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How to Use Inventory Tags and Labels to Organize Inventory?

How to Use Inventory Tags and Labels to Organize Inventory?

Inventory tags and labels are an essential tool for organizing your inventory. From increasing efficiency in the stockroom to improving traceability in the supply chain, tagging and labeling your items and equipment can bring your company many benefits.


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What are Inventory Tags and Labels?

Inventory tags and labels are slips of paper, plastic, or other material attached to items and equipment in the stockroom, containing information about the item, rack, or area. Usually, these slips include basic data such as product names, SKUs, quantities, and lot numbers, but they could also include more specific information like the assigned locations of the items, receipt and expiry dates, etc.

Barcodes or QR-codes are often used to convey this information more succinctly, with inventory employees being able to scan the items and the data directly into their inventory management software.

Why are Inventory Tags and Labels important?

Tags and labels are used foremost to organize and track inventory, both physically and virtually, and to improve efficiency in the stockroom. Here are some specific benefits of using tags and labels in the warehouse:

Better organization

Of course, marking everything makes it easier to navigate and find something in the stockroom. But an important precondition of using inventory tags and labels is the proper classification, sorting, and storage of your inventory, which is the basis of creating an organized system in the warehouse. When every item has its own place, everything is tagged and labeled, and the data is entered into an inventory management system, the warehouse will be cleaner and neater and you will have a much better overview of everything happening in the stockroom.

Full traceability

Using barcode tags or labels with warehouse management software that has lot tracking and serial number tracking functionality makes it possible to achieve full traceability in your inventory. Every time an action is taken or items are moved, the barcode is scanned and the activity is recorded in the system, allowing you to trace back inconsistencies to their root causes. Having this visibility in your warehouse also means that items are not lost or forgotten until they are obsolete or expired.

Improved efficiency

Tagging and labeling everything can drastically reduce search time and errors in warehouse processes. When everything is in its rightful place, quantities are tracked, and everything is clearly marked, it is easy to know where anything is located and in which quantities. This also makes performing stocktakes a breeze. In addition, if barcodes are implemented, data entry tasks and the risk of human errors are almost eliminated.

Better analytics

With a tagged and labeled inventory, recording inventory movements is much easier and much less error-prone. That is especially the case if you have implemented a barcode inventory system where data is entered by scanning a barcode on an item or rack. With accurate information consistently fed into the inventory management system, you can benefit from much more accurate analytics regarding the performance of your stock keeping units.

How to use Inventory Tags and Labels?

When it comes to tagging and labeling your items, equipment, and areas, there are certain steps you need to take if you want to achieve the full benefits of a well-working inventory system.


Before sticking labels everywhere, make sure that you have the following things in order:

  • Designated areas for different inventory types and items. Have your warehouse planned out before labeling your inventory. Think of the best places to store various types of inventories so that they would be easily accessible and close to their place of consumption.
  • An SKU code system. To properly track inventory, each distinct item should have its own stock keeping unit code. For example, if you sell tables made from three different types of wood, then each of the variations should have its own SKU code.
  • A concrete idea for the content of the labels. Labels should be succinct and contain only the necessary information. The required space for conveying the information could be minimized with barcodes or QR-codes.
  • A label generator and printer. The best label generator is often the inventory management or ERP system that is used to manage your inventory data. There, you can just click on an item and automatically generate labels containing the vital data for tracking the item.
  • A barcode scanner. Apart from designated barcode scanners, some systems also allow the use of a smart device such as a phone or a tablet to scan the barcodes.
  • An inventory management system. An important prerequisite for efficient inventory management, an ERP system allows you to generate SKU codes, barcodes, and labels for your products, and track everything that goes on in your warehouse.

Read more about Warehouse Organization.

Location labels

First, label your locations. After outlining the layout of your warehouse and the storage areas of different inventory items, create a system for identifying the rooms, zones, sections, rows, and shelves in the warehouse. Use a combination of easily understandable indicators such as numbers, colors, images, and names.

For example, if you only have one stockroom and want to use red to signify where the raw materials are, a label for identifying this section of your stockroom could have a red marking as well as “RAW MATERIALS” written on it. This label should be clearly visible from across the room, from various directions. The rows of raw materials could then be marked with red labels and an additional marking that would distinguish the type of materials in this particular row, e.g. “Wood”, “Paint and varnish”, etc. In larger stockrooms with many different SKUs, these labels could also have a list of the products stored in this row. Finally, the labels on the shelves could go into even more detail and include the color, type, specific names, SKU codes, and barcodes of the items.

In larger warehouses, it would also be feasible to create a map of the areas and install it in various places.

Product labels

After you have created a system for easy navigation, you can start labeling your products. These labels should contain as little information as possible and as much information as needed. Often, companies include data such as product names, SKU codes, quantities, and lot numbers, plus receipt and/or expiry dates.

Some companies also include instructions on their product labels, for example when an item needs to be shipped with additional parts or merely instructions for handling.

In addition, inventory processes could be improved with barcodes or QR codes that can be scanned with a flick of the wrist. By using barcodes, you can minimize the time spent on recording inventory movements and drastically minimize input errors.

Here are a few simple tips for labeling your products:

  • Use an easily readable font and an appropriate font size.
  • Distinguish different types of inventories (raw materials, WIP, finished goods) with different colors.
  • Laminate your labels for extra durability.
  • Attach the labels to easily accessible and visible places.
  • Always ensure that the labels are securely attached.
  • Be prepared to change labels or create new labels quickly – have a printer or a portable label maker at your disposal.

By following these suggestions, you should achieve a well-functioning, easily-trackable inventory.

Using an ERP system for inventory organization

ERP/MRP systems are designed to help you achieve a high level of organization in various business departments, including your stockroom. The inventory management module of a proper ERP system allows you to quickly generate SKU codes for your products, enter product information, generate barcodes, and edit and print out labels. Some ERP systems also provide mobile applications that can be used to scan the barcodes to record inventory movements.

The inventory tracking capabilities of an ERP/MRP system allow you to easily achieve supply chain traceability and regulatory conformance while giving you an overview of inventory levels, material requirements, and item performance. In addition, the system acts as a hub between various departments, integrating sales, inventory, procurement, production, accounting, and HR and facilitating the exchange of vital information between departments to ensure quicker and better business decision-making.

A proper ERP/MRP system can help you quickly generate barcodes and labels for your items and stock lots.

Key takeaways

  • Inventory tags and labels are slips of paper, plastic, or other material attached to items and equipment in the stockroom, containing information about the item, rack, or area.
  • These slips may include basic data such as product names, SKUs, quantities, and lot numbers, but they could also include more specific information like the assigned locations of the items, receipt and expiry dates, etc.
  • Barcodes or QR codes are often used to convey this information more succinctly.
  • Inventory tags and labels allow businesses to better organize their warehouses, improve traceability, increase efficiency, and to better analyze their performance.
  • Inventory tags and labels are best used with a barcode system integrated into an inventory management or ERP software.

You may also like: Inventory Optimization Methods and Techniques

Madis Kuuse

Madis is an experienced content writer and translator with a deep interest in manufacturing and inventory management. Combining scientific literature with his easily digestible writing style, he shares his industry-findings by creating educational articles for manufacturing novices and experts alike. Collaborating with manufacturers to write process improvement case studies, Madis keeps himself up to date with all the latest developments and challenges that the industry faces in their everyday operations.

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