Setup location has many advantages, one of them is that it allows users to connect warehouses with locations and will help improve reports. Once the locations are setup, go to Administration > Setup > Inventory > Warehouse and users can connect locations with warehouses. 

When generating reports that are related to inventory, users can use locations as selection criteria and display the result according to locations.

If you are interested in limiting the list length in the system, please visit Limit the Lists in SAP Business One.