inventory management

How to label your material inventory locations

We discuss how to implement a labelling system for your inventory to better organize and control your stock.

Effective inventory management is a cornerstone of successful business operation. A well implemented labelling system not only enhances the organization of your inventory but also ensures efficient control of your stock.

This guide serves as your pathway to developing an optimal labelling system, tailored to your unique needs, and enabling you to unlock the full potential of your inventory management.

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Why is it important to have a good labeling system for your inventory?

A well-designed labeling system makes it easier to locate and track your inventory, eliminating confusion and reducing the risk of errors. It provides a clear structure for organizing your materials, helping you keep track of stock levels and preventing overstocking or stockouts.

Additionally, a proper labeling system allows for quick identification of products, making it easier to fulfill orders accurately and efficiently. By implementing a labeling system, you can save valuable time and resources, which ultimately contributes to the growth and success of your business.

What is an inventory location?

An “inventory location” is simply the physical spot that you store your materials. To develop your inventory location system, you’ll firstly want to review your current storage situation.

If things are a little messy right now, think of this as a great excuse to give everything a big cleanout and a fresh start! You’ll firstly want to go through your inventory and remove any unused old stock (either sell or store away in a seperate location to your working stock).

Next, ensure that each material is together in the one container and after this group together all materials that are similar - buttons with buttons, and fabric with fabric for example. Ensuring that you have proper storage for each material is also important and should be considered at the same time.

How to label your inventory locations

Start by assessing your inventory and identifying different categories or types of materials. Use clear and concise labels that are easy to read and understand, avoiding ambiguous or confusing terms. Consider using a combination of numbers and letters to create a unique code for each location, making it easier to track inventory movements. Utilize color-coding to visually distinguish between different categories or types of materials. Place labels in consistent and visible locations, such as on shelves, bins, or containers. Regularly review and update your labeling system as needed to accommodate changes in inventory and improve efficiency.

Types of inventory labels

When it comes to choosing labels for your inventory, a variety of options are available that cater to the unique needs of small manufacturers.

Barcode labels are a popular choice due to their ability to store extensive data in a compact form. They can be easily scanned for swift, error-free inventory updates and tracking, which streamlines your manufacturing workflow.

Magnetic labels offer a high level of adaptability. They can be easily moved and reused, making them an excellent option for dynamic inventory systems or temporary storage locations. Adhesive labels, on the other hand, are an economical and straightforward option appropriate for a range of applications. They are easy to apply and come in a wide array of sizes and colors.

Metal labels are renowned for their durability, withstanding harsh warehouse conditions and long-term use without deterioration.

Lastly, RFID labels use radio frequency technology to track your inventory in real-time, providing an unrivaled level of detail and accuracy. However, they tend to be more expensive, making them a better fit for larger or high-value inventories.

Implementing a BIN system for your inventory

If you already have some semblance of order to your materials but just don’t have the coding system behind it then things are a little easier. You’ll want to now review where you put each material and assign a location to it.

Using a three-part coding system (zone-section-position) is recommended as it allows your stock codes to be easily read and can be adapted as your business grows.

To do this, you’ll want to create “zones” out of your storage locations - these are the high level groupings you’ll want to use so that you know roughly whereabouts your material is. These zones can be different rooms, or even different areas inside the same room. You can either use a number for each zone (i.e. your garage area is 1, your workshop storage is 2 etc.), a letter, a color, or perhaps you might like to use a code you create yourself (“G” for garage, “W” for workshop).

Within each zone, you can then further divide into sections - how many sections completely depends on how much stock you have and the different types you need to sort through. Bookshelves, storage units and static boxes are good candidates for sections. Again, you can either use numerical, alphabetical or a code: whatever works for you.

You’ll now be defining the location inside each section. This should be assigned to each material and should be the most granular level of finding your material. You might like to use alphabetical (A-Z) or numeric naming (1-99) to denote each spot in your section. Once you have figured out the system to use, you’ll then want to give each of your materials a unique code based on the three sections. This is usually written as ZONE-SECTION-POSITION. So, if you store your Red Buttons in a box on the 4th shelf in your workspace, you might give it the code W-S4-12.

Tips for Maintaining an Effective Labeling System

Maintaining an efficient labeling system is as crucial as setting one up. Here are some strategic tips to ensure long-term effectiveness: Consistency is Key: Adhere to the established labeling conventions for all inventory items across all locations. A standardized approach ensures that all team members are on the same page, contributing to smoother operations.

Regular Revisions: Review and update your labeling system regularly to account for changes in inventory, such as new product additions or phase-out of old stock.

Involve Your Team: Engage your team in the maintenance process. Regular training sessions can keep them updated about any modifications and ensure adherence to the system.

Leverage Technology: Consider leveraging inventory management software to automate and streamline the process. These tools can simplify the tracking of inventory movements, updating labels, and overall system maintenance.

Clear Outdated Labels: Always remove or update outdated labels to prevent confusion. Old labels can lead to misplacement of items or errors in inventory tracking.

Quality Matters: Invest in high-quality labels and markers that can withstand the working conditions of your storage locations. This ensures that labels remain legible and intact over time.

Audit Regularly: Conduct routine audits to ensure that the labeling system is functioning as intended. This will help identify any inconsistencies or issues that need immediate resolution.

Craftybase - your inventory labelling software solution

You’ll want to ensure that you are also using a good inventory system that allows you to record this information, so you have a full list of locations for each of your materials and also that allows you to report on each material that is in a certain location. Craftybase provides both material bin locations, and has the reporting capabilities required to maintain your inventory location system.

Remember, an effective labeling system is dynamic and adaptable, evolving with the changing needs of your business. By following these tips, you can maintain a robust system that aids in efficient inventory management, saving you time, reducing errors, and ultimately boosting your business’s productivity and profitability.

Nicole Pascoe Nicole Pascoe - Profile

Written by Nicole Pascoe

Nicole is the co-founder of Craftybase, inventory and manufacturing software designed for small manufacturers. She has been working with, and writing articles for, small manufacturing businesses for the last 12 years. Her passion is to help makers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.