How Do Barcodes Work? Learn About UPCs, SKUs, Inventory Management, POS Systems, and More

Summary

This video from KORONA POS delves into the world of barcodes, explaining their importance in inventory management for retailers. Barcodes, invented in 1951, have evolved to streamline product tracking and sales. The video differentiates between barcodes, SKUs, and UPCs, highlighting the benefits of barcodes such as improved inventory accuracy and operational efficiency. It also touches on the types of scanners used and the significance of UPCs in retail, offering insights into how businesses can leverage barcode technology for growth and cost savings.

Takeaways

• 📈 Barcodes are essential for inventory management, allowing seamless tracking of products from entry to sale.
• 🔍 Barcodes differ from SKUs and UPCs, serving distinct functions in retail operations.
• 🚀 Barcodes were invented in 1951, inspired by Morse code, and have remained largely unchanged due to their effectiveness.
• 🛒 The first commercial use of barcodes was in 1974 with a pack of chewing gum, marking a significant milestone in retail technology.
• 💡 Barcodes encode product information, which can be translated into text and linked to additional data via POS systems.
• 📊 Barcodes offer significant benefits, including easier inventory management, increased accuracy, and improved operational efficiency.
• 📊 Implementing barcodes is straightforward, with data migration taking minutes and new UPCs/SKUs being easily created in bulk.
• 💼 Real-time data from barcodes helps in managing stock levels, connecting sales channels, and automating reordering with suppliers.
• 🔗 Barcodes are a long-term investment, with the technology's core principles remaining relevant despite advancements like QR codes.
• ⏰ Barcodes save time and reduce overhead costs by eliminating the need for full-time inventory managers and automating various processes.

Q & A

What is the significance of barcodes in inventory management?

Barcodes are crucial for inventory management as they allow merchants to track products from the moment they enter the store until they are sold. They simplify the checkout process and inventory operations, providing a seamless way to manage stock levels and product information.

Who invented the barcode and what was their inspiration?

The barcode was invented in 1951 by Norman Joseph Woodland and Bernard Silver. Their inspiration came from Morse code, translating the dots and dashes into thick and thin bars.

How did the barcode evolve after its initial invention?

The original circular barcode design was altered by George Laurer to a horizontal format in the early 1970s, making it easier to read by scanners. This design has remained relatively unchanged, featuring an array of black lines of varying thicknesses accompanied by numbers.

What was the first product ever scanned with a UPC code?

In 1974, a pack of chewing gum became the first product ever scanned with a UPC code, marking the beginning of barcode usage in commercial transactions.

How do barcodes encode information about a product?

Each barcode has a unique combination of lines that encode certain information about a product. This information can be translated into text and sent to a POS device, which can attach further details such as pricing and product description.

What are the key benefits of using barcodes in retail businesses?

Barcodes offer several benefits including simplified inventory management, improved accuracy, ease of implementation, real-time data insights, and the ability to scale business operations. They also save time and reduce overhead costs by automating various processes.

How does a barcode system improve the accuracy of inventory management?

Barcode scanners reduce the likelihood of clerical errors, leading to improved accuracy in inventory tracking. This enhanced accuracy helps with better ordering, costing, pricing, promotions, and loss prevention.

What are the different types of barcode scanners and their uses?

There are 1-D scanners that read simple barcodes on flat surfaces and are often handheld. 2-D scanners can process more complex codes like QR codes and can scan omnidirectionally. Alphanumeric scanners can also pick up SKU codes for more detailed product segmentation.

What is the difference between a UPC and a SKU?

A UPC (Universal Product Code) is a universal identifying code used across all retail locations, while a SKU (Stock Keeping Unit) is an alphanumeric code used internally within a single company to track inventory.

How does a UPC code help in the ordering, inventory, and checkout process?

A UPC code, consisting of black bars and a 12-digit numeric code, simplifies the ordering, inventory, and checkout process by providing a quick and standardized way to identify products across different retailers.

Why is implementing a barcode system considered a long-term investment for businesses?

Barcode systems are considered a long-term investment because they have remained effective and relevant over the past 50 years. The fundamental technology and associated hardware have not changed significantly, ensuring that the investment will continue to be valuable.

Outlines

00:00

🛒 Barcode Basics and Benefits

Michael introduces the importance of barcodes in inventory management, emphasizing their role in tracking products from entry to sale. Barcodes are highlighted for their simplicity and effectiveness, with a brief history starting from their invention in 1951 by Norman Joseph Woodland and Bernard Silver. The video aims to clarify the difference between barcodes, SKUs, and UPCs, and to reveal lesser-known benefits of barcodes in retail operations. Barcode scanning technology is shown to facilitate transactions and inventory management, offering accuracy, ease of implementation, real-time data insights, and long-term investment value. The summary also touches on the scalability of barcode systems and their time and cost-saving potential.

05:01

🔍 Understanding Barcodes, UPCs, and SKUs

This paragraph delves into the practical aspects of barcode usage, explaining how each barcode encodes unique product information that can be translated and displayed digitally. It discusses the evolution of barcode scanning technology, including the introduction of 1-D and 2-D scanners, each with their specific capabilities and applications. The paragraph also distinguishes between UPCs and SKUs, with UPCs being universal across retailers and SKUs serving as internal identifiers within a single company. The explanation includes details on how UPCs are structured, with different digits representing manufacturer and product information, as well as a check digit for authenticity. The summary concludes with an invitation to learn more about implementing UPCs and SKUs through KORONA POS, highlighting the software's inventory management features and offering a free trial.

Keywords

💡Barcode

A barcode is a visual, machine-readable representation of data, typically consisting of parallel lines of varying widths and spacings, along with a series of numbers. It serves as a unique identifier for products and plays a central role in the video's theme of inventory management. The script explains that barcodes enable merchants to track products from the point of entry to the point of sale, highlighting their simplicity and effectiveness.

💡Inventory Management

Inventory management refers to the process of overseeing and controlling the stock of goods available for sale. It is a key concept in the video, emphasizing the necessity for even the smallest retailers to streamline and optimize this process. The script mentions that barcodes are essential for inventory management, allowing for efficient tracking and organization of products.

💡SKU (Stock Keeping Unit)

SKU stands for Stock Keeping Unit, which is a unique identifier used by businesses to track and manage inventory at a granular level. In the context of the video, SKUs are mentioned as part of the basic inventory management tools that every retailer needs, alongside barcodes and UPCs, to effectively manage their stock.

💡UPC (Universal Product Code)

UPC is a type of barcode that is universal across all retail locations, consisting of a 12-digit numeric code. The video script explains that UPCs are used to identify products across different retailers and are crucial for simplifying the ordering, inventory, and checkout processes. The script also distinguishes UPCs from SKUs, noting that a product can have multiple SKUs but only one UPC.

💡POS (Point of Sale)

POS, or Point of Sale, refers to the location where a retail transaction is completed. In the video, POS systems are highlighted as integral to inventory management, as they interface with barcode scanners to process transactions and provide real-time data on inventory levels and product performance.

💡Data Capture

Data capture is the process of collecting and storing information, often through the use of barcode scanners. The video script discusses how barcodes facilitate data capture, allowing for the seamless translation of barcode information into digital formats that can be used for inventory management and sales tracking.

💡1-D Scanner

A 1-D scanner, or one-dimensional scanner, is a device that reads linear barcodes. The script mentions that these scanners are commonly handheld and are used to process information from simple barcodes on flat surfaces, playing a key role in the retail environment for scanning product codes.

💡2-D Scanner

A 2-D scanner, or two-dimensional scanner, is capable of reading barcodes that include squares, hexagons, dots, and other patterns in addition to lines. The video script explains that 2-D scanners can hold more information than 1-D scanners and can process QR codes, enhancing the capabilities of retailers to scan and interact with various types of barcodes.

💡QR Code

QR code stands for Quick Response code, which is a type of 2-D barcode that can be scanned using a smartphone or dedicated QR code reader. The script mentions QR codes as an evolution of barcode technology, offering additional functionalities such as scanning smartphone screens and connecting to URLs.

💡Efficiency

Efficiency in the context of the video refers to the ability to perform tasks with the least amount of waste, expense, or effort. The script discusses how barcodes and scanners contribute to efficiency in retail operations by streamlining the checkout process and reducing the potential for errors in inventory management.

💡Scalability

Scalability is the ability of a system or process to handle a growing amount of work or to expand as needed. The video script highlights that barcode systems are scalable, allowing businesses to expand to multiple locations with ease, as barcode data can be transferred and managed across different sites.

Highlights

Streamlining and optimizing inventory management is essential for all retailers, regardless of size.

Basic inventory management features like counts, SKU, and UPC management are necessary for all businesses.

Barcodes enable seamless tracking of products from entry to sale.

Barcodes are simple yet remarkably effective for inventory management.

Barcodes, SKUs, and UPCs are distinct and serve different purposes in inventory management.

Barcodes offer various benefits beyond their initial appearance, such as improved efficiency and accuracy.

Barcodes were invented in 1951, inspired by Morse code, and have remained largely unchanged.

The first commercial use of barcodes began in the 1970s with George Laurer's design improvements.

Barcodes encode product information, which can be translated into text and further information by POS devices.

Barcodes facilitate transactions and offer key benefits such as easier inventory management and improved accuracy.

Implementing a barcode system is straightforward and can be done in bulk for existing products.

Barcodes provide real-time data, helping businesses stay informed about inventory levels and sales.

Barcodes are a long-term investment, with a proven track record of effectiveness over 50 years.

Barcodes assist in business scaling, making it easier to expand to multiple locations with consistent data management.

Barcodes save time and reduce overhead costs by eliminating the need for full-time inventory managers.

Barcode scanners come in various types, including 1-D, 2-D, and alphanumeric, each with specific capabilities.

UPCs are universal product codes used across all retailers for streamlined ordering and checkout processes.

UPCs consist of a 12-digit numeric code and can have a shortened version called UPC-E for simplified inventory.

SKUs are internal, alphanumeric codes used by a single company for more in-depth product tracking.

KORONA POS offers a free trial and assistance in implementing UPCs and SKUs for effective retail inventory management.

Transcripts

Hi, it’s Michael back today from KORONA POS to talk barcodes.

Remember, streamlining and optimizing your inventory management is a necessity for even

the smallest retailers.

Some of you may not need more advanced features, like stock transfers or store orders, but

everyone needs basic counts and SKU and UPC management.

Such inventory management wouldn’t be possible without the barcode.

This clever invention allows merchants to seamlessly track all products from the moment

they enter your store until the point that they’re paid for and go out your door.

It’s truly remarkable for both its simplicity and effectiveness.

But there’s a bit more to them than initially meets the eye.

Barcodes differ from SKUs and UPCs.

And there are various types of barcodes.

Plus, there are some pretty cool benefits of barcodes that you might not have realized.

We’ve put together this FAQ video to help you navigate barcodes and how you can implement

them effectively at your store.

So what is a barcode?

The barcode was invented in 1951 by Norman Joseph Woodland and Bernard Silver.

Their inspiration came from Morse code, extending dots and dashes into thick and thin bars.

Despite not achieving much commercial success for several decades after its invention, the

structure and function of the barcode has remained relatively unchanged.

It still features an array of black lines of varying degrees of thickness.

These are accompanied by a set of numbers below them.

Barcodes began to be used commercially in the early 1970s after George Laurer altered

the original circular design to be horizontal and thus, more easily read by a scanner.

The series of parallel black lines separated by white could be easily scanned to facilitate

the checkout process or inventory management operations.

In 1974, a pack of chewing gum became the first product ever scanned with a UPC code.

The technology has evolved to QR codes and automatic identification and data capture,

though these systems also maintain the simplicity that made the barcode such a success.

But, how do barcodes work in practice.

Well, each barcode has a unique combination of lines.

Any given combination encodes certain information about a product.

This information can then be translated into actual text that appears on a digital screen.

Additionally, this information is sent to a POS device that can attach further information

once it’s scanned.

For instance, the barcode might contain the product name.

And once scanned, the POS machine pulls up the pricing, description, matrix, and more.

This relatively simple technology brings a whole lot of benefits with it.

Barcodes are a critical tool for nearly every retail business.

Aside from facilitating transactions, there are several other key benefits that they offer.

First and foremost, barcodes make inventory management much much easier.

Combine the scanning technology with your POS and reporting systems and you’ll get

significant insight into your products and how they’re each performing.

They also offer more accuracy.

With barcode scanners, there is a lot less room for small clerical errors.

And with improved accuracy, you’ll also improve your ordering, costing, pricing, promotions,

and loss.

Plus, overall, implementing a system of barcodes is remarkably easy, especially compared to

some of the other projects the average business owner has to deal with.

Data migration takes minutes and creating new UPCs and SKUs in your point of sale is

straightforward and can be done in bulk.

You’ll also get more insight into your business with real-time data.

As soon as a barcode is scanned into your inventory or as a sale is made, that change

is reflected in the backend of the system.

This notifies you when stock is low, connects to other sales channels so you don’t sell

something you don’t have in stock, and even communicates with suppliers for automated

reordering.

Additionally, it’s an investment that won’t be antiquated any time soon.

There’s a reason barcodes have hardly changed in 50 years.

They work.

And even though the technology has evolved in more recent years to add QR codes and SKUs,

the root of it and the associated hardware haven’t changed.

It’s an investment that will last.

Barcodes also help businesses scale.

Businesses can also easily expand their operation to multiple locations or franchises with ease.

All barcode data can be transferred to a new location, minimizing the time and cost of

growing your business.

Finally, it saves time, lowering your overhead costs.

There is no longer a need for a full-time inventory manager or stock person.

Plus, it automates several other processes, saving you even more time and money.

Now, how is a barcode programmed and processed?

In order to process a barcode, it needs to be scanned.

Scanners come in many shapes and sizes, but their job is to read the barcode information

and transport it to the appropriate system.

Scanners help retailers maintain great efficiency and accuracy by creating a seamless channel

for data entry into their POS software.

For retailers, this means sending the barcode information to the point of sale system.

The vast majority of merchants will use one or multiple of three types of scanners:

First, 1-D scanners.

These scanners read simple barcodes on flat surfaces.

They scanners process less information since the codes get physically longer as more information

is added.

Most 1-D scanners are the handheld “gun” model.

These must be pointed directly at the barcode and usually don’t come with omnidirectional

scanning capabilities.

The normal range is up to 2-feet.

2-D codes, on the other hand, hold a whole lot more information than 1-D. In fact, they

can hold up to 2,000 characters yet be physically smaller than a barcode.

This is because 2-D codes add squares, hexagons, dots, and other patterns instead of just using

lines.

Additionally, 2-D scanners can process QR codes, so retailers can use these to scan

smartphone screens, activate loyalty check-ins, upload images, connect to URLs, pull up menus,

play voice recordings, and more.

These scanners come in many different models, but each can scan omnidirectionally, helping

to facilitate a smoother checkout experience.

Finally either scanner can also pick up alphanumeric codes for SKUs.

Not every retailer will need them to do this, but bigger operations that need more product

segmentation will benefit from creating alphanumeric SKUs in addition to the standard UPCs.

But now you’re probably wondering, what a UPC is!

Short for universal product code, a UPC is an identifying code printed on retail items.

It consists of black bars that can be scanned as well as a 12-digit numeric code underneath.

UPCs, as the name suggests, are universal across all retailers.

It was created to simplify and speed up the ordering, inventory, and checkout process.

The first 6 digits of a UPC are used to identify the individual manufacturer.

Every product from a certain manufacturer will therefore have the same first 6 digits.

The next 5 digits are used to identify the individual product.

Each unique size, color, shape, etc. will get its own 5 digits.

Finally, the last digit is used to check the authenticity of the entire code and make sure

that the item rings up correctly at the checkout.

This is often referred to as the check digit.

Additionally, you might see a difference in UPC sizes.

While the 12-digit code is standard, there is a shortened version of the code that some

retailers use to simplify their inventory.

UPC-A refers to the standard length code.

The alternative code, or UPC-E is shortened by compressing unused zeros at the end of

the manufacturer code or the beginning of the product code.

Any manufacturer must apply with the Global Standards Organization to obtain a new UPC.

But what, you may ask, is the difference between a UPC and a SKU.

Most significantly, a UPC is universal across all retail locations, while a SKU is only

used internally within a single company.

So a product that is sold by multiple businesses will have only one UPC but multiple SKUs.

SKUs are used to help businesses track inventory.

They are alphanumeric codes that can be printed on a unique label or one attached to the UPC.

SKUs are not necessary for every retailer.

Only those that need more in-depth product reporting will benefit from creating SKUs.

Think of it as a supplement to UPCs.

Now for more information on how to implement UPCs and SKUs through your point of sale software,

click the link in the description.

KORONA POS has the best retail inventory management on the market.

With a free trial, we’ll upload your existing product line into your account so you can

see exactly how your SKUs and UPCs will work.

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