How to: leverage barcode technology

Apr 01, 2011 9:30 PM  By

Barcoding technology can help streamline processes and reduce costs in warehouse fulfillment operations. But in many cases, even large multichannel merchants only scratch the surface when it comes to leveraging barcodes.

Most merchants use barcoding for shipping labels and generating manifests, and some use it to identify bin and slot locations. But to gain maximum benefit, you need to fully incorporate this technology to control inventory and track labor use within the entire warehouse.

It’s possible to implement the full range of barcode applications all at once or when you install a warehouse management system (WMS). And quite a few warehouses do take that “big bang” approach.

But for many others, it’s more financially and logistically feasible to realize the benefits by phasing in barcode technology: starting with the basics and adding more advanced applications over time.

What can effective barcoding do for your operation? Here are just a few of the benefits.

  • Fast, accurate data capture reduces paperwork, errors and labor costs: Barcode data capture and positive confirmation of transactions significantly cut down on mistakes as compared with manual keying systems in receiving, put-away, replenishment, picking, inventory control and other functions. Plus, they eliminate manual clerical time for writing, controlling and entering transactions into the system.
  • Timely information: While not all barcode systems or functions are updated online in real time, even short-interval batch updates make data available faster. With the support of information systems, timely reports showing product receiving, labor hours by function, cycle counting and other important purposes are readily accessible.
  • Productivity measurement: The ability to track individual and department performance and post individual results enhances productivity.
  • Reduced training time: Training for using barcoding is often easier and less time consuming because the processes are streamlined and defined in accordance with the warehouse’s standard operating procedures and overall best practices. The process standardization and discipline required to implement barcoding is another major benefit.
  • Better decision making: Barcode-driven systems can help standardize how department managers plan and control work. They eliminate or minimize individual manager lags in updating data and the confusion caused by individual data collection methods. The result is having the most accurate, complete and timely data possible to make well-informed decisions.

The box to the left shows the range of barcoding applications possible within a typical warehouse.

You must assess the benefits as part of a detailed cost/benefit/ROI study before investing in barcoding. While most warehouses can gain logistical and labor advantages and savings from the full range of applications, the ROI may not pan out for those that handle relatively few items and orders.

PHASED IMPLEMENTATION: A ROADMAP

There are three core stages to consider when you are planning a phased-in barcode technology approach:

  1. Basics: shipping and inventory location control

    Shipping: Generally, implementation begins with using barcode shipping labels for package deliveries, assigning orders with tracking numbers.

    Some warehouses determine and print the shipping label at the scale in the shipping area during the picking/scan process. This scan can also be used to initiate the back-end rate shopping process and create shipping manifests.

    Inventory location control: The most common use of barcoded locations by multichannel merchants occurs within the picking and reserve areas. But the potentially largest benefit of a location system is to provide tracking capabilities within the entire facility for the most efficient overall inventory management process.

    To do this, you have to assign all storage locations and functions with discrete barcode identifications. This includes not just pallet racking and shelving locations, but all locations within the receiving and shipping docks and staging areas, as well as return processing functions. If the warehouse has value-added or production/assembly areas, assign those barcodes as necessary to track and process inventory.

    The ability to scan locations and associate inventory to them helps with both real-time tracking and cycle counting processes. You can also confirm the completion of system-directed inventory moves between locations or functions, such as put-away, replenishment and picking.

  2. Tracking products throughout DC processes

    As important as location barcode IDs are, to fully leverage barcode technology, you also need to have barcodes on the products. This can be done at the individual unit level, as inner pack designations, or at the carton or pallet levels, and it may require vendor compliance changes in the supply chain.

    These barcodes include information tying items to the data about them that is housed in the item master file, and so they are key to associating specific items with a location or warehouse activity.

    Barcodes on products make it possible to improve control of receiving, put-away, picking, replenishment, pack verification, value-added services, shipping, inventory taking, aisle mapping and returns processing.

    Many warehouses also use barcodes on various operational documents. Basic uses here include purchase orders, quality control checks, pick tickets and returns documents.

  3. People productivity

    The most complex use of barcode technology is tying individual warehouse workers to specific activities and time spent on completing those activities. This provides the infrastructure that enables warehouses to track, record and post individual productivity statistics. Warehouses with this capability generally have a higher level of overall productivity.

    This application level involves using a time- and activity-keeping device like Kronos or a workstation concept that ties in with individual staff barcode IDs. It also requires setting productivity rates and standards for use in productivity reporting and labor budgeting.

    Many companies use barcoding time-clock tie-in capabilities for payroll only. By not taking them to the level of productivity tracking and reporting, these companies are likely missing out on substantial benefits.

OTHER FACTORS TO CONSIDER

Before making any final investment decisions, assess the barcode technology requirements you will need to enable use of advanced technologies such as pick-to-light and voice picking. Evaluate the costs vs. estimated financial benefits.

If the warehouse is not currently handling individual selling units barcoded by the manufacturer, the units must be relabeled in the warehouse. This can be costly.

Having vendors or manufacturers apply barcode labels requires some type of vendor compliance process. Implementing and maintaining that process are potentially staff- and time-consuming tasks.

What’s more, labeling all locations with barcode labels can also be time consuming and expensive. Don’t assume that this will happen easily or quickly.

And finally, take into account the implementation tasks, training and culture shift that barcoding technologies may require in your operation. For instance, if your center relies on “tribal knowledge” to know where products are located rather than barcoded bin/slot locations, anticipate and train to overcome resistance and problems with picking, inventory, put-away and other functions.

Remember that implementing too many operational changes simultaneously can be dangerous without ample preparation and training. Years ago, one large multichannel retailer assumed it could take its first barcode inventory to initialize the inventory for a WMS being simultaneously implemented. The inventory process and reticketing were disastrous, and the WMS implementation failed.

When barcode technology is implemented or expanded correctly, though, the tracking and more efficient use of direct labor can greatly improve efficiency and productivity and reduce costs.

Curt Barry (cbarry@fcbco.com) is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consulting firm.

FULL RANGE OF BARCODING APPLICATIONS

  • Receiving: accurate capture of pallets/cartons received on the dock

  • Put-away move: confirmation/updating of product bin/slot locations

  • Replenishment move: confirmation/updating of inventory move to forward picking

  • Pick confirmation: from bin and slot to customer order or pick document

  • Pack verify: confirmation/updating of customer order QA accuracy

  • Shipping: creation of shipping manifests and updating of customer service systems with charges and dates

  • Returns processing: for both customer files and inventory disposition systems

  • Value-added services: such as kitting work orders and personalization transactions

  • Inventory control functions: including cycle counting, reduction or elimination of financial/physical inventories and aisle-mapping

  • Integration with other technologies: such as voice technology in receiving and picking, pick-to-light for high-volume operations, and programs that automatically sort products and packages into lanes

  • Productivity tracking: for both departments and individuals

  • Fixed asset tracking: throughout the warehouse and total company

  • Packaging material tracking: including size of cartons, for warehouse space optimization

  • Capturing transactions/functions: including purchase orders, picking document confirmation, pack verification and returns