Barcode Inventory Systems: The Ultimate Guide

Barcode inventory systems are frequently used in warehouses and retail stores. However, it goes deeper than holding price data to make checkout faster and easier. Imagine a system where every scan unlocks valuable information.

When you scan a barcode, you’re not just accessing basic price data. You’re tapping into a wealth of details about the item, including its name, specifications, exact location, and inventory counts. This technology can show you how many units are in stock at your location, reveal availability at other sites, and even notify you if new shipments are on the way.

Understanding how barcode technology works can help you determine if a barcode system is right for your business. For example, a barcode inventory system for small businesses might differ from that of larger enterprises. But with the right system in place, you’ll streamline operations, boost efficiency, and gain a competitive edge.

Discover how barcodes can transform your inventory management.

Understanding the basics of barcode scanning

Barcode technology utilizes barcodes that are encoded with specific information. A barcode reader is used for decoding, allowing the user to access specific information on the item to which the barcode is assigned.

This technology has applications across many different industries. Retail stores can use it for inventory and sales tracking, while medical facilities can use it to increase the quality and accuracy of patient care.

The applications for barcode technology are virtually limitless. It can be encoded and used in a wide variety of business situations to improve record-keeping and business processes for smoother, more efficient business operations.

What are barcodes?

The unique configuration of the bars is encoded into the barcode inventory system to present information about the item to which the barcode is attached.

Sometimes, that data is simple and pared down, while other times, it is extensive. The owner of the system can encode their barcodes to provide necessary information based on the type of barcode that you choose.

Types of barcodes: 1D vs 2D

There are two types of barcodes that an establishment may use: one-dimensional (1D) and two-dimensional (2D).

These types differ in several ways: 2D barcodes have a greater data storage capacity than 1D, but some barcode scanners (particularly those using open-source or free commercial software) can struggle to scan them fast and accurately.

The amount of information that needs to be encoded often determines whether a 1D or 2D barcode is more suitable. Some examples of 1D barcodes used in retail and inventory management environments are UPC and EAN codes. 2D barcodes tend to be smaller than 1D barcodes, and are often found on electronics, pharmaceutical products, and medical devices.

The scanning devices also vary for each device. A 1D barcode is read by either a laser scanner or camera while only camera devices like smartphones can scan 2D barcodes. What’s more, 2D barcodes can sustain damage and still be scanned and read.

A barcode inventory system uses scannable barcodes and associated software to track, manage, and update inventory in real time.

There are 3 key components in a barcode inventory system.

1. Barcodes: The barcode itself is a unique identifier printed on the product that contains specific information on the item or product. This is the heart of the system, linking the product to its information, and making it readily accessible by the user.
2. Software: This is the program that stores, organizes, and deciphers the information on each product so that the user can access and understand it. The software typically has capabilities for reporting, tracking sales, detecting inventory levels, and more.
3. Hardware: Readers or scanners for reading the barcodes are some of the hardware needed for the system. Mobile devices with cameras, like smartphones and tablets, may also be used, offering more flexibility and mobility. These devices provide real-time data access and can often integrate seamlessly with existing systems, reducing the need for dedicated scanning equipment.

Small and large businesses can reap the benefits of a barcode inventory system. It provides the most current information on products in real time.

Security is one of the leading features because all barcodes are auditable and fully traceable. This is essential in tracking losses or theft and helps minimize inventory mistakes.

Other benefits include:

• Cost savings and return on investment (ROI): barcodes reduce human error and streamline operations.
• Scalability and integration with other business systems: regardless of your inventory size, barcodes can level up to offer a consistent, effective solution.
• Reducing human error and enhancing accuracy in inventory control: Barcodes help reduce excess inventory levels, can track inventory location, and reduce the risk of human error from manual entry.
• Streamlining inventory audits and reconciliations: barcodes can track products, shipments, and even equipment.

Once you determine that a barcode inventory management system is right for your business, the next step is to implement it. Begin by organizing your inventory to streamline the process and identify any special features that you would want for your system.

Implementation is accomplished in several steps.

Step 1: Choose and integrate the right barcode scanner

Make sure you choose a barcode scanner that will work with your barcodes and your software. Integrating barcode scanning software with your inventory system and backend ERP should be treated like any core business process. Integrating successfully means understanding your specific needs up-front and identifying the areas that will add the most value.

Step 2: Select inventory management software

Choose inventory management software that has the features and options that you need. Make sure that the barcodes, scanners, and software all work together.

Step 3: Decide what type of barcode system you need

You’ll first want to assess your specific inventory management needs, such as the amount of data to track, the type of items, and scanning environments. This will help guide your choice in a system. From there, you will need to decide on the barcode type. Some common barcode types include Code 39, PDF417, QR codes, UPC, EAN, and Code 128, among others.

Choosing the right barcode scanner

Learn how to choose the right scanner for your business with insights from Scandit’s innovations

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Step 4: Design and generate barcodes

Design your barcodes to be printed directly onto packaging or onto label paper for easy application. You can place the barcode alongside your logo, product name, or other details. While barcodes can’t include these elements within them, they can be integrated into the overall label or packaging design for a cohesive look.

Step 5: Label your inventory

Place the barcodes on your inventory. They should all be in the same general area for each product type. That will make it easier to scan later.

Step 6: Train your employees

Create a user manual, documentation for the hardware and software, and a training program for your employees. Some companies provide this information and offer training, so it’s always a good idea to ask about these services.

Step 7: Test your system regularly

Test your system before you go live with it, then conduct periodic checks to ensure it is operating as it should. During these checks, look for system updates as well as software and hardware updates.

The biggest difference between system and software updates is how often they occur and the changes they make. Software updates tend to be small and frequent, focusing on bug fixes and performance improvements. System updates, while also addressing these issues, often include additional security enhancements.

Step 8: Keep track of your inventory

Incorporate a system backup into your regular operations. It may be weekly, monthly, or quarterly, depending on volume, sales, and other factors. Conduct regular checks on your inventory and sales, taking advantage of the reporting features to keep yourself and your business organized.

Barcode inventory systems are a fundamental component of a good inventory management system. They are found in many different industries. They are highly customizable and can be modified to fit a wide range of uses.

Retail: Enhancing customer experience and sales tracking

Barcodes enable quick and accurate scanning at checkout, reducing wait times and improving the shopping experience for customers. They also provide valuable data on sales patterns, helping retailers manage inventory more effectively and tailor promotions to customer preferences.

Healthcare: Improving patient safety and inventory control

Patient safety is a priority for hospitals, clinics, and research facilities. Barcoding charts and medications help prevent mixing up patients, ensuring they receive the proper medication, treatment, and care.

Manufacturing: Streamlining production and inventory processes

Components are barcoded to track use, inventory, reorder, and returns. They can also be used to identify defective batches and facilitate recalls.

Government: Monitoring government assets

Used to monitor equipment such as laptops, phones, and other devices, recording who the item was issued to when it was returned, and condition, especially when in the field. Can also be used to assist Board of Survey hearings for loss, damage, and destruction of property.

Logistics and Warehousing: Increasing efficiency and accuracy

Items and equipment stored in warehouses and moved to various locations, such as rentals or construction, can get lost in the shuffle. Barcodes can help managers keep track of it even if it is moved around. It can also help track damaged or worn-out items that need to be replaced.

The problem with most barcode scanning technology is that, traditionally, there have been rather high error rates. This has been widely tolerated across multiple industries.

But it shouldn’t be that way. When you invest in barcode scanning tech, whether it is a pre-built component, an app, or software, you should expect accuracy.

At Scandit, we set high standards for all of our products, and it shows in the high level of accuracy they are known for.

VF Corporation is one of the world’s largest apparel and footwear companies – and its inventory management was put to the test thanks to the rise in online orders due to the onset of the COVID-19 pandemic. According to VF, inventory inaccuracy caused up to 15 percent of online orders to be canceled due to stock shortages.

The solution? VF replaced its legacy systems with Scandit-powered smartphones to deliver critical data capture. Mobile scanning and real-time data resulted in full inventory visibility, leading to 100 percent inventory accuracy and a revenue boost.

The accurate inventory levels we get with Scandit Smart Data Capture have ultimately boosted our omnichannel revenue.

Andrea Comi – Global Director, Digital and Technology DTC, VF Corporation

Even the best software and equipment require some human intervention to perform at their best. Once your barcode inventory system is up and running, there are some best practices you can employ that will ensure it continues to deliver exactly what you want.

Regular system maintenance and updates

Your entire system should undergo monitoring as well as regular maintenance and updates. This can be scheduled quarterly or monthly, but a bare minimum of twice a year.

Tech moves fast, and you want to be on top of any upgrades and fixes that come with the updates. Regular maintenance also ensures that your system performs as it should, allowing you to address any issues before they become a big problem.

Continuous employee training and support

User training is integral for any software and should be part of an employee’s onboarding process. Training should also continue regularly to reinforce skills and educate employees on new features or changes to the software and equipment.

However, the days of employees needing to be trained extensively on how to use barcode scanners (how to aim, what to do if codes are damaged, and so on) are over. Smart barcode scanning software today comes with built-in intuitive user interfaces, can scan even damaged codes, and can even predict which barcode users want to scan.

That means your employees can get out of the classroom and back to work faster.

Data security and backup strategies

Data security is a priority for most businesses. Taking steps to ensure data security and implementing proactive backup strategies is just smart. Backing up your system on a regular basis will help prevent the loss of data should some unforeseen issue occur.

At Scandit, we make inventory management faster, easier, and more efficient by streamlining processes like inventory receiving and cycle counting. This leads to improved accuracy, increased productivity, and a more positive worker experience. Our barcode scanning software delivers:

• Performance on any device: Our software provides consistent, high-speed scanning and runs on any smart device with a camera (including smartphones, handheld computers, and tablets).

• Advanced features: With customizable analytics, AR overlays, and advanced data capture capabilities, you gain deeper insights to optimize your operations.
• Integration options: Choose from no-code solutions like Scandit Express, pre-built barcode scanning software, or fully customizable solutions to suit your business needs.

If you are ready to find out how our barcode scanning software can fit into your inventory management system and benefit your business, contact us. A team member will be happy to answer your questions and help you choose what’s right for you.

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How do I create a barcode inventory system?

Several components make up a barcode inventory system. However, there are many different printers, scanners, and software options out there with different features and applications.

Determine your inventory needs and let that drive your selection of the software and equipment you will use. Take advantage of free trials and talk to company representatives to ask questions before you make your purchase. Get the features that you need so you get the performance that you want.

What type of barcode is used for inventory?

Different industries have different standard barcodes that they use for inventory.

For instance, retail inventory management environments often use UPC or EAN barcodes. Code 128 is an easy-to-read, flexible barcode that offers the highest number of characters per inch, often used for shipping labels and medical applications. PDF417 barcodes are often used in advanced inventory management. You can learn more about the different types of barcode symbologies here.

How do barcodes help with inventory control?

Barcodes are encoded with information and can be used to track product movement. Barcodes offer a quick way to access the data assigned to the barcode, track the movement of the barcode, and see where it is going or how it is used.

How does a barcode inventory management system work?

An item enters the inventory. As part of its processing, before it goes to the sales floor or warehouse, a barcode is assigned to it, which contains specific information about that item. The inventory management system retains that information and tracks the item’s movement using its unique barcode.

Inventory management systems can also help with tracking sales, tracking loss, and tracking returns. This data can be used in various ways to help the business grow, improve sales, and increase the efficiency of overall operations.

What are the maintenance requirements for a barcode inventory system?

The system, like any software, should be updated regularly. The hardware should also be inspected regularly and repaired or replaced as necessary.