Why Use Barcodes

Why Barcode?

As you probably know by now, technology is expensive. And you’ve probably had the frustrating experience of investing in new devices and not receiving the benefit you anticipated or were promised. Many people disagree with me, but it is suggested that you cautiously and skeptically evaluate every new technological tool. Ask, “How will this tool affect our company’s bottom line?” If the new device won’t improve profitability within a reasonable period of time, don’t buy it.

This line of reasoning applies to barcoding. Barcoding can help your business by:

• Providing value-added services to customers.
• Improving inventory accuracy.
• Making your employees more productive.

All these benefits sound great. But, for the investment to be worthwhile, the benefits you receive must exceed the price you paid to implement the solution, in terms of both time and money. In this article we’ll look at some of the benefits barcoding can provide, and discuss how to evaluate whether or not it is worth the cost.

Value-Added Services for Customers

Many customers (especially OEM manufacturers) now require that distributors apply barcode labels to material shipped to them. This requires that the distributor has a barcode compatible printer and the necessary computer software to produce the labels required by the customer. This service is expensive. Consider not only the equipment and software, but also the labor necessary to affix the labels. It is normally offered only to high-volume, high-profit accounts. But keep in mind that if the customer requires UPC (Universal Product Code) or some other industry-standard labels, the costs associated with producing the labels can be applied to other tasks as well. Tasks such as supplying labels to other customers or preparing your warehouse for automated physical inventory counts (see below). If a customer requires special labeling, be sure to consider the cost of this custom value-added service when you consider the account’s profitability and salespeople’s commissions.

Improving Physical Inventory/Cycle Counting Speed and Accuracy

Physically counting your inventory is a boring, tedious, time-consuming task the is susceptible to many errors.

To prepare the warehouse for barcode physical inventory, a barcode label which identifies a product is printed and affixed to each stocking bin location. These labels are assigned to locations because it often is not practical to place a label on every piece of every product stocked in inventory. During the actual physical inventory process, the counter takes a hand-held barcode reader (with an attached storage device and numeric keypad), scans the label, and then enters the counted quantity using the numeric keypad. After a section is counted, the barcode reader is placed in a computer input device (often called a “wedge” or a “holster”) and the product counts are automatically downloaded into the computer system, updating the on-hand quantities in the database.

Many computer companies offer a barcode package which includes a barcode printer for the labels, hand-held scanners, and the necessary software for both the scanners and your computer system. The savings realized from just the reduced labor cost often make physical inventory barcode implementations a worthwhile investment. But a word of caution: Because barcodes are assigned to bins, all of your products must be located in their proper locations. Don’t attempt a barcode physical inventory unless your warehouse is in order!

Shipping and Receiving

Barcoding is usually a cost-effective investment for assisting in the physical count of your inventory. Why not adapt barcoding to your other inventory-related transactions and have a completely automated warehouse?

Imagine the time that would be saved if your receiving clerk could just scan products as they were received, rather than manually checking each item with paper and pencil. Or, picture the improvement in accuracy if your shipping clerk could verify that the right product was pulled to fill an order by scanning barcodes printed on both the pick ticket and bin. There are even radio frequency (RF) barcode units now available that will electronically transmit customer orders to warehouse personnel, avoiding the need for printed picking documents and resulting in paperless warehouses!

If you’re experiencing “challenges” with your current physical inventory process, start there. After that function has been successfully implemented, determine if barcoding can be a money-making benefit in other inventory-related areas.