complaints.

Trust me: Warehouse layout design matters.

For example, pickers find, pick, and pack products much slower when poor warehouse layout makes them cover a lot of area. 

This results in less efficient warehouse operations.

In this article, I’ll outline popular warehouse layouts and give you some pros and cons for each one.

By the end, you should be able to choose the right warehouse layout for your unique business needs. 

Let’s get to it.

3 warehouse layout options

U-, I-, and L-shaped models are three popular types of warehouses. 

You can use any of these models for centralized dispatching, allowing you to receive inventory and send it off for last-mile delivery from one location.

Here’s a quick roundup of each one’s advantages and disadvantages.

U-shaped warehouse layout — best for avoiding bottlenecks 

A U-shaped warehouse is (surprise, surprise!) shaped like the letter U.

Usually, one “arm” of the U accommodates inbound logistics and serves as the receiving area (where products are dropped off). 

The other arm of the U is the shipping area (where products are sent off).

Between the two arms, you have floor space for storage and work areas for staging (preparing products for the next stage in the supply chain).

The storage capacity section is divided into dynamic storage and static storage.

Dynamic storage is used for high-demand products that move through the warehouse quickly, while static storage is used for those that aren’t in such high demand.

The static storage items are held in the very center of the U, farthest away from the shipping and receiving areas. 

This allows workers to access dynamic storage items more easily.

The U shape is practical because it clearly distinguishes incoming versus outgoing products, allowing goods to flow through the warehouse quickly.

Thanks to the speedy workflow, it can also help minimize the storage space needed for packages.

Pros:

• Avoid bottlenecks by keeping incoming and outgoing goods on opposite sides
• Support a fast flow of goods
• Works for warehouses of all sizes

Cons:

• If the U is too narrow, the shipping and receiving areas may get congested on high-traffic days

I-shaped warehouse layout — best for maximizing warehouse space  

The I-shaped warehouse looks like a capital letter I — it’s basically one long rectangle.

One end of the rectangle is for receiving goods, and the other is for shipping goods.

Farther in from each side of the I, there’s a staging section — one next to shipping and one next to receiving.

Sandwiched between the staging section is the storage area. Dynamic storage is in the center, with static storage on the edges.

The I-shaped warehouse is great for larger companies with a lot of products coming in and out.

The I shape allows for an assembly-line-style movement of products from one end to the other, which is clear and minimizes confusion.

Pros:

• Clear workflows, with a straight line from receiving to shipping
• Maximize use of warehouse space, using the full length of the structure
• Works for warehouses of all sizes

Cons:

• Building and installing loading and unloading areas (like docking equipment) at two opposite ends of the building can increase warehouse costs
• Products need to travel the full length of the warehouse before being dispatched, which can slow down processes

L-shaped warehouse layout — best for separating inbound and outbound products 

An L-shaped warehouse puts receiving at the short “foot” of the L and shipping at the long end.

A staging area is adjacent to both the receiving and shipping areas.

The storage area is in the corner of the L, with space for both dynamic and static storage.

Like the I shape, the L shape helps simplify workflows since products go straight from one end of the warehouse to the other.

It also helps minimize congestion by keeping goods moving in a single direction, like an assembly line.

Pros:

• Easily separate inbound and outbound products at opposite sides of the L
• Move products in one simple direction through the warehouse
• Reduce the risk of bottlenecks and congestion with assembly-line-style workflow

Cons:

• Best for small- to medium-sized warehouses like micro-fulfillment businesses rather than large warehouses (I’ll explain why below)

Warehouse layout considerations

Now that you’ve got an idea of the different warehouse types, you may still wonder which one is right for you.

Think about these factors when deciding on the layout for your warehouse management system.

Amount of space 

Warehouse sizes are trending up, and companies are leasing “mega warehouses” of 1 million square feet or more.

The I- or U-shaped design is ideal for large, high-volume warehouses. 

A small L is ideal for compact warehouse operations because all components of material handling can be easily clustered together.

While they have more space for storage, a large U or an I means traveling farther to get from loading or unloading to shipping.

This can slow workers down, as they have to cover a larger amount of space to get a product through the various stages of the fulfillment process.

You also want to consider how you’ll organize the warehouse. 

As I explain in this guide to warehouse slotting, how you organize your products within the warehouse is just as important as the layout.

Legal needs 

Make sure your warehouse setup is in line with relevant legislation, such as guidelines put forth by the Occupational Safety and Health Administration (OSHA).

For example, you’ll need to make sure you have exits installed at appropriate intervals in line with local fire codes.

OSHA covers several details, from how to set up ladders and stairways to fall protection, ventilation, fire safety, and more. 

View the full OSHA guidelines on warehousing and storage safety.

Budget 

Warehouses aren’t cheap. 

Building a 1,200-square-foot warehouse can cost about $25,000 — while a 60,000-square-foot warehouse can cost up to $1 million.

Beyond size, other points that can impact a warehouse’s costs include building materials, security, lighting, and HVAC needs.

For example, if you’re shipping types of products that need to be refrigerated or kept frozen, you’ll need to factor in the right infrastructure and related electricity costs.

Workflow 

Your warehouse layout should allow for an uninterrupted flow of people and goods through the space.

Consider inventory management in the warehouse design — from a reception area for receiving goods to picking areas and packing stations.

In particular, I- and L-shaped warehouses have the advantage of an assembly-line-style traffic flow, with everything moving in one direction.

Equipment 

Most warehouses use different types of material handling equipment to help move goods, such as conveyors or forklifts for racking and picking pallet racks.

Consider the types of equipment you’ll use when planning your warehouse layout. 

OSHA recommends aisles at least 3 feet wider than the largest equipment used, for example.

Figure out how many aisles you can fit into each part of the warehouse (like the “arm” of a U or the “foot” of an L).

Personnel 

Your warehouse has to hold more than just products. It also needs to hold people. 

You want to make it easy for warehouse staff to access items. 

Shelving that’s too close together can make it difficult for people to locate and reach products.

As mentioned, OSHA recommends aisles at least 3 feet wider than the largest equipment. 

Three feet should also be wide enough to accommodate a person.

Your warehouse floor plan also needs to consider key factors beyond storage systems that impact personnel, like restrooms for workers.

There are also occupancy load rules to consider. 

For example, you can only have a certain number of people occupying a certain amount of space for safety reasons.

Throughput 

Throughput refers to the number of items moved through the warehousing process — from order picking to the packing area, shipping, and beyond.

To calculate throughput, pick a set time frame (like a day or week) and track all inventory that comes through the full warehouse process.

Warehouses with higher throughput may benefit from the I- or U-shaped warehouse model, which can accommodate larger workflows.

Delivering orders yourself? Circuit for Teams saves you time and money

Whether you’re a delivery business or an eCommerce company, organization is key when managing a warehouse.

Well-planned warehousing can improve your workflow, making it easier and faster for your workers to locate and pick products. 

This can improve efficiency and simplify operations.

Three popular warehouse design processes are the U-shape, I-shape, and L-shape.

And the best warehouse layout for you depends on factors like the facility’s size, warehouse equipment, legal needs, and more.

If you’re handling your own warehouse processes, you may also manage other aspects of order fulfillment — like last-mile delivery. 

This is the final step in the supply chain process, when products travel from the warehouse to the customer.

Trust Circuit for Teams to help make your last-mile delivery process just as efficient as your warehouse operations.

Our route optimization software plans delivery routes, finding the fastest sequence of stops based on details like traffic patterns and construction roadblocks.

Circuit for Teams also has other features to improve delivery operations, like the ability to set delivery time windows and send customers real-time delivery status updates.

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