Inventory Basics - How to Name your Inventory Locations

How to Create Inventory Location Names

Key Considerations

Location names should be unique. No two locations should ever have the same name.
EVERY physical space in your facility should have a location name. Even if you don’t currently store anything in that space.
Where practical, EVERY location should be labeled.
The location labels should contain the full name of the location, and if possible, have arrows that point to the location
If you have more than one “room” consider using zone names, or room names
Zone/room names should be abbreviated (usually to a single letter ) and contained in the full location names.
Within a zone or room, location names should ascend from top to bottom, and from left to right (to understand this concept better, please follow the detailed guide below.

Location names exist so you know where to put stuff, and where stuff is put. Here’s an example of a good location naming scheme using our fake company, Sweet Little Devils. Below is an illustration of the facility:

illustration of candy store for inventory basics examples illustration of candy store with interior exposed for inventory location name examples
Sweet Little Devils Cookies and Candies (fig. 1)
Hey where'd the roof go? (fig. 2)

As you can see, the store has many rooms. And each room has a name used by the employees.

The names are as follows:

 

Zone Name

SHIPPING & RECEIVING

OFFICE

CAFE

STORAGE

COUNTER

BAKING & ASSEMBLY

RESTROOM

illustration of candy store with interior exposed for inventory zone name examples
Zone Names (fig. 3)

We're going to use Zone Names over and over, in reports, location names, etc... so let's abbreviate them as follows:

 

Zone Name - "Zone Abbreviation"

SHIPPING & RECEIVING - "R"

OFFICE - "O"

CAFE - "F"

STORAGE - "S"

COUNTER - "C"

BAKING & ASSEMBLY - "B"

RESTROOM - "M"

illustration of candy store with interior exposed for inventory colored zone name examples
Abbreviated Zone Names (fig. 4)

Why are we doing this?

If you store your items in a small area or one room, you don’t need to use zones because you only have one zone. But if you have a large storage area, or more than one room, you’re going to benefit by breaking down your space into manageable smaller chunks.

Some of the benefits are obvious

You can find locations faster
There’s no confusion about what a place is called

Others not so much

Ability to reuse section names
You can sort data, print count sheets, and do other activities, by zone
Abbreviations make it easier to type in location names.
Abbreviations make it easier to include the zone names on location labels
Reports “read easier” when the same long word doesn’t appear over and over again
There’s no confusion about what a place is called

Shortening the Zone Name to just one letter will help us meet our goal of including the full name of a location on every location label. In a very short amount of time, people using the inventory system will associate the one letter name with the longer description of the zone.

How to Create Section Names

Now that we have our zones, let’s talk for a moment about how to create inventory sections within a given zone or area. Consider the figures below for a moment:

illustration close-up of inventory store room named "Zone S" illustration close-up of inventory store room with section names
Close-up of Zone "S" (fig. 5)
Close-up of Zone "S", Sections A,B,C (fig. 6)

The Storage Zone has now been divided into sections labeled “A” - “H” (fig. 5). While in this illustration the sections correspond with shelves, the main point is this: an area or zone should be divided up into sections that can be viewed without a person needing to move their feet. For instance, if you tell a person an item is located in location “Zone S, Section B”, that person knows enough to get to the section, stop walking, and start looking right in front of them for the exact location. This may seem like an obvious point, but you’d be surprised at the number of location naming schemes that do not achieve this very simple goal. You can use letters or numbers, but make sure that the sections ASCEND from left to right, in a clock-wise fashion. You may want to start your sections names with the section that is closest to you as you enter a room.

Now that we’ve explained how to name zones and sections, let’s look at the detailed location names themselves.

Putting it All Together - Detailed Location Names

When naming your exact location within a section, it’s best to use numbers, starting with the lowest number at the highest location and descending towards the floor. The main reason for this is that it will match the way your inventory reports will print out. Consider the figures below:

illustration of clipboard with inventory locations and inventory items illustration of clipboard and inventory storage racks showing the relation between printed paper lists and physical storage
Close-up of Zone "S" (fig. 7)
Close-up of Zone "S", Sections A,B,C (fig. 8)

Consider the task of someone taking an entire inventory count. All the locations will be printed along with what should be contained in them. Using this location naming scheme, the person can move through your facility in an orderly fashion, and the “paper world” matches the “physical world” perfectly.

Every enterprise has it’s own unique layout and structures. The above guide to location names is just that, a guide. You will no doubt need to make your own adjustments, but the important principle is this:

Any pretty good location name acts like a funnel starting with the general and moving to the specific. (this is an idea that will be repeated in other areas of inventory management)

In our example, the location names start with a room or “zone”, then a section, then a specific name. If you have more than one facility, your location names might start with the facility name, then the zone name, section, and place. If you have a big warehouse, your location name might include an aisle, etc... You get the idea.

So, grab a piece of paper, sketch out your facility, break it into small pieces and create your zones. Then get a rough idea of where you want your sections to start.

Now you’re ready to create and apply your labels.

Next: "How to Create and Apply Inventory Location Labels"

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