What Is a Barcoding System? Types and Key Advantages

What characteristics do the most efficient warehouses in the world share? The most efficient warehouses eliminate manual data entry and paperwork, using automation and digital tools to manage inventory through real-time, predictive systems. They have systems in place to follow, track, and move goods at the pace of demand, and barcoding is at the foundation of this. 

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While barcodes are simple in concept, combined with the right technology, barcodes enable you to have the capabilities you want: real-time visibility, accurate fulfillment, fast picking and packing, and fewer costly errors. From global supply chains to local distribution centers, barcoding systems have been proven to enhance warehouse efficiency with little capital investment. 

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In this guide, we will explain how barcoding systems operate, the types of barcodes you will see in warehouse environments, and why they are still one of the most useful solutions in inventory management. If you are looking to scale operations or optimize existing processes, understanding barcoding systems is a crucial step in building an automated and resilient supply chain.

What is a barcode?

A barcode is a machine-readable symbol that contains information about a particular product, location, or asset. Most people recognize the standard pattern of black lines and white spaces printed on retail packaging: this is typically a 1D or one-dimensional barcode. There are also 2D barcodes, such as QR codes, that store more complex data in a smaller footprint.

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On the most basic level, a barcode works as a digital fingerprint. It is not the data point for an item; it has a unique key that pulls information from a supporting system, usually a warehouse management system (WMS). When scanned, the system compiles the exact relevant information for the item, which could designate type, quantity, expiration date, and location.

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Barcodes are now essential components in modern warehousing as they standardize the way data is captured and shared. Barcodes replace handwritten logs, they prevent human error, and enable automation. No matter if it is a single product or an entire product inventory at several locations, barcodes assure that products can be identified and moved efficiently and accurately.

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How barcodes work

On the surface, barcodes appear so easy, but there is a super-fast, efficient data stream behind every barcode scan that keeps the warehouse active. Each barcode contains a unique identifier that maps to a specific product description, and this information is stored in a centralized location (most often in a warehouse management system (WMS) or an enterprise resource planning (ERP) application).

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Once a barcode is scanned on a compatible scanner, the scanner can read the barcode's pattern and convert the information into data. The scanner's data is immediately checked against the system's records to automate the next part of the workflow, whether that involves updating inventory, marking items as received, helping a picker locate the correct location, or printing a shipping label. 

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For instance, when inventory arrives at the warehouse, upon scanning the item, the system's query would have moved the item from "in transit" to "received" (in real-time). The system verifies product receipt, updates inventory level, and makes recommendation for where the product should be placed.

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Additionally, when workers scan items during fulfillment, as soon as an item is scanned while being picked, the system confirms that the correct product was picked and packed to meet shipping rules.

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This type of process reduces reliance on manual workflows, which are more prone to errors and can slow down operations. Whereas with barcodes, it is often faster to capture data from its source with consistency and much more traceability at each touchpoint or hands-on encounter and physical stage in the warehouse.

Barcode components

Each barcode, no matter how simple it may appear, has several components that help scanners read and interpret the information contained in a barcode in a reliable and error-free manner. So, it is important that you understand these components when you design and print barcodes for your warehouse. 

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Here are the components you should consider: 

• Quiet zone: The clear space before and after a barcode that signals where the barcode starts and ends.If a barcode does not contain a quiet zone, the scanner may not read the barcode correctly.
• Number system digit: This digit identifies what type of product it is; for instance, in retail barcodes like a UPC, the number system digit will specify if the item is a standard product, a coupon, an on-pack promotion, or something else. 
• Manufacturer code: Each manufacturer is assigned a unique number that distinguishes them from other manufacturers. 
• Product code: This is a code assigned by the manufacturer that describes a specific item. 
• Check digit: The last digit of the barcode is used to check that the code has been scanned properly. It is a calculation of the other digits in the code and catches errors while scanning.

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The components ensure that barcodes are standardized and operationally correct. Barcodes rely on all the parts to function. If a single part is damaged or printed incorrectly, a missing check digit, a smudged barcode, or an unknown quiet zone, the scanner is going to miss the barcode. That can slow down operations, especially in fast-moving environments like warehouses.

Business Benefits of Barcodes

Barcodes not only identify products; they bring business value by improving accuracy, speed, and decision-making in warehouse operations. No matter how small your warehouse is or if you are managing a global distribution network, barcoding systems provide you with significant advantages.

Some of the benefits are as follows:

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1. Enhanced accuracy

Manual data entry involves human error. Studies show that the average error rate of good manual data entry is one error in every 300 characters. With barcode systems, the error rate is nearly one error in every 10,000 scans. This represents a significant saving in terms of unnecessary costs resulting from errors in receiving, picking, and shipping.

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2. Faster operations 

Scanning barcodes takes an instant. From inventory counts and order fulfillment to product verification, barcode scanning is significantly faster than writing down SKUs or typing in the item's details.

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3. Greater inventory visibility 

 When integrated with a WMS, the data from barcodes provides immediate updates when stock levels fall below a set threshold. You always know how much inventory is on hand, the location, and when additional stock is needed. This makes it easier to avoid stockouts and overstocking.

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4. Lower labor costs 

Because barcodes allow your team to do tasks much quicker with less manual counting and checking, you will find your operations can handle greater volumes while only scaling up with fewer humans.

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5. Data for smarter decisions

Each scan generates data. The longer you use a barcode system, the more data you'll have to build a useful dataset on how products move through your warehouse. Over time, you'll be able to spot trends, reveal inefficiencies, and points needing improvement--whether it's a slow SKU or repeated bottleneck. 

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6. Enhanced customer satisfaction 

If there are fewer errors in picking, corrections, or shipments, customers receive exactly what they ordered when expected, building trust, which is critical for maintaining significant business relationships. 

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When you have a realistic delivery schedule based on accurate order information, you are building trust, solidifying long-term relationships, and providing your customer with a dependable business partner.

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If you are looking for one of the most cost-effective ways to add some speed, structure, and intelligence to your warehousing practices, you should implement barcodes. Once your barcodes are established, they create a solid platform for advancing logistics automation and achieving future visibility across the supply chain.

Types of barcodes used in warehouses

Barcodes vary in type, format, and function depending on the application and industry requirements. When identifying the barcode type for warehouse use, there are several considerations to keep in mind: how much data do you need to store, what is the size of the label/spaces to print it, and what barcode scanners are being used. In general, barcodes can be categorized into two types: 1D and 2D.

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1D Barcodes

• 1D barcodes are standard linear barcodes with varying thicknesses of vertical lines that contain data in a single line, usually numeric or alphanumeric. 
• Universal Product Code (UPC): Generally used in retail, UPCs act as identifiers for retail items and are useful for tracking items at the point-of-sale or receipt, tracking items for various warehousing activities if your business tracks them.
• European Article Number (EAN): similar to UPC, but often has much broader use in international retail/distribution settings.
• Code 39: Code 39 can encode both numbers and letters & is easier to understand and use. While code 39 also has a range of uses, it is easy to use in logistics and inventory systems (office supplies, tools, etc.).
• Code 128: a compact, high-density version of the 1D barcode that can encode a larger range of characters. It is best used in a warehouse setting where you want to put more information on a smaller label.

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2D Barcodes

• 2D (two-dimensional) barcodes allow data to be stored in both directions (vertically and horizontally), allowing for more data to be encoded even complete URLs or product specifications) Within a smaller space.
• QR code: easily scanned by either smart technology or warehouse scanning equipment, and is an excellent way of embedding further information (e.g., expiry date, user manuals, or source information).
• Data Matrix: Very small, ideal for labeling small items such as electronics or medical devices.  Data Matrix is very resilient to damage or distortion. 
• PDF417: A stacked barcode that is capable of storing a very large amount of information. Examples are shipping labels, ID cards, or driver's licenses. 

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Using the correct barcode for the job is crucial to ensuring effective and efficient scanning, which helps eliminate errors. As warehouses become increasingly data-driven, many are incorporating a mix of different types of codes (1D and 2D) to cover everything from simple product identification to rich traceability.

Common product & inventory codes

In a warehouse setting, it is unlikely that all of the products are labeled in the same way. Various industries, different partners, and diverse use cases employ distinct barcoding formats. Recognizing the common barcode types will help ensure that products flow smoothly, compliance is easier, and you have proper communication across your supply chain.  

Here is a summary of the most commonly used codes with an idea of usage: 

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Each barcode type has its strengths. For example, GS1-128 is ideal for inventory systems handling perishables, enabling precise tracking of expiration dates and batch information. 

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QR codes, while not optimized for high-speed scanning in picking zones, are well-suited for quality control, customer service, and emerging applications like GS1 Digital Link, supporting richer data exchange, traceability, and alignment with the global transition to 2D barcodes.

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By finding the right code format for your inventory and operational conditions, you will have quicker scans as there is less chance for misreads or data not matching between systems.

Real-world uses of barcodes in warehousing

Barcodes are far more than printed labels on packages, they provide the basis for real-time visibility into inventory and process automation in a warehouse. If barcodes are utilized properly, they enhance almost every activity in your warehouse, from receiving to shipping. 

Here's how they create value with every activity:

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1. Receiving and verifying

Upon receiving shipments, barcoded products or cartons are scanned, thereby verifying whether the correct product and quantities were delivered. As you scan the barcodes, the system instantly updates the inventory and highlights discrepancies in real-time, eliminating the costly data entry errors and saving time. 

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2. Putaway

After the items have been received into inventory, a barcode scan tells the worker exactly where to put the items. Each location in the warehouse, whether it be a shelf, bin, or pallet, has a barcode. Upon scanning the product and the location, it guarantees that your inventory is placed accurately and can be found later without confusion.

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3. Order Picking

Picking items from stock is typically one of the most error-prone tasks performed in a warehouse environment. Barcode scanners help pickers start from the right location, as well as confirm they picked the right item. This eliminates most mis-picks and helps fulfill orders faster for companies with large order volumes. 

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4. Packing and carton matching

Once the picking process is finished, items will be scanned at the point of packing to confirm they are all in the same order. Some systems will even use barcode validation to assign items to a specific box in order to keep the order accurate and promote balance in the loading and shipping process.

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5. Shipping and tracking

Scanning barcodes at the shipping stage creates shipping labels complete with tracking information, updates carriers automatically, provide ongoing tracking information to customers, and ensures orders are shipped to their rightful destinations—all while greatly reducing errors and mis-deliveries. 

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6. Inventory Checks and Cycle Counting

Barcode scanning streamlines & simplifies doing periodic inventory checks. Personnel can scan items as they count them, comparing them instantly as they scan to what is reflected in the system. Barcode tracking not only speeds up the process but also eliminates human error by not relying on pen-and-paper methods, thereby increasing accuracy in counting.

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7. Returns and Reverse Logistics

Barcodes can be used to scan returned products, quickly view the original order details, evaluate the condition upon return, and determine the method to process back into inventory, repair, or dispose of. Streamlining the routing of returns will save time and ensure you are accurately refunding customers.

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8. Asset Management

Barcodes are not only useful for products; they can also be incorporated to track tools, forklifts, computers, and other assets. Scanning the equipment during facility check-in and check-out will keep your business aware of accountability and reduce the chance of inventory loss from other sources.

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9. Internal stock transfers

Barcode scanning provides tracking of changing inventory levels, as well as an update of warehouse locations when transferring inventory between warehouse zones or between different facilities. 

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Incorporating barcode scanning into all processes eradicates guesswork, simplifies manual processes, and increases productivity. It takes disorder and turns it into planned and organized operations, especially relevant for a nimble warehouse with high rates of turnover, where both speed and accuracy can equate to profitability.

How to create and manage barcodes

Creating and maintaining barcodes does not need to be complicated and costly. If you have a small warehouse or manage several distribution centers, some tools and standards help streamline the process by providing consistent formats, reducing manual input errors, and ensuring compatibility across systems, making barcode creation and management more accurate and scalable.

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1. Creating barcodes

First, you will need barcode generation software that enables scannable images linked to elements of product data (SKU, bin location, lot, pallet ID, etc.). Some common options are as follows: 

• BarTender is an industry-standard labeling solution that offers flexibility and integrates seamlessly with ERP and WMS platforms.
• ZebraDesigner – Available in Essentials (free) and Professional (paid) editions by Zebra Technologies. This program works seamlessly with Zebra printers.
• Loftware (formerly NiceLabel) - All-inclusive option for organizations that want centralized label management across their sites. ‍
• Your own WMS or ERP - Many of the leading systems have barcode generation tools built into their systems to allow barcode connection to inventory workflows.

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In all of these options, you will typically have the ability to choose the barcode type (UPC, Code 128, QR, etc.) and populate the data pertinent to your operational needs. Once the barcode is created, you can produce and affix it to the items, bins, racks, or pallets.

2. Design and print labels

Barcode labels should be durable and of high print quality. Poorly produced or low-resolution labels may not be read accurately by barcode readers, potentially slowing down operations and disrupting workflows.

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What to consider:

• Label size – Match labels to the size and use case. Small labels should be used for individual items, and larger labels can be printed for pallets, racks, or shelving.
• Materials – Select labels by environmental condition within the warehouse. Label paper is fine under dry conditions indoors. Synthetic, waterproof, and tear-resistant labels are great for unconditioned cold storage, moisture, and heavy handling.
• Print methods – Most warehousing operations rely on using thermal printers:
  
  • Direct thermal printers utilize heat-sensitive paper, which is ideal for short-term labels.
  • Thermal transfer uses a ribbon that allows you to create a durable print for long-term labels in any condition.

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3. Testing and placement

After printing labels, always verify the labels with your warehouse scanners. Make sure they are scannable from numerous angles and under different light conditions. Consistent placement of labeling is important; put the labels in consistent locations that are visible and easy for your people and equipment to see and access. 

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The development of a clear label and a clear label location are both important contributors to consistent and accurate workflows in the warehouse.

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4. Maintaining barcode consistency

Being consistent is the most important thing when working with different teams, places, or outsiders. Adhering to internationally accepted rules predetermines interoperability:

• GS1 – A global standards organization that develops and maintains frameworks like GTINs (Global Trade Item Numbers) to structure barcodes for universal readability and traceability across industries. 

• ISO/IEC 15420 – An international standard for 1D barcodes such as Code 39 and Code 128.

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By compliant standards, your barcodes will not only be usable in your system but also in the systems of the supply chain partners, retailers, and logistics providers.

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Labeling is not all about barcode management: It is essentially about how it enables you to incorporate barcodes into your systems and when it is triggered in real time. Each barcode is supposed to connect to some meaningful/valuable information on your WMS or ERP. A scanning label that does not add any data is a useless label.

Batch, lot, and serial number tracking

Barcodes facilitate the tracking of products based on batch numbers, lot numbers, and serial numbers, each with a different purpose:

• By using batch numbers, it is possible to collect particular items produced in a batch, and that is very convenient in industries like food or chemicals to control the quality.
• Lot numbers serve the same purpose but might be employed when compliance requires traceability, whether in the pharmaceutical industry or some other regulated sector.
• Each item is assigned a unique serial number to enable tracking of individual products, such as electronics, tools, or machinery.

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Barcoding of these numbers is beneficial in recall management, accurate record-keeping, and providing a complete track of a product, starting at the manufacturing process to delivery and beyond. This degree of information enhances accountability, safety, and customer service.

Barcode standardization and WMS

Barcodes remain efficient as long as they are standardized. The best-designed barcodes cannot give accurate results when they are not formatted consistently and integrated. It is at this point that barcode standardization and how it can fit in with your Warehouse Management System (WMS) is beneficial.

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Why standardization matters

Barcodes have to be readable anywhere, not only in your warehouse but between suppliers, 3PLs, and customers. When each of your partners takes a completely different barcode format, you endanger misreads, slowdowns, and mismatched data. With standardization, it is ensured that:

• All parties use a common format for encoding data.
  
  
• Any compliant scanner or software can read barcodes.
  
  
• There’s no confusion about what a code represents, whether it's a SKU, a lot number, or a location.

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To give an example, GS1 standards determine the way in which product data is encoded, the batch numbers, expiry dates, et, using which any other compliant system would be able to read the data accurately.

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How does your WMS support standardization

An effective WMS goes beyond the storage of data to dictate the way data is to be captured and shared. The standard functions of barcode in a WMS are:

• Format validation: Ensures scanned barcodes match expected patterns.
• Field mapping: Links each barcode to specific product or location data.
• Real-time synchronization: Updates inventory shipment and gets records in real time every scan.
• Error alerts: Flags duplicated, wrong, unreadable barcodes before they result in larger problems.

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Such automation minimizes human error and ensures that your operations are streamlined throughout all the warehouse tasks, including receiving and shipping.

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Benefits  

The standardization of barcoding not only constitutes internal hygiene but it also facilitates external collaboration. Regardless of the retailers, distributors, or compliance agencies with whom you are engaged, standardized barcodes:

• Speed up onboarding with new partners.
• Prevent re-labeling or data entry mismatches.
• Enable better EDI and supply chain automation.

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Broadly, the standardization of barcodes, which your Warehouse Management System (WMS) will implement, brings stability and extensibility to your order fulfillment operations in the warehouse so that every scan is now clean, meaningful, and actionable data throughout the supply chain.

Advanced Barcoding Use Cases

Besides helping to monitor the movement of inventory, barcodes enhance more advanced functions that make operations in warehouses faster and error-free:

• Cross-docking: On arrival of the product, it is scanned and directed to outbound staging, thus avoiding storage. 
• This saves time on handling inventory, thus speeding up the closure of orders.
• Returns processing: Scanning of the return barcodes aids in rapid verification of items, eligibility checking of returns, and restocking or hurrying to inspection.
• Mobile WMS scanning: The warehouse staff can complete the steps of picking, putaway, or cycle counts in real-time using the mobile barcode scanners or smartphone apps and update the WMS immediately.

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These applications show how barcode integration with intelligent systems eliminates latency, reduces the likelihood of human error, and simplifies end-to-end warehouse processes.

Barcode Security & Backup

Barcodes are really simple, yet the data they contain is vital. This is the reason behind barcode security and backup planning, particularly in environments where the volume of transactions is high or the industries are regulated.

• Duplicate prevention: To avoid duplication of barcodes, it is a good idea that every barcode is unique and checked against your WMS or ERP to prevent such cases, resulting in a mismatch in inventory or delivery of wrong orders.
• Access control: Restrict access to those who can create or amend barcodes in your system. Uncontrolled access may result in variances, unauthorized edits, or even violations of the accuracy of data.
• Backups: It is important to regularly back up your barcode database (with any mappings to SKUs, batches, or location of bins). In case your system fails to run again, you will have to use such records in restoring without missing out on any procedures.
• Label reprinting: There should be some files of templates and their print histories to allow reprinting the damaged or lost labels without stopping the workflow.
• Audit trail: Identify how barcode generation and usage were used by tracing the system logs. This is especially good when it comes to traceability, compliance, and internal reviews.

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Though the information contained in a barcode is not much, they are highly important, especially when there is an association with your inventory system, which makes them worth securing.

Barcode Scanning Technology Overview

Barcode readers fill the gap between physical products and your online database. The selection of an appropriate scanner guarantees accuracy, speed, and reliability in any work process.

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Scanning device types:

• Hand-held scanner: The most popular one, mainly used in general warehouse activities, is used in receiving and picking. They are corded and wireless.
• Mobile computers: These incorporate a scanner, screen, and operating system, and they are best suited where the task needs real-time data entry or access to WMS.
• Wearable scanners: These can be mounted on gloves or wristbands, and they enhance speed where there is high-volume picking or packing.
• Fixed-mount scanners: These are mounted on conveyors or stations and automatically scan items passing by them, which is ideal in automated lines or fast-moving lines.

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Notable characteristics to look at:

• Connectivity: Ensure compatibility between your WMS or ERP with ease through devices connectable via Bluetooth or Wi-Fi.
• Durability: The tough designs are resistant to falls, dust, and varying temperatures- something essential in the industrial space.
• Touch screens and displays: Ideal for handheld computers or tablets, allowing workers to view a scan as it is verified on the spot.
• Scan Range and Speed: The scanner needs to have the capability of reading your type of barcode within the required distance, especially when scanning shelves or pallets.

Bringing the scanner into your working process is much more productive, reduces the level of mistakes, and limits the strain on workers.

Barcode hardware differentiation

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Each type has its place depending on your warehouse’s speed, automation level, and user needs.

Limitations of barcoding without a system

Barcodes are only as powerful as the system they’re connected to. They cannot achieve much without being integrated into a Warehouse Management System (WMS) or into an ERP.

• No automatic updates: Barcode scanning does not increase or decrease inventory levels or cause any action to take place until a system is connected.
• Data silos: Because there is no centralized platform, data will continue to live in isolation; it cannot support decisions based on real-time data. 
• It is still manual: manual methods, such as spreadsheets or simple solutions, can allow teams to unnecessarily risk input errors during entry.
• Lost opportunities: You cannot report, follow trends, or automate activities.

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In other words, barcoding will never be a solution by itself; it is the means. Its usefulness is that it is coupled with systems that are used to translate scanned information into actions.

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Barcoding systems are among the most reliable technologies in warehouse management, and there is a reason behind that. They make the work easier, less prone to mistakes and make the businesses ready to act and perform at all times.

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Whether you use simple 1D codes to track the retail items or a 2D barcode that includes all the history of a product, an appropriate barcoding solution will grow with your business. This is why, when in the hands of a well-designed WMS and adhering to global standards such as GS1, barcodes can do more than be mere labels; they can be the building block of an integrated, automated, and data-responsive supply chain.

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Whether you are a newcomer or you want to improve your existing system, you should invest in barcoding technology because it will help you be more accurate, faster, and have more visibility in your warehouse.