I interviewed Martin Keyser who discussed Location Codes.







Can you tell us what location codes are and what they are used for?


Your computer tells you if you have an item and the quantity.


Location Codes tell you where they belong on your shelf. This is not only essential for storing merchandise as well as selling it, But also, when you have to find the merchandise for

counting it during Inventory time. So, your shelving, has to be labeled in such a way that you can identify what rack, shelf and, sometimes bin, the item is located and note it by part number in the computer.


What problems can arise from using Location Codes?


Well, first and foremost, the location codes in the computer have to be accurate. For example, I once worked at a company where taking inventory failed because the parts weren’t where the computer said it was. Other problems can arise if the code doesn’t fit the characteristics of the part and/or the company.


I Does the location code fit the characteristics of the part?


A. Unnecessarily specific


1. Code identifies

    a. Rack

    b. Shelf on rack

    c. Bin on shelf


  1. Bins are constantly moved as parts are added and removed
    • Changing location on the shelf
    • Changing location between shelves
  2. Necessitating
    • correcting codes in the computer
    • requiring 4 personnel over a week’s time
    • every six months
  3. Question:
    • Can the bin location be eliminated without taking more time to pull parts?
    • Time inventory guy while he
    • pulls parts using full location codes
    • pulls parts using just rack and bin locations
  4. The time was the same. So,
    • We can eliminate bin locations on the shelf


Conclusion: we can add or remove bins, and, as long as the bins on the shelf stay on the same shelf, no correction is needed in the computer.


B. Random Location Codes


1. The Characteristics of what the company sells necessitate location codes that are not dependent on what the product is or it’s quantity    

a. Examples    

  1. Pawn Shop
  2. Reseller of merchandise on the internet after buying from, say, garage sales or storage lockers 
  3. Car Rental company


2. Characteristics

    a. You do not know from day to day what space you will need. Hence, allocating space for each item may be OK one day but not enough space the next day.

    b. Solution


  1. Use a location code that is random. That is:
  2. No locations are allocated to product groups such as
    • toys, sporting goods, tools
    • Luxury cars, economy cars, trucks
  3. Instead
    • any category of item for sale/rent can be put in any location with a code that is easy to find such as included in the ad for the item or, in the case of a car, on the key tag.


So, my suggestion for assigning location codes for items a company sells is:


First: If your items are relatively fixed, that is, they stay the same from day to day, ONLY be as specific as necessary as to where the part is. If you can locate an item without using all the code, it’s too specific.


Second : If your items are constantly changing, don’t assign space on your shelf by what that thing is. It’s perfectly OK for unlike items to be next to each other if your location code in the computer allows you to find it.

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Martin Keyser


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