Inventory management is an essential part of countless businesses’ day-to-day operations. Smaller companies, in particular, often start out with handwritten inventory lists or manual entry in Excel spreadsheets. In the long term, however, a barcode inventory system is much more efficient and prevents incorrect data entries and thus financial losses.
As a company grows, so does its inventory. Eventually, businesses need to find digital alternatives to collect and manage that data. Barcodes offer the best basis for this. Let’s now go into the basics of setting up a barcode system for inventory management and look at the benefits of integrating barcodes into your workflows.
What are barcodes?
Barcodes are visual data representations. They encode numbers, letters and other symbols in black and white areas of different shapes and sizes.
There are two basic types: 1D barcodes like the UPC consist of bars of different widths, while 2D symbologies, such as QR codes, consist of a pattern of squares. They store large amounts of information in a small area and can be read with various tools, such as handheld scanners or smartphones.
Some barcode standards are particularly common in warehousing and retail, such as the UPC for North America. They are used to assign specific numbers to a product, which can then be associated with data points like the supplier, size, color, or price. Even dynamic information, like the weight of a bulk item on a supermarket scale, can be encoded inside a barcode.
How do barcodes benefit your inventory management?
Barcodes are a convenient and reliable way of attaching all required information to any item. With a high-performing device, barcode scanning takes just milliseconds. Apart from being the fastest inventory management method, barcoding offers countless advantages to users and businesses alike:
- Cost efficiency through faster, more efficient workflows
- Accurate inventory counts thanks to reliable data collection
- Real-time inventory data and analysis
- Highly versatile
- Avoids slow, paper-based processes
- Minimizes human error
The differences between UPC and SKU codes at a glance
UPC (Universal Product Code) and SKUs (Stock Keeping Units) are the two most common barcodes in retail. Each of them fulfills a different purpose and follows different specifications.
UPCs are handled by GS1, an international organization dedicated to standardizing business processes on a global scale. It also standardizes many of the barcode types used by countless enterprises worldwide.
Each UPC is exclusive to a specific product and its manufacturer or retailer. They must be bought from GS1 individually. In return, usage of the UPC enables vendors to sell their products in-store or digitally. Additionally, the UPC makes it easy for all parties to research prices and product information.
SKUs, on the other hand, are for internal use only – for keeping stock, as the name suggests. Wholesalers and retailers commonly use these codes to track items from their arrival up to the moment they are sold. As there is no central organization, businesses can create their own SKU codes, encoding whatever data they need.
Often, businesses use UPCs as SKUs. While simple, this approach offers less flexibility than implementing custom SKUs for a workflow. Creating SKUs is not difficult: Both dedicated software and online barcode creation tools can be used for this purpose.
Types of barcode scanners & their pros and cons
Barcodes are an established technology across industries and around the globe. To handle them, various types of barcode scanners were developed over the last decades. They all offer their own advantages and disadvantages and are suitable for different use cases. Let’s take a look at four common barcode scanning devices.
1. CCD barcode scanners (Charged Coupled Device): CCD barcode scanners are standard in POS environments. They work in distances from a few centimeters to about 0.5 meters, depending on LED strength, optics (depth of field), barcode size, and ambient light.
- Easy to use.
- Fast recognition.
- No moving parts.
- Relatively high resolution.
- Short reading distance.
- Limited to 1D standards.
- No direct visual feedback.
2. Laser scanner: Due to their fast and reliable detection, even in bad lighting conditions and at considerable distances between barcode and scanner, laser scanners are well-suited for industrial and transport use cases.
- Supports long distances between scanner and barcode.
- Precise results even in bad lighting conditions.
- High barcode detection speed.
- Susceptible to malfunction due to moving mechanical components.
- Limited to 1D standards.
3. Imager barcode scanner: Imagers function more like cameras than the classical scanner types above. Thus, they are suitable for 2D-barcode scanning and are used in healthcare, ticketing, or the industrial sector. They are often used in conjunction with direct part marking (DPM).
- Omnidirectional scanning.
- Robust and compact.
- Support of 2D barcodes.
- Works with damaged codes, low print quality, or uneven surfaces.
- Relatively low 1D resolution (compared to 1D CCD scanners).
- Expensive, as the technology is relatively new.
- Screens for direct visual feedback only on a few costly devices.
4. Smartphone: Today, even standard smartphones can scan barcodes to decode information and thus become cordless scanners with ease. Enterprises can take advantage of this and create mobile apps or web applications to enable a digital workflow based on barcode scanning. Barcode Scanner SDKs simplify the development of these apps enormously.
- Omnidirectional scanning.
- Supports both 1D and 2D formats.
- Direct visual feedback on the device.
- Works with damaged codes, bad print quality, or low lighting.
- Highly cost-efficient.
- Allows BYOD strategies.
- Intuitive usage with no training required.
- Easy to maintain.
- Less robust than conventional scanners.
Best practices for barcode-based inventory management
Now that we have an overview of barcode types and scanning devices, it’s time to look at some best practices around barcode scanning for inventory management. By implementing them, your business can take full advantage of this modern technology.
- Scalability: Make sure that the process you’re opting for is scalable, as you need to prepare for your business and thus your inventory levels to grow with time.
- Printer: You can use regular office devices as barcode printers when starting your new inventory management system. They will, however, produce lower quality than professional thermal printers and labels. In the long run, opt for those.
- Standardization: Setting up a standardized system for different product categories will help you organize and track inventory overall. For example, let all codes for cutlery start with a one, for tableware with a two, and so on.
- Labeling units: It’s easiest to label items in the quantities you sell them in, for example, per piece, box, or pallet.
- Accounting system: Create an inventory workflow that interfaces with your accounting and inventory management software to avoid manual data transfer.