Improving Warehouse Bin Occupancy Rate

Background

A national distribution warehouse had inconsistent bin usage, with overall occupancy at 62%. Under‑filled and over‑filled bins caused excess travel, frequent replenishments, and reduced picking efficiency.

Objective

Use Lean Six Sigma (DMAIC) to increase bin occupancy to 80%, reduce replenishment workload, and improve space utilisation.

Actions Taken

Analysed 12 weeks of data to identify under‑ and over‑utilised bins
Introduced ABC velocity‑based slotting to match SKUs to correct bin sizes
Standardised min/max levels using demand history
Consolidated slow‑moving SKUs and removed obsolete items
Added visual controls and updated WMS replenishment rules
Implemented weekly occupancy dashboards and SOPs

Results

Bin occupancy improved from 62% to 82%
Replenishment tasks reduced by 25%
Picking travel distance reduced by 14%
Storage capacity increased without expanding footprint
Annual savings estimated at $120,000

Conclusion

Lean Six Sigma enabled the warehouse to optimise bin usage, reduce waste, and boost productivity—achieving significant efficiency gains without major investment.

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