A bin location system turns every square meter of a warehouse into a map by assigning each product a fixed spot made up of an aisle, rack and bin code. The goal is simple: staff should never rely on memory or a guess when looking for an item — they should read the code and walk straight to it. The same logic works whether you're organizing a ten-square-meter storeroom behind a corner shop or a three-hundred-square-meter wholesale warehouse; only the number of digits in the code changes.
Why do you need a bin location system?
In a warehouse without a location system, products get placed wherever there happens to be empty space, turning every search into a treasure hunt. When staff change, the new hire has no idea where anything is and has to keep asking the owner or a veteran employee, which creates dependency on specific people. A bin location system moves that knowledge out of someone's head and onto a shelf label and a stock record.
Before switching to a bin location system, a hardware wholesaler took an average of 25 minutes to prepare a new order; when its two most experienced staff were both out, that could stretch to 45 minutes. After moving to aisle-rack-bin coding together with barcode inventory tracking, the same order came together in 8-10 minutes, because the screen now showed exactly where each product was.
How do you set up aisle-rack-bin coding?
Aisle-rack-bin coding creates a unique address for every part of the warehouse by giving each section a sequential aisle number, rack number and bin (the compartment on the rack) number. For example, the code A2-R3-B5 points to aisle 2, rack 3, bin 5. That same code is written on the product label, on the rack itself, and on the product card in your stock software.
- Aisles: If the warehouse is large, number the aisles A1, A2 and so on; if a small shop's back room has only one aisle, skip this step and start straight from the rack number.
- Racks: Number each rack in increasing order, left to right or from the door inward (R1, R2, R3…).
- Bins: Number each rack's horizontal compartments top to bottom as B1, B2, B3; the label on each bin should show both the product name and the code.
- Labeling: Use labels that are durable but easy to change — removing a label should be simple whenever a product's location changes.
Even for a small pharmacy storeroom or a 40-square-meter shop back room, this three-part code becomes intuitive within five minutes; the only investment is some label stock and a few hours of work.
A simplified system for a small shop's back room
In a small back room that doesn't need the concept of aisles, a rack and bin number is enough: R1-B1, R1-B2, and so on. Seasonal or bulky items go on a pallet spot on the floor, coded separately as P1, P2. Even this minimal system reduces the number of 'it's somewhere in the cupboard' searches to zero.
Where should best-sellers go with ABC placement?
ABC placement is the principle of putting group A products (your best sellers, by sales volume) near the entrance and at eye level, while group C products (slow sellers) go toward the back and onto upper or lower racks. The logic is straightforward: the products you reach for most often should require the shortest walk and the least bending or stretching.
At a food wholesaler, items like pasta, oil and sugar made up 70 percent of daily order volume. Once they were moved to the two aisles closest to the door, on eye-level racks, pickers' daily walking distance dropped by roughly a third. Rarely requested specialty spices were shifted to the back aisle, on the upper racks.
You should refresh your ABC classification every quarter, since seasonal items (holiday decorations, spring cleaning products) can move in and out of group A depending on the time of year. In a system like Welda Stock, pulling a per-product sales report shows this three-way classification automatically.
How do you plan a picking route?
A picking route is a predetermined walking path designed to collect every item in an order with the fewest backtracks and the shortest total distance. Staff who pick at random might walk the same aisle three times, while a planned route covers the whole aisle in a single pass.
- One-way sweep: Always enter aisles from the same end and move in an S-shaped pattern; there's no backtracking.
- Sort the order list by location: Items on the order form are handed to staff sorted by warehouse address (aisle-rack-bin), not in random order.
- Save heavy or bulky items for last: Light, fragile items go into the cart first, heavy boxes go in last.
- Batch picking: Shared items across several small orders are collected in a single pass and sorted afterward — this saves particular time for businesses running e-commerce and in-store orders together.
After a cosmetics wholesaler started auto-sorting its order list by warehouse address, average picking time per order dropped from 12 minutes to 7 minutes; at 40 orders a day, that's roughly 3.5 hours of staff time saved daily.
What are the common mistakes when setting up a bin location system?
The most common mistake is keeping the location code only on paper without entering it into your stock software; the code then falls out of sync with the system and loses its reliability within a few months. Other frequent mistakes include:
- Not updating the label when a product moves: If a large new shipment forces a rack change, both the physical label and the software record need updating the same day.
- Building an overly complex code system: For a 10-person business, simple 3-4 digit codes are enough — six-digit codes make the system harder for people to adopt.
- Running counts and location records separately: If a location-based count sheet isn't used during a stock count, neither the count nor the location system ends up verifying the other.
- Skipping staff training: However well the system is designed, without a 15-20 minute walkthrough for new hires, old habits of random searching will persist.
What software tracks a bin location system?
You can keep a location system as a column in a spreadsheet, but as your product count grows, inventory software integrated with barcode scanning makes it far more reliable. Once a rack code is added to a product card and a barcode is scanned, the location appears automatically on screen — no memorizing required.
Welda Stock lets you add a warehouse address to every product card, so the exact spot to put an item or pick it from shows on screen during order prep or goods receipt. That same address information also lets the count sheet sort automatically by warehouse layout during a stock count, so staff move aisle by aisle without doubling back.
How do you plan measurements when setting up a warehouse layout?
Placing racks without first planning the layout on paper can mean discovering later that an aisle is too narrow and having to move everything again. Sketching a simple floor plan before you start saves a lot of wasted effort down the line.
- Aisle width: An aisle should be at least 80-90 cm wide so one person can pass comfortably with a cart or hand truck; main aisles where two people pass each other should be at least 120 cm.
- Rack height and reach: Frequently used products should sit between eye and waist height; upper racks that need a ladder should be reserved for rarely moved backup stock.
- Fire exits and clearances: Exit doors should never be blocked by stock when planning rack placement — this matters both for safety and for passing certain local inspections.
- Room to grow: Leaving at least one aisle or a few bins empty for future product lines means you won't have to recode the whole system six months later.
Before expanding its warehouse, a textile wholesaler sketched the layout on paper and measured the aisle widths, discovering that two aisles it had planned too narrow wouldn't fit a forklift — giving it a chance to fix the plan before the racks were ever installed.
Do seasonal and bulky products need separate handling?
Yes — seasonal items and bulky products should be managed with separate logic outside the fixed location system, since they enter the warehouse at certain times of year and clear out completely at others. Instead of giving holiday decorations, seasonal candy or summer items a permanent rack-bin code, it's more efficient to set aside a 'seasonal zone' used only when that season arrives.
Bulky but low-value items (water bottles, canned drinks, feed bags) are usually given floor pallet space with its own separate code sequence, like P1, P2, so it doesn't get mixed up with the aisle-rack-bin coding — keeping the system clear for both types of product.
An example of seasonal zone planning
A stationery wholesaler temporarily hands over a third of its warehouse capacity to notebooks and pens during back-to-school season; once the season ends, the same space is handed back to holiday products. These transitions are completed within a few hours just by updating the address on the product cards in the software, since the physical rack doesn't change — only which product group is assigned to it.
How do you get staff to adopt a bin location system through training?
However well a bin location system is designed, if staff keep searching at random out of habit, the system stays on paper only. A short, hands-on training session when switching to the new system is the single most critical step in making sure it's actually used.
- Explain the code logic: Show staff how to read the aisle-rack-bin code in a 10-15 minute session — walked through inside the warehouse, not taught in theory.
- Work alongside them the first week: During order prep or goods receipt, have new staff work alongside an experienced colleague for the first few days until they get used to reading the codes.
- Check label readability: Test whether labels can be read from a distance and whether visibility is good enough in poorly lit corners.
- Gather feedback: At the end of the first month, ask staff which codes were confusing and which racks were hard to reach, then make small fixes.
At a homeware shop, thanks to the bin location system, even a brand-new employee could walk straight to the shelf on day one without asking 'where is this product' — shortening the ramp-up time after hiring.
Conclusion: a small investment, a big time saving
Setting up a bin location system takes just a few hours of work, some cheap labels, and the right coding logic. In return, dependency on specific staff drops, order prep and goods-receipt times shrink, and count errors fall. From the back room of a small shop to a large wholesale warehouse, the same aisle-rack-bin logic applies — only the scale changes. Once you set the system up correctly, your warehouse keeps saving you time through both staff turnover and seasonal rushes. If you'd like support setting one up or reviewing your current layout, reach out through our contact page.