Warehouse labeling and bin location are, perhaps, the most underrated principles in warehouse management best practices.

But let’s be honest: they’re not terribly interesting to talk about.

It’s fun to dream about new business ventures, plans for growth, and casting vision for your business. Dreaming about developing the most efficient bin location system? Not so much.

But if you want to maintain a profitable, centralized warehouse management system and maximize warehouse space, you underestimate bin location management at your peril.

That’s why we’re giving them some much-needed attention and telling you why you should give them a second look.

Want to sell more, pick more products and get merchandise out the door faster? Not to mention, reduce labor costs, miss-ships, and errors in your warehouse? Then look no further.

Your warehouse locations and how you label them might be setting you back.

Want to skip straight to the good stuff and see SkuVault Core do its thing? Why not take our interactive product tour? Promise, it takes just two minutes!

The argument for showing some location love

Let’s start from the beginning.

Industry standards exist because they’ve been proven most efficient and cost-saving. After decades of trial-and-error, the warehouse industry has determined a clear right and wrong way of naming and labeling locations in a warehouse to benefit your inventory management.

That’s not to say there are not a lot of opportunities to customize your locations based on your specific needs. However, there are some basic things you’ll want to get right from the get-go.

When you name locations properly, you can take advantage tools and systems used in warehouse management systems like dynamic locations and interactive wave picking.

These features allow you to get the most out of your warehouse space and employees. After all, having an optimized system means your pickers spend less time finding product. And they’ll make fewer mistakes which is good for your bottom line.

How to start naming your bin locations

There are many ways to label warehouse locations. First let’s define some industry terms you’ll need to understand these best practices.

Below are some terms used in the industry. However, keep in mind different terminology may be used. Find a warehouse location naming schema that works for you and be consistent. I’ll use industry standards in my description, but if you get confused, please refer to the graphics throughout the article for help.

• A location is a labeled, designated area in a warehouse where a picker goes to retrieve product for an order. Your team will scan a series of alphanumeric barcodes to move products in and out, ensuring accurate quantities and locations.
• A primary bin location (also known as a preferred bin location) refers to the designated bin or storage location for a specific inventory item. In this case, you’d assign each inventory item in the warehouse a primary bin location and this is where you’ll store it when it arrives. The primary bin location is typically the first place where you’d look for an item when picking for an order. If the primary bin is empty, you can use your warehouse management system to find the next location where the item is stored.
• A bin (also interchanged as a location) is any storage type within a location that contains one or more spaces or slots for product. For example, a bin of nails, a bin containing slots of a particular document type, etc. If you’re prioritising speed and accuracy, it is the most specific a warehouse location can get.

Labelling by shelf, rack, and aisle

• The next level of location naming is by shelf (AKA row). This is categorized as the horizontal space spanning across a rack.
• Racks (AKA units or section) can be thought of as large sections of shelving units that store your product. Depending on the warehouse, your racks/units might be identified as an entire shelving unit spanning one side of an aisle or as small sections within a long until of shelving. You can imagine the latter way as a bunch of bookcases lined in a row, and each bookcase is its own rack within the row of racks (see infographic).
• The next, most general way to specify your location is by aisle, which is just defined by the walking space between your racks.

Best practices

Warehouse location labeling is a tricky business. The organization of location codes and what locations are actually called, can (and usually do) differ greatly between warehouses.

There are, however, a few industry standards you should follow to prevent needing to rename all your shelves later on and alleviate potential confusion for your pickers.

1. Number shelves from the ground up. This way, if you add height to your shelves as you grow, you don’t have to relabel your shelves. Otherwise, if you have a rack with four shelves with the top shelf given the number one and the bottom shelf being number four, if you want to build up and add locations, your new location (let’s say shelf five) would be on top of shelf one.
2. It is best practice that when setting up alphanumeric locations to use a zero in all numbers less than ten (i.e. 01, 02, 03, etc.). This will allow the system to read the locations alphanumerically accurately.
3. Be consistent. Nothing will screw up your system and your employees faster than having an inconsistent labeling method.

If you keep these in mind, you’ll save yourself a lot of headaches, time, and money over time!

Location labeling

The thing about naming warehouse locations is that the information included depends on the warehouse they’re found in. No two warehouses will necessarily use the system as the other.

A warehouse selling large bulky lawnmowers will unlikely need to identify based on the unit/ rack. Meanwhile, a warehouse with primarily small products, like computer parts, may need to get as specific as possible to locate items amidst a wall of hundreds of products.

We’ll go into the details you’ll need to label most of your warehouse below, but if you’d like another example of how this is put into practice, please check out our support page here.

Rack labeling

Serpentine and standard rack labeling are two different strategies used in warehouse management systems. You can use them to improve efficiency and accuracy in storage and retrieval of goods.

While both methods serve the same fundamental purpose—identification and location of inventory—they differ significantly in their implementation and efficiency. Here’s everything you need to know about these two approaches.

Standard rack labeling

Standard rack labeling is the most basic and common form of bin labeling.

In this method, you would assign each rack, shelf, and bin in the warehouse a unique identifier. This may consist of a combination of numbers and letters that reflect the aisle, rack, level, and bin.

This system provides a clear, concise structure that’s easy to understand. It facilitates straightforward identification and location of inventory, making it ideal for smaller warehouses with simple operations or less complex inventory.

However, the simplicity of the standard rack labeling can become its weakness in larger warehouses with more complex inventories, where more nuanced labeling strategies might be necessary.

Serpentine rack labeling

Serpentine rack labeling, on the other hand, takes a more dynamic approach to bin labeling. In this method, the labeling follows a continuous, ‘serpentine’ path that zigzags up and down each aisle.

For example, the numbering might start at the beginning of aisle one, continue to the end, then pick up at the end of aisle two, continuing back to the beginning of that aisle. This continues through the warehouse, creating a ‘serpentine’ path.

This system has a significant advantage in reducing travel time for pickers. Instead of having to travel up and down each aisle, they can follow the serpentine path, making their movement more efficient.

This method is particularly beneficial in warehouses that employ wave picking, where pickers are collecting multiple items from different locations in one pass.

However, serpentine labeling can be more complex to set up and might require more time for workers to learn, as the labels do not follow a simple sequential order.

It’s also critical to use a robust warehouse management system (WMS) that can effectively support and manage this more complex labeling system.

Choosing the right system

Choosing between serpentine and standard rack labeling depends on the size and complexity of your warehouse, the nature of your inventory, the picking methods you use, and the capabilities of your warehouse operations.

You’ll need to weigh the benefits of increased efficiency with serpentine labeling against its complexity and the learning curve it may require for your staff.

On the other hand, while standard rack labeling might be the more logical storage method, it might not provide the most efficient paths for pickers in larger, more complex warehouses.

Most experts you come across will likely argue for the case of a serpentine system.

Why? Because when provided with a picklist that is in order by location, pickers can weave (like a snake) up and down the aisle and collect products for several orders. This means they won’t have to double back or skip around their picklist. It means a more organized and efficient route for pickers to follow.

Serpentine method for labeling racks/units:

Aisle 01

• Unit AA | Unit AB | Unit AC
• Unit AF | Unit AE | Unit AD

Aisle 02

• Unit BA | Unit BB | Unit BC
• Unit BF | Unit BE | Unit BD

Aisle 03

As you can see, a picklist would naturally guide a picker up and down an aisle from unit AA to unit AC and then back to AA on the next aisle.

Alternatively, a standard method would look like this:

Aisle 01

• Unit AA | Unit AB | Unit AC
• Unit AA | Unit AB | Unit AC

Aisle 02

• Unit BA | Unit BB | Unit BC
• Unit BA | Unit BB | Unit BC

Aisle 03

This means pickers would be inclined to skip around on the picklist or be forced to travel inefficiently through the warehouse to collect products for orders.

Shelf labeling

The industry-preferred method of shelf labeling is by section (see graphic). Depending on your warehouse and needs, you might choose to put the shelf value in the last position of your location code.

You would then organize your shelves  “vertically” or “by shelf.” Warehouses may choose to do this if they have irregularly shaped or large items that don’t fit the typical organization scheme.

However, you’ll find that most locations are divided by the following elements: aisle-unit/rack-shelf/row-bin.

Each shelf within a unit should count up from one and continue numerically until you reach the end of a shelf.

For instance, in the example below, you can see shelf four and shelf five start with bin one and end with bin four. This way, the picker knows that if he’s looking for bin two, it will always be in the second position, regardless of which shelf it’s on.

Final thoughts

As you can see, a lot goes into naming locations. But due to how highly customizable it is, you can really get as specific or general as you want.

While this can be a good thing, with a well-planned schema, undertaking this kind of project is understandably daunting. Especially when managing multiple bin locations in a large warehouse.

But don’t panic.

As we’ve gone over in this post, location labeling varies from warehouse to warehouse. With that in mind, don’t worry if your location labeling differs from the way I’ve described above.

Utilizing software like SkuVault Core by Linnworks can help you not only manage bin location information. It can also streamline your entire inventory management process, all the way from procurement to customer service.

Ready to get control of your inventory data and earn your time back? Check out our 2-minute guided tour of the platform.

An organized warehouse is an organized mind – we’ll see you on the inside!