5 Best Practices of Barcode Inventory Management

Businesses that are unable to ensure the availability of right products at the right time run the risk of losing customers. Unavailability of a certain product when they need it the most can frustrate customers to the point that they may end up abandoning the brand. No matter the type of product that you deal in or your industry, you need to maintain accurate inventory. A barcode inventory system can help accomplish this objective.


Barcode inventory system: An introduction

Barcode inventory systems include a handheld scanner and other hardware such as printers and software that runs on computers and mobile devices. Barcodes store critical information related to the product in the form of black and white stripes. When a user uses a scanner to scan the barcode, the information stored in black and white stripes is converted into binary digits, which is transferred to a computer attached to it.

Making a case for barcodes

Barcodes were first used in the 1970s. Since then, inventory management has come a long way. Over the years, advanced RFID tags have captured the imagination of businesses around the world. The increasing popularity of RFIDs, however, does not mean that there are no takers of barcodes.

Barcodes are still in high demand due to their low cost, versatility and ability to minimize errors. A major drawback of old barcoding systems was that they used bulky handheld scanners. Manufacturers have realized this problem and are now offering mobile systems that can be installed as apps on mobile devices.

Thanks to these systems, managers can now take critical decisions, instruct their team members and track the status of tasks from remote locations. Also, barcode users don’t have to be rocket scientists to understand how the entire system works. All you need to do is train your employees on basic functionalities. Once your team members start working on the system, getting the hang of it should be a matter of minutes.


Using barcodes for inventory management: Best practices

Opting for the right barcode inventory system is not enough. Your system relies on established protocols and processes to function. To get the most out of it, you need to adopt best practices that are aligned with your business needs. So, what are these best practices? Let’s take a look.

1. Come up with a strategy

First things first; you need to design an effective barcode strategy. Think about the objectives that you aim to achieve. Identify groups of stakeholders that will play an important role in implementing and managing the system.

Think about people who will be using the information generated by the system and what you could do to ensure they get real-time access to critical data when they want and where they want.

Decide what you want to barcode and the type of barcode labels you want to use. Decide where you want to place your barcodes on your equipment and the type of information that you want your barcodes to include. Decide the type of scanning device you want (camera based v/s RFID v/s laser).

Make sure your barcode is large enough to be easily scannable, yet small enough to not take a whole page.

2. Establish inventory KPIs

You cannot just implement a barcode inventory system and forget it. To ensure you get tangible results in the long run, you need to establish inventory KPIs such as cycle time, inventory carrying costs, fill rate and order status.

Compare your performance with the set targets. In case of deviations, brainstorm with your teams to find out where the system went wrong and what could be done to ensure the mistakes are not repeated in future.

3. Hold as less inventory as possible

A study suggests that an average business has 20-40% of its working capital tied up in inventory. If you are close to the higher end of this range, you need to come up with an inventory reduction strategy.

Decide a point where you have enough inventory to meet demands without being overstocked. Use data generated by your system to find the lead time and reduce minimum order quantities. Get rid of obsolete inventory. Use reports by your barcode inventory system to improve inventory forecasting.

4. Test your barcode and system

Before starting to use your barcodes, make sure to test them. Your barcodes must be resilient, and the system should scan barcodes right the very first time. Analyze the recognition accuracy, recognition rate and recognition speed of your barcodes.

During the testing period, you will be working closely with your vendors which will give you an opportunity to test their capabilities too and find out whether they can scale up to meet your future needs and how effective is their technical support. Testing your system helps to eliminate future issues such as dysfunctional workflows and an unusually high number of support incidents.

5. Educate your teams

Change is the new permanent. Many people fail to understand this. When you migrate to a new system, there will be voices of resistance. To ensure no one is left out, you need to educate your teams on the benefits of implementing the system. Create a team that will have the responsibility of answering questions from different teams.

Make sure your teams understand your vision and strategy. Train teams that will be using the system. Make sure your top management interacts continuously with different teams.