What is a barcode inventory system? Which one should you pick?

Keep track of thousands of items without losing your sanity. A barcode inventory system is a lifesaver for businesses, both big and small, saving them time, reducing errors, and helping them stay on top of their inventory. 

An inventory scanning system is like an automated assistant that facilitates product tracking and management by using black-and-white striped labels. 

In this post, we’ll explore how they work, their benefits and drawbacks, and how to select and implement the right barcode inventory system for your business. 

Types of barcodes

How barcode inventory systems work

Barcode inventory system advantages

Barcode inventory system disadvantages

How to implement a barcode system for inventory

How to choose a barcode inventory system

Barcode inventory system best practices

Retail barcode inventory systems are a must-have for retail

Navigate midsize business challenges and opportunities

Barcode inventory system FAQ

Types of barcodes

A barcode is simply a unique graphic with numbers or text, just like you see on products at the supermarket. The graphic represents data visually. When a barcode is scanned, the data from that product is instantly transferred to a computer.

There are two types of barcodes:

1D barcode 

The 1D barcode is the one you’re likely most familiar with. These are the black-and-white stripes on most products in grocery stores, department stores, and warehouses. 1D barcodes are pretty straightforward, typically containing the product’s unique code, like a universal product code (UPC) or stock-keeping unit (SKU). 

1D barcodes are excellent for basic inventory tracking, supply chain management, and cash registers. However, they can only hold a limited amount of information.

2D barcode 

2D barcodes track more complex information, like product details, small images, and links to your small business website. A 2D barcode can come in many different shapes, but you’ve probably seen them most in the form of a QR code. 

2D barcodes are great for marketing materials like direct mailers and brochures. They’re also often used in the healthcare and manufacturing industries. 

How barcode inventory systems work

Whether you use 1D, 2D, or both barcodes, a barcode inventory system can help you manage and track all types of inventory in your business. 

Here’s how it works:

1. Each product in your inventory gets a unique barcode label. 
2. When you receive new stock, scan the barcode using a handheld scanner or smartphone app. 
3. The scanned information is instantly sent to your inventory management software.
4. The barcode inventory software updates your inventory count in real time. 
5. When someone buys a product, you scan it again. This time, the system automatically deducts it from your inventory. 

Whether you own a small mom-and-pop shop or a massive e-commerce store, a barcode inventory scanning system helps you monitor your stock so you don’t have to do it yourself.

Barcode inventory system advantages

There’s no shortage of perks when adding a barcode inventory system to your business. Here are some of the main ones: 

• Reduce human error: Sometimes, We make mistakes, especially when performing tedious tasks like typing in long product codes. Barcode scanning eliminates the risk of typos and data entry errors, helping you keep an accurate inventory account. 
• Have access to real-time data: Barcode systems update your inventory every time you scan them. You’ll know exactly what you have in stock when you’re running low on something and how each product is performing. Better yet, you’ll save time and money by no longer needing to conduct end-of-day inventory counts. 
• Multi-purpose use: Barcode inventory systems are useful in any industry where records must be kept, including libraries, hospitals, restaurants, warehouses, and more. Barcode systems also help with inventory analysis tasks, like tracking multiple products. 
• Save time: Conducting a manual inventory count can be a job in itself! Don’t waste hours of your life scanning everything yourself, especially when you have a million other things to do.
• Save money: Barcode systems make up for the price in labor savings alone! They also save you from minimizing stockouts and overstocking and help you improve order management overall. And, because it’s worth mentioning again, they reduce human error.

Barcode inventory system disadvantages

While the pros outweigh the cons, no system is perfect. Here are the setbacks to having a barcode inventory system that you should be aware of:

• Setups are time-consuming: Your products won’t label themselves. Between setting up your barcode inventory management system, accounting for all of your products, and training your team, implementing this system takes time. However, the long-term benefits are well worth your initial effort. 
• Requires continual use: If you or your team members aren’t constantly scanning items in and out of your system, you won’t be able to keep track of your inventory accurately.

How to implement a barcode system for inventory

While setting up your barcode system is time-consuming, it’s not a difficult process. Here’s a step-by-step guide on how to implement a barcode system for inventory:

1. Define your Stock Keeping Units

First, you need to decide how you’ll identify your products. Stock-keeping units (SKUs) are unique codes you assign to each product variant. For example, a small white T-shirt might have the SKU “TS-WHITE-S.” There’s no wrong way to give an SKU an identifier, so long as you create a logical SKU system that makes sense for your business. 

2. Choose a barcode inventory system

Next, you need to pick a barcode inventory management system that will seamlessly integrate with your existing software. While doing your research, consider factors like ease of use, scalability, and mobile capabilities. 

3. Decide which types of barcodes you want to use

Choosing between 1D and 2D barcodes shouldn’t be too difficult of a task. Both types have distinct uses, depending on what you need barcodes for. If all you require is simple product information, then 1D barcodes might do the trick. If you’re tracking customer engagement or need to show more complex data, use 2D barcodes. 

4. Create your barcodes

Use online tools or barcode generation software to create barcodes for each of your products. Remember, each barcode should have a unique, easy-to-remember identifier and contain all the necessary information for accurate tracking. 

5. Apply barcodes to your inventory

With your barcodes created, it’s time to label your products. Print barcode labels using a unique barcode printer or create sheets of labels with a regular printer. Whatever you use, make sure your barcodes are clear, scannable, and securely attached to your products. 

6. Train your team

Now that everything is ready to go, teach your team how to use your barcode system for inventory. Most inventory management strategies are pretty easy, but your team will need to know what to do when things don’t scan properly or not at all. You also need to stress the importance of consistent scanning; otherwise, your physical inventory may not align with your recorded inventory. 

7. Test your system

Your barcode system for inventory isn’t something you can set and forget. Regular testing is required to ensure everything is accurate and working correctly. Consider spot-checking inventory counts now and then and running test transactions. 

How to choose a barcode inventory system

There’s more than one barcode scanning system out there, and different ones are more useful for certain industries and scenarios than others. To find the system that works best for your needs, here are a few things to think over: 

• What are your goals? Are you looking for faster checkouts, better accuracy, or a simple system that your team can easily learn? Do you need a barcode inventory system for small businesses? Understanding your specific needs will help narrow your scope when selecting a system. 
• What are customers saying? Read reviews and testimonials from other businesses in your industry. What are they saying about a specific system? The more information you have, the better a decision you can make. 
• What are people in your network saying? There’s no better marketing than word of mouth. Ask other business owners and people you know in similar industries about what they use. They might have valuable insights or recommendations based on their own experiences.

Barcode inventory system best practices

The better you set up your system, the better it’ll work for you. To get the most out of your barcode inventory software, keep these best practices in mind: 

• Use integrated systems: Barcode systems work best when they seamlessly integrate with other business software, like your cash register system or accounting software. This ensures smooth data flow across your entire operation. 
• Train your team: We’ve already stated this several times, but we can’t stress it enough—your team needs to know how to use your system correctly. Offer ongoing training and support whenever needed to keep everyone on the same page. 
• Automate where you can: Look for ways to automate routine tasks, like reordering stock when inventory levels get low, to free up your time for more vital business activities. 

Retail barcode inventory systems are a must-have for retail

There’s a reason why most retail businesses have a barcode scanning system. They help you track products from the moment they arrive at your store to the second they’re sold. The real-time visibility barcode systems help you manage inventory, reduce theft, and improve customer experiences. 

Retail barcode inventory systems can also help you:

• Quickly find items in your store
• Speed up the checkout process
• Easily handle product exchanges and returns
• Identify slow-moving items for sales or clearance 

Navigate midsize business challenges and opportunities

As your business grows, so do your inventory management needs. An inventory barcode system can help you scale while you seize new opportunities. With accurate, real-time data, managing your supplier relationships, stock levels, and product mix becomes much easier. 

Are you ready to save time and money while streamlining your operations? Check out QuickBooks’ advanced inventory management solutions and see how they can work for you.