How to Name Your Inventory Locations

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.
  • EVERY location should be labeled.
  • The 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 as short as possible, usually one letter
  • 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.

A Detailed Guide:

This example of how to create your inventory location names and labels involves a fictional Cookie and Candy Company, Sweet Little Devils. The business has both retail and wholesale operations. Some items are purchased for re-sale, while others are made in-house. There is also a small cafe area that serves coffee & espresso drinks. Below is an illustration of the facility:
fig. A - Sweet Little Devil's Cookies & Candies Store fig. B - Hey where'd the roof go?

As you can see, the store has many rooms. And each room has a name used by the employees. The names are as follows:
fig. C - Long Zone Names

Now, let's shorten these names into "one letter zone names". Like this:
fig. D - Zone Names shortened to one letter abbreviations

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.

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:
fig. E - Close-up of the Zone S (The storage room) fig. F - Close-up of shelving units in Zone S

The room has now been divided into sections A - H. 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 S-D-X that person knows enough to get to the location, stop walking, and start looking right in front of them. 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.
Now that we've explained how to name zones and sections, let's look at the locations themselves.

When naming your 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:
fig. G - List of inventory by location fig. H- Match your physical inventory to the way it will appear on a list.

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.

The final step is the creation and application of your inventory location labels. Please look at the figure below.
fig. I - Examples of Bad, Good, Better, and Best Inventory labeling practices

Every label should contain the full name of the location so there is no doubt about the location name. To further eliminate any confusion, the use of arrows on the labels is an excellent idea. For some tips on inventory location labels, click here.