Reduce Warehouse Costs with Barcodes

Barcode ScannerA barcode is a visual, machine-readable representation of data – it is essentially electronic data entry using a scanner.

The data contained in the barcode is typically tied to something, such as a SKU or a purchase order. Once scanned, this data is accessed and displayed for the user to learn more information or take an action. Barcodes are most commonly used alongside a WMS.
In recent years, adoption of barcodes in small and midsize businesses is increasing as they find implementation of barcodes can dramatically reduce costs and increase control of your warehouse operations.

Barcodes let you track the “what,” “who,” and “when” for all activities within the warehouse’s four walls. Many of the fulfillment centers we work with use barcode technology in areas such as:

  • receiving
  • put away
  • replenishment
  • picking 
  • packing
  • shipping/manifesting
  • returns
  • cycle counts
  • value-add function
  • labor tracking

For managers not involved in system selection and implementation, it’s important to understand how barcodes will work with your current systems. Barcode marking and scanners are of no standalone value and need integration to Warehouse Management System (WMS), labor management, and inventory applications to see benefits. Barcode technology is vital to a WMS’ effective use and benefits. 

READ: 4 Foundational Prerequisites to Maximize E-Commerce WMS Benefits

Benefits of using barcodes

In our work with multichannel and wholesale distribution companies, we see operational savings and a favorable return on investment from the following:

Speed and order throughput

Reducing order cycle time to ship in a high percent of orders shipping same day is very difficult without barcode scanning of inventory and all key processes. Generally, using barcodes is the fastest way available to speed up processes. If your business is in a growth period, it is essential.

Decreased warehouse clerical costs

Warehouses which do not use barcode for scanning and data capture are very manual and require office personnel or warehouse employees to key all warehouse activity documents, such as receipts, inventory transfers between locations, cycle and physical counts, and returns.

Error reduction

Clerical keying of the manual source documents, such as a receiving document, transfers, and cycle counts, leads to data entry errors from illegible or misinterpreted handwriting and data entry keying errors. Handwritten documents and keying have potentially several percentage points of error, whereas barcode scanning is 99.9% accurate.

READ: How to Reduce Fulfillment Errors in Your Warehouse Operation

Increased inventory accuracy

Inventory is one of the single biggest balance sheet assets in multichannel businesses. Most WMS have tight barcode data capture and integration to inventory audit trails.

When you select a SKU in the WMS, you can access all of the inventory locations that this product is in and has historically been in. By inventory location, you can see what products were stored there. Barcode scanning tracks the employee number/date/time stamp for every transaction, including sales, returns, adjustments, and transfers. The two technologies lock down accuracy to 99.9% or higher.

Cycle counting accuracy often allows warehouses to eliminate physical inventory counts, which saves substantial dollars after accuracy is proven. Better control leads to faster inventory turnover and reduced cash requirements for inventory.

Improved processes

You can use barcodes in conjunction with warehouse paperwork to scan purchase order headers to retrieve:

  • PO records
  • pick tickets
  • returns processing from labels and order documents to access customer records
  • cycle count and physical inventory counts
  • individual employee identification

In order to track products, put barcodes on cartons or pallets identifying the contents. Each warehouse, zone, aisle, level, bin, and slot should be barcoded for tracking inventory movement through various processes and locations.

Labor management

Barcode data capture of activities, date, and time stamped by employee allows tracking of employee performance. This data leads to improved productivity measurement, reporting, and scheduling of warehouse department activities.

Increased mobility

Wireless scanners connected to the WMS allow data capture where the inventory is -- on receiving docks, on pallet racks, in receiving, and in shipping. You can also use wireless scanners where the processes are being performed, including forklift mounted scanners.

Reduced training time

Using barcodes alongside your WMS makes the training process much easier to learn and can reduce the amount of training time. It takes only minutes to master the hand-held scanner for reading barcodes versus learning from a written procedure manual.

Foundation for future efficiency and automation

Barcodes are a critical technology for all automated and advanced sortation, conveyance, robotics, and voice-based systems. In fact, barcode is one of the four foundational pre-requisites to get the most out of a new WMS.  

Decreasing purchase price and recent integrations make implementing barcode technology easier than ever. Many smartphones now include apps that scan and interpret barcodes. While a phone is not as durable as gun-type scanners in terms of breakage, it is considerably cheaper and light weight. Phones can also be used for various data capture and inquiry by office personnel and line management users.

Improved warehouse dashboards and management

There is tremendous data potentially available in warehouse operations, but much of it is manual and not accessible. Barcodes integrated into a WMS offer online, real time data capture of major functions.

This data allows an entirely different ability to manage the warehouse. Real time dashboards allow line managers and fulfillment directors to be more proactive. Companies can not afford to key all of the data in a timely manner and with low error rate. Barcodes do both in real time.


Barcodes are one of the critical technologies necessary to reduce costs and provide higher order throughput today and in the future in your warehouse and across your Supply Chain.

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Brian Barry is president of F. Curtis Barry & Co. since 1995 and is an adept consultant who has worked with hundreds of businesses and a variety of types of warehouses across America. Brian is passionate about his partnerships with ecommerce and retail companies; industrial and manufacturing companies; and third party (3PL) companies and companies using 3PL services.