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How to Use Inventory Tags and Labels to Organize Inventory?

How to Use Inventory Tags and Labels to Organize Inventory?

Tagging and labeling inventory items can bring substantial benefits to your business. From increased stockroom control to better supply chain traceability, this post explores how inventory tags and labels can help further efficiency.


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What are Inventory Tags and Labels?

Inventory tags and labels are physical identifiers that are placed on stock items for the purpose of counting, identification, and traceability. These can be slips of paper, barcode labels, stickers, color-coded plastic tags, stubs, or any other marker that includes human-readable and/or scannable information about a stock item.

They can be used not only with stock items but also with office supplies, equipment, storage areas, or other physical assets. They can include asset labels, repair tags, inspection tags, shipping tags, etc. Put simply, whatever information is needed to convey to anyone physically handling the items at any point in the supply chain.

Inventory labels and tags usually contain basic information about the item. This can include product names, SKU (stock keeping unit) codes, lot numbers, quantities, etc. They can also include more specific information like the item’s assigned locations, receipts, expiry dates, quality control, instructions, and so on.

Inventory tags and labels are a reliable means of organizing the stockroom and increasing supply chain traceability. Barcodes and QR-codes printed on the labels alongside human-readable information also enables making the information on the inventory tag scannable into inventory management systems.

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

Having everything marked makes it easier to navigate and find things in the stockroom. An important precondition for using inventory tags and labels is the proper classification, sorting, and storage of your inventory, which forms the basis of a well-organized warehouse.

When every item has its own place and everything is tagged and labeled, the warehouse will be cleaner and neater, giving you a much better overview of everything that happens in the stockroom. Entering as much of this data as possible into an inventory management system compounds this multifold.

Full traceability

Using QR codes or barcode labels alongside human-readable ones forms the basis of digital warehouse management. Inventory or warehouse management software (WMS) with lot tracking and serial number tracking functionalities makes it possible to achieve end-to-end traceability of your inventory.

Every time an action is taken with an item or when it’s moved, its barcode can be scanned and the activity is recorded in the system. This creates a digital trail and allows you to trace back inconsistencies to their root causes. The added visibility also helps ensure that items don’t get lost or forgotten until they are obsolete or expired.

Improved efficiency and saved time

Tagging and labeling everything can drastically reduce search time and errors in inventory and production management. When items are in their designated place and clearly marked along with quantities, production planning gets easier, manufacturing runs smoother, and purchases are more informed. If barcodes are in use, data entry tasks take far less time and the risk of human errors plummets accordingly.

Better analytics and reporting

Recording and reporting inventory movements are much easier and less error-prone with a tagged and labeled inventory. This is especially the case if a barcode inventory system has also been implemented.

Accurate information consistently fed into the inventory management system means more accurate analytics regarding stock performance and asset management. Comprehensive reports can be compiled much easier as well. Tags and labels also hugely simplify counting and accelerate stocktakes.

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 given thought to the following:

  • 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 or serial number system. Essential for proper inventory tracking, distinct items should have their own stock-keeping unit codes. For example, if you sell tables made from three different types of wood, each of the variations should have its own SKU code. Adopting serial numbers takes it even further and enables separate tracking of individual items.
  • 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 can be minimized with barcodes or QR codes. It is probably wise to leave some info in human-readable form, however.
  • 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. This enables automatic and customizable label generation which can then be easily sent to a label printer. Labels can be generated with external tools and ordered online as well, but it’s usually more hassle.
  • 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. Manufacturing ERP systems include everything you need for organizing and managing the inventory and implementing traceability. +
  • Training program. When putting in place a new labeling system, it makes sense to duly inform and train all relevant employees on the system’s use and logic.

Location labels

First, label your locations. After outlining the layout of your warehouse and the storage areas for 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. Here are a few tips for labeling your products:

  • Use an easily readable font and an appropriate font size. Also, think through the label’s layout. For example, when workers need to quickly identify SKUs with sequential numbers, it’s a good idea to make the respective information larger on the label.
  • Use a logical and uniform labeling policy. Even if in different shapes and sizes, it’s a good idea to have labeling carry the same logic.
  • Distinguish different types of inventories (raw materials, WIP, finished goods, equipment) with different colors.
  • Choose a fitting label material or laminate your labels for extra durability.
  • Attach the labels securely and in easily accessible and visible places.
  • Be prepared to change or create new labels quickly should the need arise – have a printer or a portable label maker at your disposal.

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 inventory management or ERP software.
What is an inventory tag?

An inventory tag or label is a physical identifier that is placed on a stock item for the purpose of counting, identification, and traceability. It can be used both for stock items as well as designating areas in the stockroom. All kinds of items can have inventory tags, from raw materials and finished goods to equipment or machines.

What is the purpose of inventory tagging?

The purpose of inventory tagging is to simplify counting, identifying, and tracking stock items. Tags usually carry basic or more advanced information about the item and can designate an item’s status like on a repair tag or quality control label. Used in tandem with a barcode inventory system, inventory tags can greatly increase supply chain traceability.

How do you label inventory items?

There are many ways in which to label and tag your inventory items. Best practices include coming up with a uniform labeling layout; differentiating tags by color, font size, shape, or material; using a proper label generator, and placing the labels in high-visibility positions.

What are the different types of inventory tags?

Different types of inventory tags and labels include identifying labels, status labels, location labels, instruction labels, etc. Essentially, whatever information is needed to convey to anyone physically handling the items at any point in the supply chain.

Why are inventory tags important?

Inventory tags are important because they increase the level of organization within a stockroom, which leads to more efficient overall manufacturing performance and robust inventory management. They are also crucial for tracking purposes and can simplify stocktake, reporting, and analytics.

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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