How to Implement Barcodes in Your Warehouse: A Step-by-Step Guide

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The emergence of COVID-19 has accelerated many consumer behaviors that have an impact on warehouse operations. Some of the most notable trends have been an increase in e-commerce sales and a shift toward e-grocery services, both of which continue to grow at a steady rate. In addition, labor shortages and recruitment challenges are impacting the warehouse and logistics industries, making it even more challenging to keep up with demand.

Many warehouse managers are turning to automation technologies to improve operational efficiency, reduce costs, and remain competitive. Of these technologies, barcode scanning has remained one of the most popular. The typical warehouse must manage shipping, receiving, replenishment, picking, and packing activities that are often occurring simultaneously. Barcodes give each rack, container, or item a unique identifier that makes it easy to transfer goods between different locations both within and outside a warehouse.

In this guide, we’ll describe a step-by-step process for implementing barcodes in a warehouse environment. As a key enabler of efficient inventory management, barcode technology has become a convenient and reliable way to track goods. There are many considerations to weigh before, during, and after implementing barcodes and this guide will help explain the fundamentals needed for a successful transition.

You’ll learn:

Why Use Barcodes in a Warehouse?

Manager and warehouse worker in a warehouse

Efficiency in a warehouse requires moving bulk containers and individual products smoothly through several unique steps. Using spreadsheets and manual data entry to perform inventory counts and other activities can lead to errors and prevent staff from responding to changes quickly. Warehouse barcode labels allow you to tag each warehouse location (using warehouse floor labels or hanging labels), rack, and pallet and container with a label that can be easily scanned at any time. This is useful for performing semi-automated cycle counts and transferring inventory between departments or locations.

In addition to automated scanning, barcodes provide a few unique benefits that are important for warehouse operations.

The use of a barcode system also makes it possible to develop a perpetual inventory control system by monitoring real-time data and using a centralized warehouse management system. These software platforms also allow you to link important information, such as product size and weight, to each unique barcode.

Create an Initial Barcode Plan

Team conducting planning in a warehouse

The first stage of any new barcode implementation should start with an initial plan. This will not only help prevent future issues but will also ensure compatibility between the different components of the barcode system. The following steps are a good starting point when creating your barcode labeling plan.

Determine Inventory Barcode Needs

It is helpful to make a list of all existing and potential SKUs and variants for the warehouse. In many cases, it will be possible to utilize the manufacturer’s barcode for a particular item and copy this into your system. Every item should have a unique barcode number and storage location assigned, and a process should be in place to review and scan items during arrival and shipment.

Review the Warehouse Layout

Deciding where to place barcodes is an important decision that is much easier after reviewing the layout of the warehouse racks, shelving, and transit routes in the facility. Scanning that is performed by warehouse staff will need to be done from the ground level and it is important to decide how to handle items that are store on elevated racks. For this inventory, you can either invest in long-range scanners that have an extended range or consider placing duplicate product barcodes at ground level. This is the perfect time to review the flow of inventory through the warehouse and determine the best way to mark areas such as cold storage racks, aisles, interior docks and doors, and outdoor doors and docking areas.

Examine the Product Supply Chain

Many warehouses handle bulk containers including totes, pallets, and intermediate bulk containers (IBCs). If a warehouse also does fulfillment, these bulk containers may be broken down and individual items placed in inventory. It is important to review the barcodes on these packages to ensure that it is easy to differentiate between bulk containers and individual items. For warehouses that work closely with vendors and retailers, it may also be helpful to review barcode symbologies to align the scanning systems across the supply chain.

Align Existing Warehouse Control Systems

If the warehouse is already in operation, there will be a number of different processes already in place. The true value of a barcode system is improving efficiency and reviewing your existing procedures can help you identify which steps can be replaced with barcodes. Getting input from staff and working together on the solution is also a great way to facilitate buy-in and help get everyone on board. This is also a crucial point where you should review your existing warehouse control system and software platforms.

Configure the Centralized Software Platform

Warehouse managers using software

After barcodes are established, they can be easily scanned with additional hardware that is attached to a centralized software platform. The most popular inventory and asset management platforms used by warehouses are Warehouse Management Systems (WMS), Computerized Maintenance Management Systems (CMMS), and Enterprise Asset Management Systems (EAM). If a software platform is already in place, you should check the requirements to determine which barcode symbologies and barcode scanners are compatible.

This is also a good time to determine your barcode scanning needs and which hardware will be used throughout the warehouse. Scanners can be purchased as computer-attached, mobile-attached, or wireless. Some scanners may have multiple connection methods integrated into a single piece of hardware. It is also important to select scanners with an adequate scanning distance to reach the desired barcode tagging locations in the warehouse. Additional scanning hardware options to review include the charging method, battery life, and whether or not you require a ruggedized for more demanding applications.

Select Barcode Symbologies

After checking compatibility with your scanning hardware and centralized software system, you can choose a specific design for your barcode labels. Barcode designs are either one-dimensional (1D) or two-dimensional (2D). A 1D barcode uses vertical lines of varying widths to encode data that is either numeric (numbers only) or alpha-numeric (numbers and letters). The 2D barcode design, such as the popular QR code, use boxes to encode the data. Warehouse worker scanning pallets

The most important consideration when selecting barcode labels is to choose a coding option that is logical and as simple as possible. Since many warehouses handle retail products, these are a few common barcode symbologies they may encounter.

  • UPC Code (1D numeric). This is probably the most recognized consumer barcode and is used in the vast majority of products that are shipped to retail locations. The code can represent 12-digits to identify the specific product and manufacturer’s identity.
  • EAN Code (1D numeric). The EAN code is nearly identical to the UPC code but is used in applications that are designed for point-of-sale (POS) scanning. Some common versions of the EAN code are the International Serial Book Number (ISBN) and the International Standard Serial Number (ISSN) that are used for many products including periodicals, books, and electronics.
  • Plessey Code (1D alpha-numeric). The Plessy code was originally released in Europe and is often used in many retail grocery and library locations. It has become popular in the United States for these applications due to the flexibility of encoding numbers or any letters from A to F.
  • Code 39 (1D alpha-numeric). This code is popular in the automotive and defense industries and is the most common barcode used in non-retail situations. Reviewing codes such as these are a good reminder of the potential barcode standards that a specific industry may have.
  • QR Code (2D). As a 2D barcode, a QR code can store much more data than a standard 1D barcode. Each QR code can contain up to 2,509 numeric characters or 1,520 alpha-numeric characters. This has made these codes very popular for advertising purposes as they can quickly transfer internet links to a phone with a single scan.

As mentioned above, most warehouses will likely adopt a barcode style similar to the UPC code. For locations that process retail products, it may also be useful to register with GS1, the global organization that standardizes barcodes used among retailers, manufacturers, and suppliers. Part of the benefit of aligning with GS1 is the fact that they maintain regulations to standardize barcodes among the millions of businesses that use them.

Design Barcode Labels

Warehouse team having a meeting

It is important to choose a final barcode label design that matches well with the target applications within the warehouse. In many cases, a combination of different designs will be necessary to accommodate different physical environments, locations, and attachment methods. Some of the most common labels chosen for use in a warehouse are:

In addition to the applications above, it is also possible to customize a barcode label based on a few other factors. These are the final considerations to make before ordering an appropriate quantity of barcode labels and preparing the warehouse for implementation.

  • Substrate Material – Barcode labels are generally available as metal or plastic, and the specific material should be chosen based on the compatibility with the operating environment. Applications such as cold storage may require a unique label, and additional hazards such as moisture and abrasion should also be considered. Take a look at this label selection guide for more details on label materials.
  • Size – The chosen size of a barcode label should be primarily based on the intended scanning distance and amount of information to be printed on the label. Labels that are placed farther away from employees and scanners should generally be larger, while smaller items may require a similarly sized label.
  • Attachment Method – Standard warehouse labels can be attached using an adhesive or a physical attachment method such as screws or bolts. Some of the rack labels highlighted above can also be attached using a magnetic backing and easily moved between racks and warehouse locations.

These general parameters should be sufficient for the majority of common warehouse applications. For more unique and niche applications, it can be helpful to work closely with the label manufacturer who can provide specific recommendations.

Establish Barcode Inventory Processes

After barcode labels are fabricated, it is important that you have processes in place to manage this new system. This includes procedures for applying labels, updating information in the software system, and scanning items. Careful consideration should be made for the placement of the barcode label on each item to ensure that it is not easily obscured and can be easily scanned. Warehouse worker taking inventory

Using barcodes with a centralized WMS also allows employees and management to view real-time data from throughout the facility. This digital system is an excellent resource for tracking key performance indicators (KPIs) for important activities such as safety stock levels and inventory turnover. With targets established, it is possible to set clear priorities for the entire warehouse team, more easily measure results, and conduct effective training sessions for everyone involved with the new workflows. Warehouse management should also establish a regular schedule to review warehouse data. This can help identify problems on the warehouse floor and work out any issues that may arise in the first few months of transition.

With proper planning, it is possible to implement a barcode system in any warehouse that adds significant value to the operation. As you can see from this guide, there are literally several moving parts that must be configured and optimized for the needs of each facility. By reducing manual data entry and automating key steps in the inventory flow process, a barcode system can reduce operational costs and lead to a significant ROI over time.