Label equipment in a way that lets you categorise items across different folders. You can filter by groups/labels (giving you an overview of every item of PPE that has been allocated to your team, for example).
Use groups to label equipment rather than organise it, like Equipment Type (Staff PPE, etc).
Using a combination of groups and folders, you can assign items to a folder that best represents how your inventory is organised (store room/vehicle/kit bag etc), and also give them a label that you can then filter by, giving you an overview of every item of PPE that has been allocated to your team, for example).
Labels are great for categorising items in flexible ways across different folders, while folders give you a structured view of your inventory.