Let's say you store goods in warehouses and only label the warehouse location of each item. For example, 1.5V alkaline batteries, 3V button batteries, and 9V rectangular batteries are all stored in Warehouse A, while 20mm screws and 30mm screws are stored in Warehouse B. As business expands and the number of items increases, it can become difficult to locate specific items within a warehouse.
This is where bin location management comes in. Simply put, it means dividing the warehouse space into designated storage areas, known as "bins," and assigning each one a name— ideally with a numbering or coding system. For example, if Warehouse A has dozens of shelving rows, each with 6 levels that have 10 storage slots each, you can assign codes based on: warehouse-row-level-slot. An item in Warehouse A, Row 3, Level 2, Slot 5 could be labeled as A-03-02-05.
Once all locations are coded, the warehouse then effectively has a structured address system. When storing items, you record not only which warehouse the item is in, but also its specific location. For instance, 1.5V alkaline batteries may be stored in A-03-02-05, and 3V button batteries in A-03-02-06. When items are needed, you can go directly to the corresponding location, making packing and inventory checks much more efficient.
Many companies rely on memory to manage inventory when their warehouse is still small— employees simply remember where items are stored. However, this approach breaks down as business scale and the number of items increase. Common signs that bin location management is needed include:
1. As the number of SKUs grows or the warehouse expands, items may be difficult to find, even if they are in stock, or may be packed incorrectly.
2. Operations become dependent on specific individuals: Only a few experienced employees know where items are, making it hard for new staff to get up to speed. If those key people are unavailable, fulfillment processes may be delayed.
3. Declining operational efficiency and inventory accuracy: Orders take multiple attempts to fulfill, items appear in records but cannot be found physically, or inventory counts require long operational downtime.
At this stage, bin location management should be introduced.
Items can be grouped into major categories and stored in different location zones based on operational needs. Common classification methods include:
1. By product attributes: Makes it easier to visually identify and locate items, and simplifies packing and inventory counting for similar products.
2. By turnover rate: Frequently shipped, high-demand items are placed in easily accessible locations, while slower-moving items are stored in less accessible areas.
Start by planning your storage locations. Divide the warehouse into different zones based on your needs and assign names accordingly. The level of detail depends on your scale and requirements. If more granularity is needed, you can adopt an address-like coding system (e.g. zone, row, level, slot) and apply visual labels on shelves (e.g. marking “Row 5” on the side of the shelf). Ensure that all storage areas are assigned location codes and are properly documented in a tracking table. If locations are highly detailed and you're worried about missing or forgetting them, you can create barcode labels and place them on-site.
Next, record the assigned location for each item. If you already have an inventory management sheet (tracking quantities and warehouse locations), simply add a “location” field alongside the existing “warehouse” field. Also include location fields in inbound and outbound records. Then conduct a full inventory count to map each item to its location. Going forward, make sure to record the corresponding location for every inbound and outbound transaction.
If you need to find a specific item but cannot locate it, simply search for it in the inventory system to identify its assigned location.
