How Barcodes Work: History, Technology, and Benefits

The evolution of barcodes from a ground-breaking concept to an integral part of inventory management and sales tracking is a captivating narrative of technological advancement, legal disputes, and strategic rebranding. This exploration delves into the pivotal moments in the development of barcodes, shedding light on their profound influence on sales strategies, marketing tactics, and global commerce.

A barcode serves as a method for encoding data in a visual format that can be easily read by machines. Originally devised to streamline checkout processes in supermarkets, barcodes have since permeated various industries, including retail, manufacturing, logistics, and healthcare. Fundamentally, a barcode comprises a series of parallel lines (bars) and spaces of differing widths, representing numerical digits and other symbols. Optical scanners, commonly referred to as barcode readers, are adept at decoding and interpreting these patterns, facilitating swift data retrieval and processing.

History of Barcodes:

The inception of barcode technology unveils an intriguing tale rooted in the necessity to monitor railroad cars traversing the expanse of the United States.

• In the 1940s, the groundwork for the barcode was laid when Wallace Flint, a grocery store executive, conceived the idea of automating the checkout process to minimize errors. Recognizing the potential of this innovation, Flint collaborated with Norman Woodland, then a graduate student at the Drexel Institute of Technology (now Drexel University), to bring his vision to fruition.
• 1951: Normad Woodland and Bernard Silver created a system capable of encoding data into visual patterns decipherable by machines.
• 1967: By 1967, one notable early implementation was witnessed within the U.S. freight railroad system, where railcars were equipped with placards adorned with barcodes, facilitating their identification as they traversed rail yards and facilities. The adoption of the KarTrak system became mandatory across North America, heralding a significant advancement in the tracking and sorting of railcars. However, despite its initial promise, this early system encountered reliability challenges, particularly attributed to environmental factors such as dirt accumulation obscuring the barcodes. As a result, the KarTrak system eventually fell out of favor and was discontinued.
• 1973 and 1974: In 1973, the Uniform Grocery Code Council (UGPCC) advocated for the implementation of the UPC barcode symbol, laying the foundation for uniform product identification standards. A pivotal moment ensued in 1974 when, on June 26th, the inaugural product bearing a UPC barcode was scanned at Marsh Supermarket in Troy, Ohio. This milestone event, featuring a pack of Wrigley’s Juicy Fruit gum as the first scanned item, marked the dawn of a transformative era in the realm of retail, showcasing the tangible application of barcode technology.
• 1984: In 1984, the UPCC underwent a transformation, emerging as the Uniform Code Council (UCC), signaling a shift towards embracing uniform communication standards across diverse industries beyond just groceries.
• 1994: In 1994, the QR code (Quick Response Code) made its debut, originating from the innovative efforts of Denso Wave, a Japanese company affiliated with Toyota. Crafted by Masahiro Hara and his team, this ingenious creation aimed to streamline and expedite the tracking of vehicles and parts throughout the manufacturing cycle, surpassing the efficiency of conventional barcodes.
• Early 2000: In 2002, the UCC’s transition to a lease-only model for barcode prefix numbers stirred controversy, precipitating a class-action lawsuit that concluded in their defeat. This legal battle prompted a settlement and instigated alterations to prefix ownership rights. Subsequently, in 2005, the merger between the UCC and EAN International culminated in the formation of GS1, representing a pivotal juncture in barcode standardization and positioning GS1 as the principal global barcode provider. Furthermore, in 2008, Amazon’s mandate for barcodes on products sold via its platform underscored the indispensable role of barcodes in contemporary inventory and sales management systems. Amazon’s collaboration with GS1 further underscored the barcode’s centrality in facilitating seamless global commerce.
• Early 2010s: In 2012, GS1’s implementation of the Global Trade Item Number (GTIN) to classify product formats represented a significant advancement in barcode technology, streamlining and optimizing global trade processes with enhanced precision and efficacy. Subsequently, in 2016, eBay’s integration of GTIN requirements underscored the growing significance of barcodes in the realm of e-commerce, enriching product monitoring capabilities and facilitating seamless customer transactions.
• 2020s- For more than fifty years, barcodes have played a pivotal role in streamlining inventory management and sales tracking processes.

How does a barcode work?

The varying widths of black bars within barcodes typically correspond to binary digits, representing either 0 or 1. Combinations of these bars and spaces form sequences that denote numbers ranging from 0 to 9. When scanned, a connected computer deciphers this unique pattern to identify the corresponding product, utilizing mathematical operations like addition, multiplication, or division. This information is then displayed on a screen for reference.

In warehouse settings, barcodes often encode a wealth of details about an item, including its dimensions, color, and other specifications, along with its precise location within the facility. This comprehensive data provides companies with a thorough understanding of their current inventory status, enabling swift order fulfillment and accurate physical inventory assessments. Similarly, in retail environments, barcodes may contain essential details such as product names and prices, assisting associates during the checkout process. From manufacturing and distribution to sales and post-purchase services, organizations leverage barcodes to seamlessly track goods throughout their entire lifecycle, ensuring efficient management and optimal customer service.

The structure of a typical barcode adheres to universal standards across nations and is compatible with inventory management systems. Traditional barcodes comprise three essential elements:

Quiet Zone:

The unmarked space surrounding a barcode, known as the “quiet zone,” is indispensable for facilitating accurate scanning by the device.

Number System Digit:

In UPC codes, the inaugural digit delineates the product category. For instance, retail items typically commence with 0 or 1, pharmaceuticals with 3, and coupons with 5, serving as a categorical identifier.

Manufacturer Code:

Following the number system digit, the initial sequence typically denotes the manufacturer. GS1, a globally recognized standards body overseeing UPCs, allocates a distinct code to each manufacturer, ensuring uniqueness and consistency.

Product Code:

Subsequent to the manufacturer code, the ensuing characters specify the individual product and are formulated by the manufacturer to provide product-specific identification.

Check Digit:

Embedded within the barcode, the check digit serves as a reliability check, confirming the accuracy of the encoded data. It acts as a fail-safe mechanism, promptly detecting and signaling any potential data discrepancies or errors.

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Moving further, let’s delve into their functioning:

Initially, barcode scanners utilize either an incandescent light bulb or a laser to project light through the barcode, which is subsequently directed onto an ultra-sensitive light detector.

The dark bars on the barcode absorb the projected light, while the lighter sections permit light transmission and reflectivity.

Subsequently, the scanner measures the intensity of the light received, converting it into digital data. Notably, the dark segments, reflecting less light, are interpreted as ‘1,’ whereas the illuminated areas, registering higher light levels, are recognized as ‘0’ by the scanning mechanism.

This digitized data is then transmitted to inventory management software, where it is decoded and integrated into the system for further processing and analysis.

Types of barcodes:

Linear/1D

Linear, or one-dimensional (1D), barcodes are the quintessential image that comes to mind for many when they think of barcodes—consisting of black vertical bars accompanied by numerical digits below. These are commonly employed by stores to label their products. Within these linear barcodes, a combination of numbers, letters, and symbols is encoded, connecting the code to a comprehensive database containing pertinent details such as product name, category, dimensions, and color variations. Crucially, for a one-dimensional barcode to operate seamlessly, it must be intricately linked to a corresponding database. This type of barcode finds widespread application across various domains, including retail consumer goods, loyalty programs, shipping logistics via labels, and cataloging of books.

Matrix/2D

Matrix, or two-dimensional (2D), barcodes offer enhanced capacity for storing supplementary data beyond mere identification, encompassing details such as quantity, images, and website URLs. Unlike their one-dimensional counterparts, 2D barcodes possess the capability to render this information autonomously, eliminating the necessity for direct connectivity to a database. Notably, QR codes are a prevalent example of 2D barcodes, adept at directing users to specific websites or serving as digital boarding passes. Furthermore, their utility extends to sophisticated tracking requirements in high-value manufacturing sectors, such as medical equipment and pharmaceuticals, where precise monitoring of components and products is paramount.

Key Difference:

1D barcodes are characterized by either horizontal or vertical lines, whereas their 2D counterparts can incorporate a diverse array of shapes and patterns, offering greater flexibility in encoding information. Consequently, 2D barcodes boast a significantly larger data capacity, accommodating up to 2,000 characters, in stark contrast to the 80-character limit of 1D codes.

Furthermore, while a wide range of scanners can effectively decipher linear barcodes, the decoding of 2D barcodes typically necessitates more sophisticated scanning equipment or the utilization of smartphones equipped with appropriate software.

Lastly, owing to their ability to condense information in a smaller physical space, matrix barcodes often serve as the preferred choice for items constrained by minimal barcode placement, making them particularly well-suited for compact or petite products.

Business Benefits of Barcode:

Barcodes have surged in popularity due to their ability to deliver swift and tangible returns on investment. Here are the key advantages that businesses can leverage with barcodes:

1. Accuracy:

Barcodes eradicate the need for manual input of product data during receiving processes, significantly minimizing the risk of errors. Whether in retail establishments or warehouses, associates can effortlessly scan barcodes, drastically reducing the occurrence of inaccuracies. Moreover, instances of barcode-related errors are exceedingly rare.

2. Real-time Data:

Each barcode scan triggers an instantaneous update of inventory levels and sales figures within the company’s enterprise resource planning (ERP) or business management system. This provides businesses with continuous access to current data, enabling rapid calculation of vital metrics such as inventory turnover, on-hand inventory valuation, or weekly sales per item.

3. Streamlined Training:

Barcodes and scanners are generally intuitive, requiring minimal training for new employees to operate efficiently at checkout counters or within warehouse environments. Moreover, barcodes alleviate the necessity for extensive memorization or reliance on institutional knowledge. For instance, in a grocery store, workers need not memorize codes for popular items to maintain productivity.

4. Enhanced Inventory Management:

Barcodes enhance inventory control by facilitating more effective management practices and curbing excessive spending on products. Access to real-time inventory data enables employees to make informed decisions regarding purchasing and discounting strategies. This, in turn, reduces both inventory holding costs and the accumulation of obsolete inventory, ultimately bolstering long-term profitability.

5. Cost-effectiveness:

Barcodes offer exceptional value, with relatively modest upfront investments compared to alternative systems offering similar benefits. Companies can generate a limited number of barcodes for internal use at a nominal cost. As business needs evolve, the expenses associated with supporting technology remain reasonable, ensuring continued affordability and scalability.

The Best Ways Businesses Can Use Barcodes:

Barcodes offer an array of versatile applications that can significantly enhance the efficiency and precision of everyday operations. Here are some of the most prominent uses:

1. Inventory Tracking:

Efficient inventory management hinges on knowing not only the current stock levels but also the precise whereabouts of each item. Barcodes play a pivotal role in resolving this challenge by enabling seamless tracking of products throughout the supply chain. Warehouse personnel can swiftly scan incoming and outgoing items, while automated facilities employ mounted scanners to track items as they traverse conveyor systems. Each Stock Keeping Unit (SKU) is assigned a unique barcode linked to a comprehensive database, ensuring accurate, real-time updates on inventory levels.

2. Asset Management:

Barcodes are widely employed for tracking the myriad assets essential for daily business operations, ranging from machinery and vehicles to computers. Paired with asset tracking software, barcodes facilitate the monitoring of asset status and location while also storing pertinent records related to maintenance and repairs. This capability is particularly vital for capital assets, which organizations often retain for extended periods and utilize repeatedly. For mobile assets like vehicles and computers, barcodes provide visibility into usage history and aid in assessing asset condition, thereby informing strategic investment decisions.

3. Invoicing:

Integration of barcodes into invoices streamlines the tracking of accounts payable (AP) and accounts receivable (AR) processes. By affixing barcodes to invoices, organizations can easily associate each invoice with a specific customer. Upon receipt of payment, employees can swiftly scan the barcode to ensure accurate crediting of the corresponding account. Similarly, barcode scanning expedites order fulfillment processes in warehouses, enabling workers to efficiently identify and pick items for orders, thereby minimizing errors and enhancing operational efficiency.

4. Mail Management:

Barcodes serve as indispensable tools for tracking outgoing mail and packages, allowing businesses to monitor shipment progress and provide customers with real-time tracking information. By scanning letters and parcels before dispatching them to couriers, businesses can link tracking data to each order, enabling customers to track the status of their deliveries. In cases of returned mail, scanning the barcode facilitates swift identification of the recipient, streamlining resolution efforts.

5. Mail Merges:

Incorporating barcodes into mail merge processes enables businesses to automate the generation of barcoded items from a data source, such as a spreadsheet. This streamlined approach expedites the creation of barcodes for batches of items, offering significant efficiency gains compared to manual handling.

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Barcode Technology Essentials

Embarking on the barcode journey requires just a few technological components, each playing a crucial role in harnessing the power of barcodes. Here are the three key elements:

Printing Equipment:

Investing in a barcode-compatible printer is paramount, especially if your warehouse handles significant inventory or experiences frequent product turnover. The market offers a diverse array of printers, ranging from large, stationary models requiring direct power connections to sleek, wireless variants designed for portability. Depending on the scale of your operations, you may need multiple printers strategically positioned throughout your warehouse or retail space to optimize efficiency.

Scanning Devices:

Scanners serve as the gateway to unlocking the myriad benefits offered by barcodes. There are a variety of scanner options, each catering to specific needs. Laser scanners, renowned for their affordability and versatility, can effortlessly read most one-dimensional (1D) barcodes from considerable distances. Alternatively, Charge-Coupled-Device (CCD) scanners, employing an array of LED lights for barcode recognition, offer enhanced accuracy, albeit with a shorter scanning range. For businesses utilizing two-dimensional (2D) barcodes, an imager scanner equipped with a camera becomes indispensable for capturing these advanced barcode formats.

Centralized Database:

At the heart of barcode functionality lies a centralized database, which serves as the linchpin that connects unique barcode identifiers with corresponding product information. This database ensures that scanning a barcode yields accurate and relevant data. Typically, this critical data repository resides within a software application accessible to point-of-sale (POS) systems and warehouse management devices, facilitating seamless integration and data retrieval across various operational touchpoints.

Conclusion:

Barcodes, found on everything from cereal boxes to library books, are crucial for efficient retail operations. They provide powerful inventory management capabilities, offering consistent visibility into stock levels. However, effective utilization requires robust inventory control processes and supporting software to generate real-time, informed inventory reports for strategic business planning.