Bin locations are used to designate where items of inventory are to be stored which is essential for good warehouse organisation. They can represent a shelf, a pallet location, a storage area, or any other place where products are stored. Why are they important and how can they save you money?

Consider this… 

A customer calls and asks if you have 5 ABCWidgets. The computer shows that you have 6 of them available in stock. “Great!” says the customer “I’ll be right down to pick them up.”

All good so far – A pick ticket is sent to the warehouse. A few minutes later the warehouse manager comes into the office and says “You know those ABCWidgets, computer says they are in stock, but they’re not out there. Don’t know where, but we can’t find them.” Perhaps your warehouse organisation is not up to scratch.

From here, there are two outcomes, you will find them or you won’t. Being the manager you take charge of the situation and direct all the warehouse staff to search for the ABCWidgets.


OUTCOME 1 – You find the items.

You are greatly relieved. The customer gets the items they need. You have probably disregarded the 3 man hours spent in the search, let’s be generous and say that it’s cost you only $60 extra to fill the order.

OUTCOME 2 – You don’t find the items.

The items are somewhere in your warehouse, but you can’t find them. The customer is disappointed or worse. You spent the $60 trying to find the items – in vain. You lose the sale, but also damage your reputation as a supplier. The next time, the customer may choose another supplier. Because you can’t find the goods and you are committed to keeping that item in stock, you will also need to purchase more inventory that you can’t find until you have a complete stock take. More cash spent on inventory.

So, what’s the fix?

Solve this problem by having areas to put things away in their proper place. These proper places are warehouse shelves, pallet racks, marked off floor areas, or actual bins. These are all called bin locations.

Bin types

Fixed Bins

Use these for products that you always store in the same place. Even when you are out of stock its place remains empty for when the replenishment arrives. A single product can take up several bin locations in the warehouse. Stock that is used to fill small orders can be stored in one bin, while other bins are for bigger orders. This picking area is often called a “pick face”.

Random Bins

Bins aren’t reserved for a specific product, a stock receipt may be stored in any currently empty bin. As soon as the stock in that random location is emptied, that bin is available for any other delivery of any product. This also provides for an automatic stock take.

Holding Bins

Holding Bins are used for stock that isn’t available for sale just yet. Awaiting repacking, return to supplier, repackaging.

How to find your bins

You will need a meaningful bin numbering system for each warehouse. You could develop a bin location of say: 03-C-17-02. This could indicate that the stock is on level 2 of the racking, Bin 17, Row C in Section 03.

It is a good idea to have odd shelving on one side of a row, and even bins on the other side. This allows staff new to your warehouse pick things up quickly.

warehouse organisationSome other features of a good bin numbering system include leaving some numbers in the sequence unused, this allows you to change the numbering or racking without changing the whole warehouse. Arrange to have the same number storage bin in the same location in each row. Floor storage also has assigned bin locations. All the work on choosing bin locations is based around assisting employees find items – But we also want to pick goods at the lowest possible cost.

In addition to bin locations, you will need to add a sort sequence number to direct pickers through the warehouse to help minimise the cost of picking. The sort order is the order of picking irrespective of the numbering system used in the warehouse. It isn’t unusual for there to be a direct correlation between the amount of effort spent on warehouse bin numbering design and the overall efficiency of your warehouse. In short, time spent planning your warehouse organisation will save you even more time… and money.