What Is A Barcode Inventory System?

Quick Response (QR) codes have become nearly ubiquitous daily. We scan them to conveniently pull up websites, menus, coupons, etc. But did you know that barcodes also play an integral role behind the scenes in inventory management?

According to a 2021 survey, 45% of US consumers had scanned a QR code in the past three months, with usage highest among 18-44-year-olds. This demonstrates the growing adoption of this technology in both consumer and business realms.

By integrating barcode scanners with inventory management software, companies can count, organize, and analyze stock with astonishing efficiency and precision.

Manual inventory tracking tends to be tedious, prone to human error, and limited in insights. However, a barcode system for inventory management reduces wasted time while nearly eliminating mistakes through automated processes.

Read on to learn more about the transformative potential of barcode inventory systems for your business.

What Are Barcodes?

Barcodes are optical machine-readable data representations that can be scanned to quickly collect information. The familiar black lines and white spaces encode numbers and letters in a format the computer can easily interpret. The most common standard barcode is the UPC-A, which encodes 12 numerical digits.

Pro-tip

Businesses must thoroughly understand the benefits and implementation process of this technology. Prioritize accuracy by ensuring proper barcode labeling and scanning procedures. Invest in reliable barcode scanners and compatible inventory management software for seamless integration. Regularly update and maintain barcode databases to avoid discrepancies. Additionally, train employees on barcode system usage and best practices.

Barcode labels are applied to retail products, assets, documents, and more to automatically assign them a unique identifying code that computers and scanning devices can recognize. This enables quick tracking of inventory movement, asset management, document filing, and other applications.

The omnipresent barcode tracking system for inventory allows businesses and systems to instantly identify items consistently worldwide. When paired with inventory management software, barcodes enable automation, optimization, and analysis of inventory tracking activities.

How Does A Barcode Inventory System Work?

A barcode system for inventory management combines barcode scanners with inventory management software. It associates unique barcodes with each inventory item, location, and bin. Staff use handheld or stationary scanners to read these barcodes during key processes like receiving, away, picking, and shipping. The barcode software records each scan in a database to track inventory flow.

Additional functionality can include barcode labeling and printing, analytics, and interfacing with eCommerce systems. With consistent barcode scanning, businesses gain complete visibility into inventory activity in real-time, minimizing errors from manual data entry.

This automation provides timely, accurate inventory tracking and powerful insights to improve stock management without the tedium of traditional pen-and-paper methods.

Example – Imagine you run a retail store that sells various products, from electronics to clothing. Managing your inventory is crucial to ensure you always have the right products in stock and can quickly fulfill customer orders. This is where a barcode inventory system comes into play –

• Each product in your store is assigned a unique barcode. These codes contain information about the product, such as its name, price, and a unique identifier.
• You have a centralized database where you store all the product information linked to their respective barcodes. This database can be a computerized system or a cloud-based software. It contains product name, description, cost, selling price, supplier information, and current stock quantity.
• When you receive new shipments of products from suppliers, each product’s barcode is scanned upon arrival. The barcode tracking system for inventory then updates your inventory database with the new stock quantities for each product.
• When a customer wants to purchase a product, the cashier or salesperson scans the product’s barcode at the checkout counter using a barcode scanner. The barcode scanner instantly retrieves the product information from the database, including its price, and adds it to the customer’s bill.
• As products are sold, the inventory system subtracts the sold quantity from the database in real-time. This ensures accurate stock tracking and prevents overselling products that are out of stock.
• The inventory system can also be set up to send alerts when the stock of a particular product reaches a predefined threshold. This helps you proactively reorder products before they run out.

What Is The Difference Between UPC And SKU?

The barcode inventory management system consists of UPC and SKU, which are identifiers used to track inventory but serve different purposes.

UPC stands for Universal Product Code. UPCs are 12-digit barcodes usually printed on product packaging by the manufacturer. A UPC uniquely identifies a specific consumer product and contains information about the manufacturer and product. UPCs enable stores to scan items at checkout and track them for reordering and inventory management.

SKU stands for stock-keeping unit. A SKU is an ID code assigned to each unique product variant by a retailer or vendor, not the manufacturer. The SKU identifies product attributes like size, color, style, etc. For example, a t-shirt with UPC 123456789012 might have SKUs for Small Blue, Medium Blue, Large Red, etc. SKUs allow retailers to track individual product variants in their inventory system even if they have the same UPC.

While UPCs only distinguish products at the manufacturer level, SKUs allow retailers to track granular inventory details like color and size. A barcode inventory system needs SKUs, not UPCs, to track and manage detailed inventory for all product variants. So, while UPCs identify products universally, SKUs give retailers and distributors internal inventory control at each location by tracking the unique items they sell.

What Are The Benefits Of A Barcode Inventory System?

Using a barcode system for inventory management can benefit businesses across various industries. The many benefits make a barcode system an invaluable investment for many companies. Below are 7 key advantages of implementing barcode technology for inventory management:

1. Enhanced Accuracy

One of the biggest benefits of barcode inventory management systems is improved accuracy. Barcodes allow you to precisely track products in and out of your warehouse or retail location. Scanning barcodes eliminates human error that occurs with manual data entry, leading to fewer mistakes in records.

Rather than relying on employees to manually enter long, easy-to-misspell product numbers, barcodes provide an error-proof way to collect data. This results in highly accurate inventory counts, purchasing records, and sales reports. Tools like Uniqode’s QR Code Generator further enhance accuracy by allowing businesses to generate scannable QR codes for seamless inventory tracking. Such precision helps businesses place perfect orders and maintain optimal stock levels.

2. Accelerated Operations

Barcode scanners can also drastically increase the speed of inventory processes like counting, picking, receiving, and shipping. Workers can rapidly scan barcodes on items instead of typing in product IDs or descriptions. This shaves significant time off fulfillment and restocking processes.

Some barcode tracking systems for inventory are advanced enough to update inventory records automatically after items are scanned. This real-time tracking allows workers to complete inventory counts much faster. Speedy workflows lead to improved customer service through quicker order fulfillment.

3. Cost Savings

Greater accuracy and efficiency provided by barcodes translate into serious cost savings for many businesses. Reducing errors prevents losses from sending wrong orders or maintaining improper inventory. Minimal mistakes also mean less time and effort spent making corrections.

Faster inventory processes boost productivity among workers, who can get more done in less time. Increased throughput with the same personnel decreases the need to expand staff. Altogether, barcoding cuts significant operational costs in the warehouse and retail store.

4. Streamlined Organization

Barcode systems allow for greater organization of inventory and locations. Each product can be assigned a unique barcode corresponding to its ID number and description. Barcodes applied to bins, shelves, or other storage areas help track where inventory is located.

Workers can scan these barcodes during put-away and picking processes to better manage the layout. Well-organized inventory makes it easier for staff to quickly find products when needed to fulfill orders or restock. Systematic organization is key to efficient workflows.

5. Insightful Data Analysis

Most barcode inventory management systems provide deep analytics and reporting on your products, orders, customers, and more. Tracking data can be exported into spreadsheets, databases, or inventory management software for further analysis.

Metrics on inventory quantities, sales levels, turnover rate, buying trends, customer purchases, and other KPIs help optimize operations. Analytics allow you to spot top-selling items, seasonal patterns, slow-movers, and more to adjust purchasing and marketing appropriately.

6. Seamless Warehouse Management Integration

Barcode scanning systems can often be integrated with warehouse management systems (WMS) to synchronize data throughout an operation. When barcodes are scanned, the WMS automatically updates inventory records, order fulfillment status, product locations, and other key information.

This integration provides a central database for managing inventory, workflows, shipping, and more. With barcode data flowing into the WMS in real time, workers have full visibility into day-to-day operations. Integrated systems allow businesses to track progress and make data-driven decisions.

7. Efficient Asset Tracking

In addition to inventory, barcodes can be used to track various assets like tools, equipment, documents, and more. Unique barcodes can be applied to any item that needs monitoring. During audits, workers can scan these barcodes to regularly confirm that assets are in the correct locations.

Barcodes enable automated management of all assets for a business – not just inventory. This provides complete visibility and helps maximize the utilization of assets across an organization. Managers can run reports to view the status and movement of each item.

What Are The Drawbacks Of Using A Barcode Inventory System?

While barcode inventory management systems provide many benefits, like automation, there are some potential drawbacks. Implementing barcode tracking requires upfront investment and added processes. Technology dependence also creates certain business risks if not properly managed. However, with adequate planning and training, most inventory challenges can be overcome. The main drawbacks to keep in mind when adopting a barcode inventory system are below:

1. Initial Setup Costs and Complexity

Implementing a barcode inventory system requires an upfront investment of time, money, and effort. Purchasing the hardware (barcode printers, scanners) and software licenses takes budget allocation. Integrating it with your existing POS and accounting systems may require custom development or API connectors. Designing and printing high-quality barcodes at scale isn’t free.

There is a learning curve for staff to adjust workflows and utilize new scanning-based processes. Proper inventory and SKU analysis must be done beforehand. While automated in the long run, establishing barcodes and labels for all your products demands significant labor and focus.

2. Potential for Inaccurate Data and Mislabeled Inventory

Error applying incorrect barcode labels can create inventory tracking inaccuracies. Employees may scan the wrong item or skip scanning altogether. Barcode label quality issues like fading, damage, or detachment can lead to bad scans and data.

If the barcode system falls out of sync with actual warehouse stocks, the integrity of the inventory data becomes compromised. Formal audits and cycle counts would then be required to realign. Mislabeling items or entering inaccurate information into the system is risky without proper barcode quality control and staff training.

3. Added Time for Staff to Scan Barcodes

While scanning a barcode is quick, repeatedly doing this for all inbound/outbound inventory and stocking tasks can add up. Workers must take the additional step of pausing to scan rather than relying purely on manual checks.

If employees try to cut corners or skip scanning, it diminishes the system’s benefits. There is more potential for bottlenecks at choke points like shipping/receiving, where all items must be scanned. Processes have less flexibility when reliant on barcodes versus judgment. Employees may need incentives to fully adopt barcode-dependent workflows.

4. Technology and Process Dependence

Once barcodes are implemented for inventory, your business heavily relies on the technology and processes. Any failures like barcode printer jams or software outages will halt operations using the system. Workarounds without barcodes would require temporary manual tracking. If specifications change, all labels may need to be replaced.

Changing to a new barcode vendor or software platform in the future would require extensive reinvestment. Downtime and adjustments to the system must be planned for. This dependence on barcodes to function can be risky if improperly managed and maintained.

How To Start Using A Barcode Inventory System For Your Business

Streamlining processes and enhancing efficiency are paramount in the modern business operations landscape. One technology that has significantly revolutionized inventory management is the barcode system.

With its accuracy, speed, and improved organization, integrating this system into your business can be a game-changer. From retail giants to small-scale enterprises, the benefits of barcode inventory systems are undeniable, and you can get them by implementing a barcode inventory system in your business. Follow these steps –

1. Establishing Your SKUs

The first step in implementing a barcode inventory system is establishing SKUs (stock-keeping units) for all your products and inventory items. 

• Determine a unique numeric or alphanumeric code to assign to each product variation, including factors like size, color, style, etc. 
• Keep SKUs simple but distinct. 
• Have a system to manage and assign new SKUs as you add new inventory items. 
• Make a master list of all SKUs with product descriptions. This SKU master list will be the foundation of your barcode system.

2. Selecting a Barcoding Inventory Software Solution

Once your SKU framework is built, the next key step is selecting barcode inventory software. There are many options on the market – evaluate features like ease of use, barcode formatting/printing, reporting, inventory tracking, and integration with other software.

Make sure the solution can scale with your business needs. Cloud-based systems offer accessibility and integration advantages. Compare pricing tiers and consider costs like hardware (barcode printers/scanners), software subscriptions, training, and setup. Select a robust platform to centralize your SKU management, barcode labels, inventory tracking, and orders.

3. Specifying Barcode Formats for Implementation

Now, it’s time to decide on barcode formats. Decide which barcode formats you will use, such as:

• UPC-A – For retail products sold in stores
• EAN-13 – For global retail products
• Code 128 – For alphanumeric SKUs with letters and numbers
• QR Codes – To encode product information

The main standards are 1D (linear) or 2D barcodes (matrix). Specify barcode height and width appropriate for your product labels and scanner equipment. Select human-readable text position and font. Partner with your software vendor and printer manufacturer to finalize barcode formats during setup.

4. Generating Your Barcode Labels

Once barcode formats are defined in the system, you can begin to create barcodes for your inventory items. Ensure label stocks are compatible with your barcode printer. Print sample labels first to verify quality and scalability.

Adjust barcode size, scale, alignment, content, etc., before the final label design is approved. Use blank template labels during setup testing. When ready for deployment, mass print all SKU-specific barcode labels to apply to corresponding products. Perform quality checks on random labels from each batch printed.

5. Implementing Barcode Labels on Your Inventory Items

With your customized barcode labels printed and ready, it’s time to implement them on inventory.

• Organize and group label batches by product type or location for systematic application.
• Physically apply labels securely to products, boxes, bins, shelves, etc., following specific product labeling guidelines.
• Perform test scans on random items in your physical inventory to check labeling accuracy and scalability.
• Provide barcode scanning equipment and training to staff that will use the system.

Celebrate being operational on your new barcode inventory platform! Maintain label quality and continue labeling new inventory as it is added.

Simplify Inventory Management with Barcode Technology!

Implementing a barcode-based inventory system provides undeniable advantages but requires careful planning and execution. The key is choosing the right barcode scanning hardware and inventory management software for your organization’s needs and seamlessly integrating them. Employee training and buy-in are also essential for smooth adoption.

The investment quickly pays dividends through increased efficiency, fewer errors, better organization, and insights into purchasing patterns. By taking a phased approach and starting with barcode scanning for inventory counting and order fulfillment, you can demonstrate benefits before tackling more advanced capabilities.

With accurate inventory tracking, you can offer customers reliable product availability information. By implementing barcode scanning, organizations can transform inventory management from an arduous chore to a strategic advantage.

Automated tracking helps focus less on stocktaking and more on business growth. For any operation dealing with physical products, barcode inventory systems are an investment that yields significant rewards.

Hiba Ali

About the author

Hiba is an accomplished specialist in writing for Software as a Service (SaaS) and has extensive experience crafting compelling and informative content. With over two years of experience, she has honed her skills in producing various forms of content, including articles, blog posts, and more, all centered around SaaS. Hiba is dedicated to sharing her insights to assist businesses in leveraging SaaS to achieve growth and success.