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How Does ESL Make Warehouse Location Numbering Efficient?

Without a comprehensive numbering system, your WMS will remain a software with no practical use.

There may have been a time in the operational life of any business with a storage or warehouse facility, where the location and picking of inventories rely on a few veteran staff who knows every nook and cranny of their facility. These are the go-to guys who you approach when you need something or are looking for a piece of item from your warehouse inventory. As long as they come to work every day, you have someone to rely on when it comes to inventories.


But what if these people retire or leave the company? What if the size and magnitude of your warehouse or the volume of your inventories have reached a point where it has become quite impossible for the unaided human memory to process and fathom effectively? In the early 2000s, warehouse sizes are typically at the 127,000 sq. feet level on the average. This average has gone up to 180,000 sq. feet at present, and more warehouses are built much, much better.


With such sizes and magnitudes of warehouses that are typically requiring a third more space than what they needed a decade ago, simple systems for maintaining inventories, or relying on sheer human memory for locating items is not a wise business choice. Many have opted to invest in a Warehouse Management System (WMS) as a tool for handling daily inventory and warehouse operations.


Still, even with an effective Warehouse Management System, you can only do so much and fail to reap the most benefits from such a system, if you do not have an efficient warehouse location numbering scheme or system. Without a comprehensive numbering system, your WMS will remain a software with no practical use.

The Need for an Efficient Warehouse Systems and Operations

Warehouse systems and location schemes are topics not too many people or even business owners would be interested in unless they are warehouse managers or personnel who are directly involved in day-to-day warehouse operations. What they fail to realize is that the efficient operation of their warehouse is crucial to the continued success and sustainability of their business. It is an element of production that can directly affect the performance of other divisions in the operations.


To point this out strongly, business owners should be aware that an inefficient warehouse system can reap continuous losses that could amount to hundreds of millions and, surprisingly, can reach even up to billions of dollars. Such inefficiencies result in inaccurate inventories, lost or damaged items, misplacement of items, slow delivery, and ultimately failure in delivery. Such occurrences will definitely end up with a loss in confidence from the side of the customer.


With typical warehouses handling an increasing number of SKUs as their operations continue, there is a real need to establish efficient warehouse systems and operations. As mentioned earlier, a big part of establishing such a system is to create an efficient warehouse location numbering scheme. How to go about implementing this? This and more will be addressed in the next section.

Creating an efficient numbering scheme

Creating an efficient numbering scheme

Creating an Efficient Warehouse Location Numbering Scheme

In its most basic sense, a warehouse location numbering scheme is primarily a system of identification of the various divisions or locations that can be found inside a warehouse facility. It’s just labeling, what could be more complicated than that? Others may have such statements, but what they do not realize is that having an efficient numbering scheme takes more factors into consideration aside from simply sticking numbers and stickers on bins and racks.


The following describes practical recommendations and considerations that you can opt to follow to implement an efficient location numbering scheme for your warehouse operations.

Make Use of Numerals

It has been a common practice among many industries to make use of an alphanumeric labeling system to identify files, items, and locations. However, from a warehouse operations perspective, the use of an alphanumeric system may not be that effective, compared to using purely numbers. This is what renowned material handling coach, Don Benson, P.E., highlighted in his study, which he published in Material Handling & Logistics.


According to Benson, the use of purely numerals would result in better accuracy, creation of sub-systems, and prevention of human error in warehouse operations. According to him, using alphabetical characters will not be effective beyond using the letters “E”, “F” or “G”. Alphanumeric characters is effective if you only have a maximum of six options, such as in the case of using these to identify certain areas of a building or the levels of a shelf. But if it goes beyond that, such as in the case of aisles, it will not be effective.

Simplify Your Location Codes

No matter how big or small your warehouse operations are, it would be to your best advantage to keep your location codes and numbering scheme to as short and precise as possible. There will be more confusion with longer codes, particularly if your warehouse gets bigger, and you’re faced with more aisles, racks, and bins. A simpler and shorter numbering scheme will make it easier for personnel to understand, particularly those who have just joined your operations.


On top of that, longer codes will also require larger labels. The longer the code and the larger the label would make your scheme more prone to confusion. This would also give more room for making mistakes, such as in the case of using scanners while in a rush. Keep it simple and easy to understand – and avoid costly mistakes.

Make Use of a Sequential System

If you opt to go for a fully numerical scheme or decide to stick to using an alphanumerical system, it would be to your great advantage to create your labels based on a logical and sequential order. This is better than using color codes that other warehouse systems go for. They are better visually, of course, but they are prone to mistakes and human error because there is still this human tendency of forgetfulness, making them prone to mistake because of simply forgetting what color comes after another.

A worker using a sequential system

A worker using a sequential system

It would be the best practice to refer to specific location elements when assigning location codes in your numbering scheme. This would be more accurate and less prone to errors or mistakes in locating items. The following are some recommendations that you can use to develop your numbering scheme:




Assign an aisle number to each aisle

For different work areas in the warehouse (ex: repack area; pallet rack area; etc.), it would be best to make use of different number sequences for each

Reduce total picking travel distance by making use of cross-aisle, which involves assigning numbers to aisles in racked areas, instead of assigning them to shelves, rows, and racks

Begin aisle numbering at 01, starting from one side of the facility, then moving towards the opposite end of the building or unit. It would be easier to remember particularly in location higher aisle numbers from lower numbers

Ex: 01-X-X-X

Consider the growth and expansion of your warehouse facility. Three-digit aisle number schemes would be a good way to consider this, instead of being limited by a two-digit number scheme




A section or bay, in warehousing terms, is usually assigned as the area between two upright structure

Start your numbering from 01 then ascend. It would be practical to start from where the receiving bay is located then move towards opposite sides

Ex: 01-01-X-X

It is a good rule of thumb to put odd-numbered sections to the left side location of the aisle, then assign even-numbered sections to the opposite side




A level is usually designated to a shelf. It can also refer to a pair of beams

Start your numbering from 1 from the lowest level (near the floor), then ascend the level count as you go upward

Ex: 01-01-1-X




There are usually two positions (left and right) for each level, and these are usually numbered 1 and 2, respectively.

Start your numbering from 1 from the left of each section then going higher to the right

Ex: 01-01-1-1

It would be best to have a physical separation for each position, such as using a tape line, a divider, a painted line, or a bin box

Worker using unique elements to identify location

Worker using unique elements to identify location

Optimize The Placement of Your SKUs

Sudden increase or changes in demand are usually compensated by companies by stockpiling multiple SKUs they have on their inventories. While many warehouse facilities now maintain multiple SKUs as part of their inventory, it is not advisable to put multiple SKUs in one location. This will create confusion and will reduce the effectiveness of your location numbering scheme.


On top of that, make use of innovative technologies like Internet of Things (IoT) and Electronic Shelf Labels and have these integrated into the database of your Warehouse Management Systems (WMS). Such an integrated and automated rack and bin systems will make it easier for you to control and monitor inventory.

Take Advantage in Using Specialized Labeling Systems

While optimizing your warehouse layout and implementing a good and efficient location numbering scheme, it will be less effective if you still stick to manual systems and make use of traditional stickers or paper labels for your locations. On top of that, making use of printed labels can be a source of wastes as well as an additional cost that can add to your overhead.


A great alternative to traditional stickers and printed labels is the use of ESL or what is known as Electronic Shelf Labels like those provided by SoluM. When such technologies are used with other innovative systems like IoT, among others, you can have an enhanced and intuitive labeling system that can give you real-time information that is more accurate and less susceptible to human errors.

Specialized labeling system

Specialized labeling system

Document, Share, Implement

Once you’ve finalized a location numbering scheme, it would be best to formalize and standardize the guidelines and procedures of use. With this, everyone can be trained and be familiarized with your system in place. It would also be advantageous to make use of maps and visual aids where locations are indicated. This will make it easier for someone from your team of pickers or logistics people to go to a particular location.

Make it a Team Effort

Any program is made much more effective if it is implemented as part of a team effort. Everyone should be well trained and well versed with your location codes and numbering schemes. Beef these up with regular training on updates, effective knowledge transfer sessions, and operational assessments regularly.

Teamwork in the warehouse

Teamwork in the warehouse

The Take Away

A simple naming code or a location numbering scheme may seem very simple to many. Yet, such numbering schemes should be effective enough to create order amidst the confusion and disarray that is the warehouse operations. There are several ways and methods employed by various businesses across multiple industry verticals. However, you can always stick to what is practical and what is highly acceptable, resulting in an efficient location numbering system that is less prone to error, highly accurate, and productive.


Get your warehouse ready for the demands of the future. Equip your industrial and retail business with the most advanced Electronic Shelf Labels with SOLUM. Contact us today to learn more.

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