• Jon Brown FCCA

Why you should be using barcodes in your business – Part 1


Unravelling the mysteries of Barcodes

For those not using bar codes in their businesses, the concept of bar codes carries an air of mystery about what they are, why you might want to use them and what you need to do to implement them throughout your company.


In these 3 very short blogs we look to unravel these mysteries.

Why should I use them?

Barcodes increase stock accuracy which saves you wasting cash and increasing your profits.

The fundamental reason for using bar codes is to maintain stock accuracy, which is especially an issue if you have staff who don’t yet know your product range.

While your business is fairly small, you can have a walk around and see quickly what you need to re-order.

As you grow, for re-ordering, you want to be looking at the inventory levels on your system.


We'll look at an example of why you need this accuracy (and bar coding).

Let’s say you have 10 Widgets and 10 Doohickeys in stock.


Now Frank sells 5 Doohickeys as 5 Widgets.



When you get to re-ordering, your system will say you have 5 Widgets and 10 Doohickeys. So you will reorder another 5 Widgets to maintain your stock levels to have 10 of each.


When they arrive and you do a physical stock take, you’ll see that you really have 15 Widgets and 5 Doohickeys.




So you have splashed cash and are now overstocked on Widgets - cash that should have been invested in quicker selling stock. You might also lose out on sales of Doohickeys because you don't have enough in stock.

If you only are carrying a few stocklines, then that is no big deal, but as you start to carry 100’s and then 1,000’s of stocklines, then that is a big overspend on re-stocking.

If you had everything barcoded, and Frank was trained to always scan the goods as they are sold, Frank would scan the Widgets and sell them as Widgets. Thus your stock would be accurate. Thus you would not be tying up cash in stock that is now going to take a while to move.

Let’s not forget that a Doohickey is only $5, whereas a Widget is $8, so again you lose through inaccuracy.

In the same way that we have goods going out being scanned, we can also have goods scanned coming IN – so we are showing the correct stock on the shelves and in the system and not constantly cursing the warehouse staff!

It makes stocktaking a lot easier. No guessing at codes, no typing in codes. You carry out stock take electronically and minimise accuracy errors due to no paper stock takes being re-keyed into the computer system. When set up correctly, time taken to do the stock take decreases, and more importantly, the time required to produce variations is substantially diminished.

For merchandising, it makes price changes less painful.


If you print a price label and attach it to each stock item you sell, then when you have a price change, it is a major job to go through and either replace, or remove and replace the old pricing on every item (for which you are paying staff).


If you are using bar codes, you don't need to put a price label on the goods - simply have a label for the shelf.


When you change prices, you print one new label for the shelf - so that is 1 label as opposed to 100 labels where you need to re-price each box.

So that’s the reason WHY covered.

Next time we’ll look at what a barcode is.


In the meantime, if you want to get in touch about accounting / ERP software, stocktaking or any of the elements covered above, please use the details below.

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