You can move Items around by enabling dragging on your Inventory Manage page.
(but you can't change the structure of your inventory by dragging - see here for that)
Here is how you change the order of things.
Take a look at these Norco's. We have the M above the S which is clearly wrong.
So we hit the options > enable dragging checkbox:
(we don't allow dragging by default because it can be annoying and dangerous on touch screens)
Then we can drag them into the order we want:
What can be dragged into a new order?
- Product Families within Cats
- Product Lines within PFs
- Items within PLs
But ! Please note - you can't change the structure with dragging.
e.g. you can't drag items into another PL
For that you need to see this article in order to make structural changes.