What is Inventory Management?
Inventory management is a process by which businesses keep a close watch over their stock. This involves tracking stock usage, stock depletion, stock depreciation, stock reordering and purchase, over-portioning, vendor management, demand planning, and forecasting, stock loss, and stock wastage. It also involves inventory tracking so that businesses are never in the dark about the stocks they own.
Inventory management is a tedious exercise, but no organization can do without it. Modern technology, thankfully, can make inventory management far less painstaking, faster, and more accurate than traditional, manual methods.
Inventory management entails the procurement, storage, processing, shipping, and selling of raw materials and finished products, and is therefore closely related to supply chain management. Sophisticated software enables businesses to accurately monitor stocks moving in and out of warehouses and point of sale, or POS systems.
The key objectives of an inventory management system are to ensure that a business doesn't fail to fulfil its orders on account of stocks running out, and that it doesn't end up with extra inventory that takes up valuable storage space and causes a drain of dollars. Meticulous inventory control is what businesses aim to achieve.
Inventory Management Methods
Inventory management can be done manually with the help of spreadsheets, with legacy software systems, or with highly sophisticated cloud-based systems. The size of the organization, the number of items handled, the number of vendors and customers involved, and the scale and scope of the organization's functioning -- all go into determining which inventory management method is most suited to the business.
A small business with limited needs and capital, for instance, may make do with a manual or spreadsheet-based system. Manual inventory management involves dealing with vendors through phone calls, text messages, emails, and fax, and counting inventory by hand. Spreadsheets provide a semblance of technology, but at a rudimentary level, requiring manual inputs for audits and updates.
Some of the limitations of manual and spreadsheet methods are that they're prone to human error, are time-consuming, tedious, and lack scalability. Data access is also slow and cumbersome with these methods.
On the other hand, while legacy software offers considerable ease of stock-taking, they function on a closed network and can only be accessed via a limited number of connected devices. Users therefore have to be on site every time they need to access information. Restoring data in the case of data loss also becomes difficult with a legacy system.
Cloud-based solutions, however, effectively address all the issues that impair other systems. A high degree of automation ensures that all the tasks involved in inventory management, from stock counting and updating to sending alerts and reordering, are accomplished without needing much human intervention.
Modenr inventory systems work in tandem with POS systems and employ barcode scanners to make inventory management even smarter. These systems are quick, and accurate, and don't strain your nerves. What's more, you can access data in real time as it is updated and watch how your business is functioning from any mobile device, even when you are not at your business site.
Global Market for 2D Barcode Readers: The global market for two-dimensional barcode readers was valued at $6.79 billion in 2020 and is predicted to expand between 2021 and 2028 at a compound annual growth rate of 6.7%, according to consulting and market research firm Grand View Research.
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Barcode Inventory Management Broken Down
A barcode is a unique alpha-numeric code printed on product labels that digitally represents data. To make sense of the data, these barcodes are scanned with the help of wired or wireless devices called barcode readers or barcode scanners.
Barcode scanners are vital for quick, easy, and accurate inventory management. They don't just help with counting and registering products and updating stock levels in real time, but in reading product details such as their price, weight, manufacturing date, expiry date, and name of the manufacturer.
Once a barcode is scanned, the data is instantly transferred to the barcode inventory software on a computer, laptop, or mobile device. Barcode scanners are seamlessly integrated with modern, cloud-based inventory management programs that allow data to be accessed in real time, on the go, at any given time, on any handheld device, and from a distance.
One-dimensional (1D) barcodes are, in this regard, the most common type of barcode. These consist of a white background with vertical black lines. The barcode scanner can read the product data from the space between the vertical lines.
Two-dimensional (2D) barcodes encode product information by using squares, dots, and other patterns. QR codes are an example of this type. 2D barcodes can be scanned with the help of smartphones to access digital menu cards or to make payments. A 2D barcode contains more complex information than a 1D barcode.
Components of a Barcode Inventory Management System
A barcode-based inventory management system consists of a barcode scanner, a decoder, barcode scanner software for inventory, and a printer. The barcode scanner and the associated barcode software for inventory are usually integrated and designed to operate both on a desktop and on a handheld device. Competent barcode programs for inventory can track products from acquisition and processing, to the POS, offering complete traceability.
Other barcode terms to know are universal product code (UPC) and stock-keeping unit (SKU) code. These terms are often interchangeably used, but there are some important differences between them.
There are essentially two parts to a UPC, namely a barcode that can be read by a machine and a 12-digit number. The UPC helps in identifying the product and its manufacturer and doesn't change with a change in seller.
SKU codes, on the other hand, are alphanumeric sequences containing 8-12-digits. Each seller has a unique SKU code, and businesses may produce their own SKU codes to reflect the size, weight, price, color, and other features of a product.
Types of Barcode Scanners
Barcode scanners are used to interpret data encoded in barcodes. The scanners are connected to a computer by a wire or they may be wireless. Gathered data is then transferred to the software. There are five main kinds of barcode scanners. They are briefly described here-
1. Pen wand- This is the simplest and least costly barcode reader/scanner, but it's highly durable. A pen wand doesn't have any moving parts. It works at a certain angle and must be in direct touch with the barcode for it to gather data. The speed at which it must be moved over the barcode is also specified.
2. Slot scanner- This barcode scanner is stationary in nature and the item to be scanned must be pulled through a slot on the scanner by hand. A slot scanner is mainly used to scan barcodes on cards.
3. CCD scanner- This is a charge couple device scanner and is usually used at retail sales. It has an interface resembling a gun and has a higher range than pen wands. It is usually held close to the product barcode and several readings need to be taken to record the data properly and accurately. The downside to these gadgets is that they can only read barcodes whose width matches the size of the scanner face.
4. Image scanner- This can also be referred to as a camera reader, because it uses a small camera to take a photo of the barcode. The advantage of this type of barcode scanner is that it can make sense of barcodes from a distance of up to nine inches and is equipped with digital imaging processors.
5. Laser scanner- This type of barcode scanner may either be handheld or stationary, and like an image scanner doesn't have to be near a barcode in order to read it. Laser scanners use lenses and mirrors and can work from a distance of up to 24 inches. Furthermore, these scanners can interpret barcodes no matter their orientation, and do up to 500 scans a second.
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How to Select the Right Barcode Scanner
Barcode scanners have to be judiciously chosen for highly efficient inventory management.
If your pace of business is frenetic, barcode scanners and other pieces of hardware may undergo a lot of stress and strain. They may be accidentally dropped on the ground, get submerged in water, or encounter dirt and dust in storehouses. It's therefore important to check the Ingress Protection (IP) rating of your device before buying.
IP ratings, in this regard, are standards developed by the International Electrotechnical Commission (IEC) that indicate the extent of protection offered to an electronic gadget against dust or liquid. An IP rating contains two digits. The first digit shows how safe the gadget is against solid foreign materials and the second digit indicates the extent of protection against water. Barcode scanners must ideally have a rating of at least IP68, which is an assurance that the scanners are resistant to dust and will be safe even if they fall into water and stay submerged for a while.
Moreover, barcode scanners ought to be chosen in keeping with the environment of operation. In case they are to be used in a dimly-lit storehouse, scanners with low brightness levels will be okay. However, if they are to be used in well-lit surroundings, they must have a higher degree of brightness.
Furthermore, opt for barcode scanners with ergonomic keys. For instance, if the employees of a bar or restaurant usually wear gloves during inventory counting and accepting payments from customers at the POS, the keys of the scanner need to be large in size.
Take into account the code type and scanning distance while choosing barcode scanners. Two-dimensional image scanners work well for ordinary barcode scanning. Use long-range scanners if you have to scan from a distance. As mentioned in the preceding section, laser scanners can read codes from a distance of up to 24 inches. These are best suited for long-range scanning.
Inventory management improves significantly with software supported by barcode scanners. It makes stock-taking completely hassle-free and far less intimidating than a manual or spreadsheet-based method.
Barcode-based inventory management works by assigning every product in the inventory a barcode label that is unique to that product. Barcodes contain a substantial amount of information on the product, which can be extracted by a simple scan.
A barcode scanner linked to inventory management software ensures operational accuracy by allowing users to check and re-check items scanned on the computer screen.
Moreover, automated identification of products through barcode labels helps cut down overhead costs by reducing the effort, time, and money needed to train employees in inventory management. Barcoding also ensures that products are properly stored and easily located, which in turn facilitates order management based on precisely measured stocks. It makes inventory tracking efficient throughout the production process, right until the product is sold.
Barcode scanning also ensures strict product quality control. Theft and loss of products can be quickly identified and stopped through inventory tracking at close quarters. Moreover, businesses can keep track of their inventory in real time and get full visibility over each inventory item. It's therefore imperative for restaurant and bar inventory control systems, especially at large organizations, to work in by barcode scanners.
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