When you’re running a small business, your to-do list might be the length of a novel. It’s easy to let asset management fall by the wayside.
But whether you’re a small eCommerce business or a bustling boutique, your company leans on its inventory to draw customers and generate revenue. You must maintain optimal stock levels to reduce holding costs, keep enough on hand to meet customer demand, and gain a competitive edge over companies that aren’t as well-equipped to respond to market fluctuations.
If you’re looking for ways to make inventory tracking even more effective for your small business, a barcode inventory system is a logical next step. Barcoding lets you optimize stock control, enhance accuracy, and boost productivity, streamlining operations so you and your team can focus on activities that help the business grow.
The basics of barcodes
The traditional universal product code (UPC) barcode is familiar to anyone who’s ever shopped in a retail store: a block of parallel, black-and-white lines paired with numbers or characters to create a unique code. A digital reader called a barcode scanner deciphers the code and displays the item’s details, like its name, price, or SKU.
Today, dozens of barcode variations exist, like data matrixes that look like pixelated rectangles or the increasingly common quick response (QR) code. In most cases, you no longer need a dedicated handheld barcode scanner to read them — a camera-equipped mobile device can do the job just as well.
Many inventory systems use barcode technology to identify, track, and manage products within a warehouse. Each SKU has a unique barcode label. When a worker scans it, the technology instantly retrieves the associated product information from a centralized database, and depending on the system, it notes where and when a product moves.
Implementing a barcode system eliminates the need for manual data entry, reducing the risk of human error and saving employees valuable time. It enables real-time tracking from receiving to order fulfillment, empowering you to make informed decisions about stock replenishment, identify slow-moving items, and optimize inventory levels to meet demand without overstocking.
Types of barcodes
UPC barcodes are examples of one-dimensional (1D) barcodes, while QR codes and data matrixes are two-dimensional (2D). Let’s take a look at the different types of barcodes within each category and what sets them apart.
What are 1D barcodes?
The generic barcodes you’re likely used to are 1D. They’re made up of a series of vertical black lines that vary in width. The spaces between the lines allow a laser scanner to identify a specific product number or other identifying marker and search through a digital inventory system to find the product that corresponds to the code.
When to use 1D barcodes
These 1D barcodes are best suited for businesses with simpler inventory needs and that prefer a cost-effective option. They’re most common in retail environments for point-of-sale transactions or for companies with a relatively small number of items with minimal variations.
Examples of 1D barcodes
- UPC-A
- UPC-E
- EAN-13
- RSS-14
- Code 39
- Code 93
- EAN-128
- Interleaved 2 of 5
- USPS IMB
What are 2D barcodes?
The 2D barcode is much more complex than 1D because it’s not just simple binaries of vertical lines. Often square-shaped, it’s made up of a mix of pixelated dots and geometric shapes. The code itself contains data, so barcode scanners get inventory information from the code instead of searching for it in a database.
When to use 2D barcodes
While 2D barcodes are often smaller than their 1D cousins, they contain significantly more information. They can encode details like serial numbers, batch numbers, and production and expiration dates — all crucial for tracking products throughout the supply chain. For example, in the healthcare industry, 2D barcodes can store vital information like dosage instructions and allergy alerts.
If your business has more complex inventory and tracking needs, a 2D barcode is up to the task. But keep in mind that they’re more expensive to implement because they need camera-based scanners instead of simple laser scanners.
Examples of 2D barcodes
- QR code
- PDF 417
- Data Matrix
- Aztec
- MaxiCode
5 key features of an effective barcode inventory system
Some small businesses use software that lets them create and print barcode labels, but it doesn’t have advanced inventory management capabilities. If you want a truly effective barcode inventory system, look for a solution that handles every part of the process, from printing and scanning to integrating with your accounting system.
Here’s what your barcode inventory management system should enable you to do.
1. Create, print, and scan barcodes
With the proper software and hardware equipment, you can print dozens of barcodes at once onto sticky labels that attach to virtually any shelf unit, product, or other object. This lets you quickly identify, reorder, and receive items just by scanning them.
2. Ship, receive, and count inventory seamlessly
Cycle counts are much easier when you use barcode software instead of a pen and paper. Simply scan an item’s barcode to check its current quantity and update as needed. This makes it easier to assess inventory levels and document movement during picking and shipping.
When you receive items, you can also use barcode scanning to check them against the purchase order on file and ensure you’ve received the right quantity. If any items are missing or don’t match the type of product you ordered, you’ll know right away so you can start the reconciliation procedure.
3. Handle order management instantly
With a truly functional barcode system, you can instantly check incoming order statuses and place new ones when necessary. You can also set up reorder points on anything in your warehouse. The system alerts you as soon as it’s time to order more products, avoiding shortages and stockouts.
4. Automatically track parts across multiple locations
When you scan a product’s barcode in one location, you can check its quantities in other warehouses and stores to see if you need to transfer any stock between locations.
5. Integrate with your accounting system
When a barcode inventory system integrates with QuickBooks or Xero, it sends any changes directly to the accounting software, usually on a scheduled basis. This eliminates the need for double data entry and ensures changes are properly recorded on your general ledger, keeping all invoices and other documents in order.
How to create a barcode inventory system for your small business
Here’s a step-by-step guide to setting up your small business’s barcode inventory system.
1. Assess your inventory needs
Before rushing to invest in barcode technology, evaluate your specific needs. Here are some factors to keep in mind:
- Your inventory size and the level of information required for each product
- How much you can afford to spend on a system and equipment
- Any industry-specific barcode standards or regulations that may apply to your business
2. Choose the right barcode system
Based on your assessment, decide whether a 1D or 2D barcode better fits your needs. You’ll also need to choose the appropriate hardware and software components.
Opt for 1D barcodes for simpler inventory needs or 2D barcodes for more complex requirements. Then, select a barcode scanner that’s compatible with your chosen barcode type. It should also integrate seamlessly with your inventory management software.
3. Start generating barcodes
Once you’ve adopted a system, generate a barcode for each SKU in your inventory, which you can do with barcode generator software or online tools.
4. Label your products
Print the barcode labels and affix them to your products. Choosing a label size, material, and placement that fits and sticks to the items is key to ensuring the barcode’s scannability. If it’s warped or too small, the scanner won’t be able to read it.
5. Establish a barcode scanning procedure
Train your staff to use your new scanners and the associated inventory software. Establish clear procedures for receiving new stock, picking and packing orders, and conducting inventory counts.
6. Connect the system with your inventory software
Sync your barcode scanning system with your inventory management software. This integration allows for seamless data transfer, ensuring that your inventory records are accurate and up to date.
Make your transition to barcode scanning easy with Fishbowl
Implementing a barcode inventory system is easier with Fishbowl, one of the best inventory management software solutions to pair with barcode technologies. Fishbowl is an all-in-one solution for inventory tracking, warehouse operations, manufacturing workflows, and more, with a powerful QuickBooks integration for financial visibility.
If you’re ready to see how simple it is to add barcoding to your inventory management system, schedule a demo today.