Beyond Counting Inventory—What Your Barcode Data Can Tell You

The information gathered by barcode scanners throughout a warehouse results in a wealth of individual data points. How much value they bring depends on the interpretation of the data once it is gathered. By coupling barcode data with warehouse management software, managers have access to the facts and figures they need to make data-driven decisions that optimize operations.  

Key takeaways:

1. Barcode data gives warehouse managers better control over operations, cost savings, and a way to measure success.
2. Data points from barcode scanning are the building blocks of metrics and key performance indicators.
3. By studying those KPIs, managers can make data-driven decisions about workflow, space utilization, and staffing.

Tracking the What, Where, Who, and When

Barcodes printed on paperwork like pick tickets, posted on storage racks, and of course affixed to the products themselves all tell managers the who, what, when, and where of their inventory. 

Let’s take a look at some examples as a barcoded product moves through the warehouse:

• A SKU’s size, weight, and category can dictate where it belongs in the storage area. As the product arrives in the receiving area, its barcode can tell the put-away staff the precise aisle, bay, etc. according to the warehouse’s rack labeling system. 
• Pickers scan the barcodes on items as they fulfill each order. This automatically updates inventory totals on the shelf. Not only does this give a real-time inventory count, it can also tell the put-away staff how many of the newly arrived products will fit in the storage area. 
• Data from the pickers’ scanners will show who picked which items, and how quickly. When linked with return information, this can also indicate who is responsible for inaccurate fulfillment. HR might use the information for performance reviews and rewards.
• Pick frequency of a certain item might make it clear that it should be in a forward-picking location, or at least in a place where it is easily accessible to all of the pickers. Data that shows how often two items are ordered together might call for some rearrangement of the shelves to make it easier on the pickers. It could even provide ideas for kitting.

Barcode scanning offers useful data points for managers such as: 

• Which (and how many) items are in the warehouse
• Each item’s location
• Who received, put away, picked, packed, or shipped the items
• When each of those movements happened

How Barcode Data Fits Into the Big Picture

Barcode scanning is a quick and convenient way to count inventory. But by itself, that’s all it is. True, simply by automating the counting, a warehouse can be more efficient. Counts are faster and more accurate. But there are many more ways the raw data collected on the warehouse floor can produce valuable information.

Better Control

When barcode data is captured in real-time and integrated with a WMS, it gives managers a clear picture of what is going on with their inventory—not only last week or yesterday but right now. Products are typically scanned at strategic points along their journey through the warehouse. This way, managers know the quantity, location, and status of everything at any given time—even if spread across several different warehouses. 

Scanner data can also tell a manager how long it takes an item to get from one scan to the next. Tracking this data might uncover bottlenecks or other inefficiencies that are affecting operations. 

For example, what if there is a significant increase in the time between scanning items as they are dropped off in the packing department, and when the package is complete and moves to shipping? Something is slowing down the packers. It could be inadequate packing supplies, a slow label printer, or the addition of a new task like including sales flyers in each box. Once they find the issue, managers can work on a solution.

Savings

Making things more efficient saves money. So does keeping inventory levels in the sweet spot between overstocking and running out. 

Too much inventory on the shelves wastes money by increasing carrying costs, while insufficient stock results in backorders and unhappy customers. Barcode scanning helps managers keep an eye on quantities in real time. For example, it can tell the WMS precisely when stock reaches the preset quantity that triggers an alert for reordering. 

Replacing manual tasks with scanning also means more accurate fulfillment. There is less chance of pickers grabbing the wrong item off the shelf, resulting in fewer costly returns.

Measuring Success

The concept of comparing metrics and measuring key performance indicators for strategic decision-making is familiar to warehouse managers. Managers can set various benchmarks that serve as a comparison of their analytics to past performance and industry standards. Barcode scanning provides the data points that go into the KPIs that are most meaningful for the company.

Barcode scanning automatically compiles this data and presents it in real-time to warehouse managers so they can solve issues as they arise. Managers also have a bird’s eye view of long-term trends from the collected data to make slower changes over time, which can have a big impact on a warehouse’s operations and efficiency.

Translating Data Into Useful Metrics

Warehouse managers base the metrics and KPIs they follow on the company’s strategic goals. These often align with and address the pain points felt by the operation itself and its customers.

Below are some examples of common goals and pain points and the corresponding data that can provide solutions. The data that informs these is collected, in part, from barcode scanning:

Customer Satisfaction

Item fill rate  → measures how much of each order the warehouse is able to fulfill.

Order cycle time → shows how long it takes for a customer to receive their order after placing it.

Efficiency

Returns due to incorrect orders → shows where accuracy is lacking.

Order fulfillment time → tracks each employee’s productivity.

Put-away time →  is important to track, as pickers can’t pick what is in the warehouse but not yet on the shelf.

Inventory Management and Sales

Days on hand → can show several things, such as when a product is no longer in demand. It is also important for products with expiration dates. The amount of time spent on the shelf can result in higher carrying costs too.

Product velocity → when viewed historically, can indicate seasonal highs and lows.

Making Data-Driven Decisions

Tracking metrics like the ones above gives managers the information they need to make decisions about the workflow, space, and staffing needs in their warehouse.

For example, if the barcode data shows an increase in demand for a certain product or a slowdown in the supply chain, it can help them tighten up their replenishment processes. When linking these data points with WMS information, managers can spot anomalies, connect to their supply chain partners, or manage the workflow over more than one sales channel.

Managers can use scanned barcode data to ensure that their warehouse layout is optimized for efficient fulfillment. When order fulfillment lags due to bottlenecks, they can rearrange pick paths, processes, or locations for better accessibility. Sales velocity will show what needs to be in forward picking areas. On the flip side, it can indicate what is out of season or not selling well, and can therefore be stored in an out-of-the-way place—or even discontinued. 

In the case of a company with multiple warehouse locations, real-time inventory data can drive the decisions to move inventory from one location to another.

Barcode scanning reduces clerical and data entry tasks, freeing up staff for other work. Beyond that, scanning data can play an important role in scheduling. For example, if unloading and put-away is not done in a timely manner, picking could finish for the day leaving orders unfulfilled. The manager may decide to add personnel in receiving, authorize overtime for the pickers, adjust orders from vendors so shipments arrive earlier, or any number of other solutions.

Counting Inventory Is Just the Beginning

Using barcodes to automate the inventory counting process is a great first step. But barcode scanning does much more for a warehouse than that. Data points from scanners throughout the warehouse offer a wealth of information about the inventory, the workers, and the processes in place. Managers can leverage that data to measure the metrics and KPIs. This practice will help managers reach their goals for a more efficient and profitable warehouse.

Infoplus products provide useful tools like alerts when a KPI misses its mark. Managers can track goals automatically, while viewing all of the relevant data points arranged on an easy-to-read dashboard. Contact us today for a demonstration.