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In the late 1960s, grocery store labor costs were rising fast, and inventory tracking was a beast to manage.

Cut to June 26, 1974. The first Universal Product Code (UPC) barcode is scanned at a Troy, Ohio grocery store on a 10-pack of Wrigley's gum

Cut to 1977. Walmart, the Defense Department, and the U.S. automobile industry start to use barcodes to track products.

Cut to October 2024. The barcode is scanned 10 billion times every day globally.  And this year, we’re celebrating its golden jubilee. Welcome, one and all, to the barcode’s scanniversary! 

I may not have actively been thinking about barcodes until I started researching for this piece—but ever since I can remember, my world has been tagged, coded, and identified with beeps

From a boarding pass to a loaf of bread, barcode labels are the silent workhorses of commerce worldwide.

To honor the legacy of this fifty-year-old technology, I’ll walk you through how to implement a barcode inventory system for your business, best practices, challenges, and top solutions. 

Let’s get scanning!

What is a Barcode?

A barcode is a visual code—a machine-readable pattern of black lines, white spaces, and numbers. In each combination, you'll find information about a specific product.

To the untrained eye, this might look like gibberish. But to a barcode scanner, it's a goldmine of information. 

Zap! 

And suddenly, your computer has all the details about that can of soup, including its price and expiration date.

Author's tip

There’s a wonderful podcast episode by 99% Invisible I was listening to about barcodes. (The things you do for research…)

And there’s one snippet in particular that perfectly sums up the silent ubiquity of the 50-year-old technology:

Katie Mingle (Producer): “Barcodes help us keep track of prescriptions, library books, luggage, and injured animals. There are so many barcodes on so many things that according to Jerry Whiting–”

When future archaeologists come across remnants of our backward-ass civilization, and they stumble across a barcode, they’re going to assign it religious significance if they don’t understand the supply chain.

Jerry Whiting

Jerry Whiting

founder of Azalea Software

Speaking of religious significance…

👀 FUN FACT

There’s a conspiracy theory in motion that UPC barcodes have the “mark of the beast” (666) embedded in them. 

The Christian Fundamentalist belief took off with such velocity that the OFFICIAL website of UPC barcodes had to directly address this conspiracy:

666 is not embedded in a barcode—The short answer is “no.”

1D barcodes vs. 2D barcodes

There are two types of barcodes:

  1. The one-dimensional barcode (1D) looks like a simple sentence—it presents data in one straight line. A line of vertical bars separated by spaces, each with a specific width. The UPC is the most common 1D barcode, staring back at you from every cereal box and shampoo bottle.
barcode inventory system - 1D barcodes vs. 2D barcodes infographic
  1. Two-dimensional barcodes (2D), on the other hand, store data on both the X and Y axis, like a miniature grid. Think of the QR code you now have to scan instead of feeling the ridges of a physical menu in your hands. They can store a variety of files, including text files, images, and website links. In situations where you have to pack a lot of information into a small area, 2D barcodes are an excellent choice. 
zebra qr code instead of stripes joke
Image: Pinterest

Here are some chief differences between the two types of barcodes:

Feature1D barcode2D barcode
Data representationLinear sequence (horizontal)X-Y axis (grid)
Data storage capacityLimitedHigh
Common typesUPC, EAN, Code 39, Code 128QR code, GS1 DataMatrix, PDF 417 
Typical usesRetail, inventory management, product identificationMarketing, product information, mobile payments, event ticketing
Reading mechanismLaser scannerImage capture technology
Ease of scanningSpecific orientation requiredCan be scanned from any direction
Database dependenceNeeds to be linked to a database to read informationDoesn’t need access to read encoded information

What is a Barcode Inventory System?

A barcode inventory system is like a digital librarian for your products.

Each item has a unique serial number, and by scanning it, you can see exactly where it is and how many you have.

A real-time view of your data empowers you to make smarter decisions. You'll know what's hot, what's fading, and when you need to restock.

barcode inventory system infographic

A barcode inventory system comprises three key components:

  1. Barcode labels. These are digital tattoos for your inventory. You can make your own or buy pre-made ones, just be sure they follow the industry requirements. (UPC or EAN).
  2. Barcode scanners. Also called barcode readers, price scanners, or point-of-sale scanners, these readers can decipher the cryptic digital tattoos on your products and relay the information back to your system. 
  3. Software. These are applications that manage, create and print barcodes.

A barcode inventory system, therefore, combines the integrated power of hardware and software to streamline inventory management.

Now the question is: what's in it for you, really?

Benefits of a Barcode Inventory System

There's a good chance your current inventory management system might be a relic from the Dark Ages. 

Are you still relying on Excel spreadsheets or gasp—handwritten ledgers? In all honesty, that’s about as efficient as using a carrier pigeon for email.

Think lost inventory items, inaccurate inventory levels, poor reorder systems for in-demand SKUs… and on and on and on.

Now imagine this: a quick scan, and bam! You have real-time visibility into your entire stock.

Rain Yang, founder & CEO of WoodenAve, says it best: “All it takes is a simple scan—no writing, no jotting down notes, no wasting of time.

Real-life success story: KR Stationers, New Delhi

I spoke with Abhishek Kalra—the owner of KR Stationers—a one-stop-shop for stationery supplies and the latest gadgets in Hauz Khas, New Delhi. 

He manages both, a brick-and-mortar store, as well as a digital storefront. So, successful inventory control is key to customer satisfaction.  

And with a rating of 4.7 across 600 reviews, they’re clearly doing something right.

kr stationers screenshot
KR Stationers’ Google business page shows an impressive rating of 4.7 stars.

I’ve been visiting his shop since I was 10 years old to buy glue, papers, and pens. Now that I have my own business, I’ve graduated to purchase electronics from him as well.

There’s a reason I’ve been his loyal customer for two decades…

His implementation of a barcode inventory management system seven years ago has come with a laundry list of benefits:

1. Increased accuracy

To err is human, to forgive is divine. 

But when the cost of incorrect manual data entry can be 30% of a business's revenue, it’s pretty hard to forgive and forget.

Human errors are costly.

We make mistakes; however, barcodes rarely do. No more typos or miscounts, just pure, unadulterated data accuracy.  

2. More cost-effective

Yes, setting up barcode scanning systems comes with a price. At first. 

The good news is, it's usually a drop in the bucket when compared to the time and money you'll save in the long run.

For KR Stationers, tracking inventory no longer means running up to their warehouse to physically search for the items. The ease of business for better order management, faster billings, and more efficient reorders significantly outweigh the initial cost. 

Abhishek says, “I only had to pay a one-time barcode licensing fee, and the monthly subscription fees for Busy accounting software seem negligible compared to how, over the past decade, we’ve more than doubled our revenue.”

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3. Better data visibility

The system doesn't just show you what you have, it also shows how your inventory is moving.

For example, on our call, Abhishek mentioned that he has access to up-to-second data on both vendor and customer item summaries, which would've previously meant rifling through dusty ledgers to compile information from different records.

barcode inventory system - better data visibility screenshot
K.R. Stationer’s “About Us” website page.

A barcode inventory system, therefore, becomes a reliable, single source of truth for your business.

4. Improved inventory control

A real-time stock count eliminates overstocking or running out of popular items. 

In fact, over the weekend, I ordered a OnePlus phone from Abhishek’s store for my grandmother. In less than five minutes, he sent me a WhatsApp message with the latest model, color options, estimated delivery time, and payment information. 

barcode inventory system - improved inventory control screenshot
WhatsApp message sharing product details.

His operations, in his opinion, wouldn’t have been so efficiently run had he not implemented a barcode inventory control system to manage inventory. 

In addition to more accurate inventory counts, reduced manual errors, and a smooth workflow—when you use barcodes for your inventory items, you can better streamline your operations, boost customer satisfaction, and automate sales orders. 

So, your bottom line doesn’t take a hit. Now, on to the headliner of the show.

5 Step-Guide: How To Implement A Barcode Inventory System 

The modern barcode may have been a grocery store invention, but today it tracks everything from gauze in hospitals to iPhones in retail stores. 

Here’s how to get started with implementing a barcode inventory system for your business:

Step 1: Evaluate your current inventory management needs

What inventory headaches keep you up at night? Do you constantly run out of stock, lose items in the warehouse, or struggle with a spreadsheet longer than War and Peace?

Identify the specific pain points in your inventory workflow. Whether it's improving order fulfillment, streamlining reorders, or tracking stock levels.

Once you know what you need, you can then choose a barcode solution that’s tailored to your exact requirements.

Step 2: Choose the right barcode types and generate barcodes

The next step is to select the right barcode system based on your inventory challenges. 

Think of it as choosing the right tool to get the job done. You wouldn't use a hammer to fix a leaky faucet, would you?

There are two types of barcodes, as you now know. The type you pick depends on your specific requirements and industry standards. 

You might be wondering…

Which barcode is right for my business?

1D barcodes are sleek, simple, and perfect for everyday items like groceries, clothing, and electronics. If you need to identify and track basic products, these are the perfect choices. 

For example, KR Stationers uses this type of barcode to simplify order fulfillment. 

barcode examples infographic

2D barcodes can store a ton of data, including website URLs, text, and even images.

You can use them to convey a lot of information in a small area or to create interactive experiences for your customers. 

And there's always the option to get in touch with a barcode system provider—they can give you valuable information based on your business's unique needs.

How to generate barcodes

Once you've selected the barcode type, you can generate product-specific codes. 

Create these codes with specialized barcode software and make sure they're compatible with your current system.

The good news is you don't need a graphic design degree to make barcodes. Online barcode generators are plentiful, many of them free.

For example, here’s a free barcode I generated for one of The Ecomm Manager’s blogs using a free online barcode generator

barcode inventory system - free online barcode generator screenshot
How to generate a barcode online for free. Go ahead and scan the one above!

All you have to do is select the barcode type from the list on the left, enter the relevant data (product code, price, URL, etc.), and voila! You have a downloadable digital tattoo!

🔥HOT TIP:

Scan this barcode to read all about GS1’s barcode regulations and best practices:

barcode screenshot

Step 3: Select the right barcode scanner and printer

It's time to gear up with the right hardware.

Barcode scanners: Your digital eyes

Choose a scanner that meets your needs and is within your budget. 

Take into account the ease of use and compatibility of the program with your system. For environments with harsh conditions—like manufacturing, select rugged models, while lightweight models are ideal for retail settings.

  • Handheld scanners. For retail environments and small businesses, these are perfect workhorses. They're durable, easy to use, and available in both wired and wireless versions.

Caveat: Abhishek of KR Stationers isn’t a fan of this option because his business has millions of SKUs and handheld scanners often increase the workload of an operation. 

Instead, they use “an oval-shaped” scanner mounted on a tabletop that can scan items from any direction. The kind they “have in supermarkets,” he says.

  • Mobile apps. If you need a portable solution or are on a budget, your humble mobile device can double as a scanner. All you need to do is download a barcode-scanning app, and you're good to go. 

Here are some mobile app recos: QR & Barcode Scanner by Gamma Play, Barcode Scanner - Price Finder by Essential Labs, and Google Lens by Google.

  • Integrated scanners. In warehouses and high-volume operations, integrated scanners integrated into POS systems and industrial equipment facilitate smooth scanning and data capture.

Barcode printers: Bring your codes to life

To bring your unique barcodes into the physical world, you'll need a printer. The right barcode printer depends on your needs and can come in many shapes and sizes.

  • Small businesses and retail. Usually, a desktop printer is sufficient. Choose a model that can print high-quality labels on a variety of materials.
  • Warehouses. Invest in industrial printers. In addition to handling large volumes of labels, they can also withstand harsh conditions.
  • Specialized needs. For printing barcodes on small items or curved surfaces, consider mobile printers or printers with label applicators.

Step 4: Integrate barcode software with your existing systems

Right. The barcodes are ready, and the scanners are charged. 

Now, it's time to integrate your barcode system with your inventory management system (IMS) or warehouse management system (WMS). 

Here’s where everything comes together—the hardware and the software.

Barcodes create a direct link between the physical and digital worlds when you connect them with IMSs or WMSs.

As soon as a scan is performed, a signal is sent, updating your software in real-time.

In the end, this eliminates the need for manual data entry, which, let's face it, is about as fun as sitting and watching grass grow.

The integration provides real-time inventory visibility, eliminating stockouts and guesswork. Making data-driven decisions will help you streamline operations, automate repetitive tasks, and boost efficiency.

If you’re shopping around for a solid inventory management software system, check out our list of top 10 recommendations:

Need a robust warehouse management system? We’ve got a list for that too!

Step 5: Train your staff and test the system

Organize your troops for a crash course in Barcode 101. Cover everything from basic scanning techniques to troubleshooting common issues. 

The barcode inventory system is a team effort.

Make sure everyone knows what their role is. Make sure that clear, written procedures are outlined for the receipt of new stock, picking and packing orders, and conducting inventory counts. 

This will maintain consistency and accuracy across the board… and avoid awkward conversations like this one:

Now this is important: Make sure you thoroughly test your system before it goes live. Consider it a dress rehearsal before the big show. 

Test your processes by starting with a small batch of inventory and working your way through receiving, picking, packaging, and counting. 

Be on the lookout for any glitches, hiccups, or confused looks from your staff.

Challenges and Solutions for Using a Barcode Inventory System

In total, I spoke with 31 ecommerce SMB owners who’ve successfully implemented a barcode inventory system. 

The findings were unanimous—improved order fulfillment, increased accuracy, and greater customer satisfaction… but the initial installation process isn’t without its bumps. 

So, here are some top tips from the best in the biz:

1. Metal Marker Manufacturing advises a pilot program to avoid integration issues

When you’re introducing a new solution into your workflow, it mustn’t disrupt the existing one.

So, whether you have hundreds or millions of SKUs, David Primrose has some solid advice:

For business owners considering a barcode system, here's a valuable tip: start small with a pilot program on your most popular items. 

This allows you to iron out any kinks before full implementation.

We began with our aerospace identification tags, which helped us perfect the process before expanding to our entire product line.

2. Yorkshire Fabric Shop provides tips on managing inventory

Jay Soni, founder and CEO, describes setting up a barcode inventory system as an “adventure.”

Why?

First, we had to pick a system that would plug into our existing ecommerce platform. 

The hardest part was setting it up—taking our wide-ranging stock of fabrics by color, pattern, and material and cataloging it in a digital format that could be scanned and tracked. 

Every item had to be tagged properly to avoid mismatches that could lead to order fulfillment errors.

So, how did he work out the kinks?

Put a lot of thought into the planning stage. 

Make sure you choose a system that scales with your business and one that’s compatible with any existing line-of-business software

Take the time to get your product categories and inventory data organized, because this will save you a lot of headaches in the long run, with inventory discrepancies and system glitches during operations.

3. JettProof struggled with staff resistance and scaling hardware

Founder Michelle Ebbin initially started with a simple barcode printer and scanner “when order volume hit 50/day.”

As they expanded, however, there was resistance in the ranks, which they were able to overcome with diligent staff training. They also scaled up their hardware and software as the “business grew to 2,000 garments produced daily.”

Ebbin shares three key pieces of advice for other small businesses:

  1. “Start early, even if your volume seems manageable—it's easier than catching up later.”
  2. “Involve your team in the process and invest time in training to ensure adoption.”
  3. “Think long-term when selecting vendors to avoid expensive switches as you scale.”

As for the tangible impact…

Since implementing barcodes, we've expanded to 14 countries, won multiple awards, and helped countless families living with autism and sensory processing challenges

An efficient barcode inventory system has been critical to our growth and impact.

4. SuperBee overcame trouble with reading labels

SuperBee is a green-certified beeswax products ecommerce business…and they faced unique challenges. 

Namely, how do you balance the rough and tumble supply chain logistics with eco-friendly materials? 

Antoinette Jackson, creative director & founder, explains:

The biggest challenge was to rig the system to deal with many of the more green packaging materials that sometimes didn't read very well on regular barcode labels

We were forced to try different biodegradable labels so that they would stick in place and be scannable through the supply chain

This was important to make sure the system ran without disruptions while meeting our sustainability goals.

For other eco-conscious business owners, Jackson provides cogent directives:

My suggestion is to actually think carefully about how the system can be applied to your products and packaging. 

Don't go for the most popular or cheapest

Think about the ecological footprint of the system parts (such as labels and scanners) and how they align with your sustainability objectives.

As for the overall business impact, they’ve successfully implemented a barcode inventory system by thinking deeply about their business goals, which has ultimately led to “improved order accuracy to close to 100%.”

The Future Of Barcodes

In 2027, the retail world will receive a major upgrade with “Sunrise 2027,”  spearheaded by GS1. 2D barcodes will take center stage, promising us a radical change in how we shop.

The 2D barcode will “take you on an experience that the brand wants you to have.

So says Carrie Wilkie, SVP of standards and technology at GS1 US

Imagine scanning a product and instantly getting everything you need, from ingredient lists to recipes to recycling instructions.

Real-life examples of 2D champions: Puma and PepsiCo

We may already be in the matrix. Check these out:

  • Puma was the first major brand to use 2D barcodes in the United States. Just a quick scan reveals the shoe's details and Puma's sustainability journey.
  • But PepsiCo is pioneering customer engagement even further. Their on-package QR codes, known as GS1 Digital Link 2D barcodes, provide a wealth of information: from nutrition facts to sustainability initiatives to loyalty rewards and personalized content.

The future, dear reader, is coded, personalized, and interactive—all through a single scan.

Happy 50th Scanniversary!

Whether they save you from mindless data entry or prevent you from accidentally selling that last PlayStation to 17 different customers, these stripy guys have you covered. 

In inventory management, barcodes and scanners are the visible face, but the software you choose is the brains. WMSs and IMSs act like a central nervous system, collecting, organizing, and analyzing barcode data. Because let’s be real—without barcode inventory software, barcodes are basically glorified zebra stripes. 

So, here's to 50 years of beeps, scans, and profits. Salut!

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Brinda Gulati

Brinda Gulati is a solopreneur focusing her efforts on writing people-first content for SaaS brands like Wordtune, as well as working closely with the content marketing agency, Optimist. She has hands-on ecommerce business experience, two degrees in Creative Writing from the University of Warwick, and believes that stories, in all their forms, are a deeply human endeavor.