September 20, 2005
Volume 1 Issue 28        

Effective Implementation of Bar Code Technology can Cut Costs

One of the most difficult decisions in introducing new technology into your business is the inability to determine when you will recover your investment.  This also applies to bar code technology.

There are three areas when bar coding can save you money or add to your profitability.

     1.      Provide added value services to your customers.

     2.      Improve inventory accuracy.

     3.      Making your employees more productive.

We will examine each one of these areas and help you understand where they might apply in your business.  Since this newsletter addresses small to medium distributors and processors we want to focus on how the bar codes apply to your small and medium companies.

Provide added value services to your customers.

This is an area that is more focused on processors and manufacturers.  Most distributors and retail chains today require bar codes on the products you produce.  This has really become mandatory for most operations.  One of the observations I’ve seen in my visits to processors is they will provide bar codes for their customers, but will make little attempt to use those bar codes in their own business.  If you are applying UCC-128 variable weight bar codes, see Figure 1.

Figure 1

This bar code can be scanned very easily and will capture the random weight for billing purposes; and also, if formatted properly, will provide data for product recall purposes.  By 2006, Federal requirements will force more accurate tractability of products.  Waiting to conform to these requirements cannot only cost you more money, but will jeopardize your business’ survival.  If you have to put bar codes on, it is very practical to use them yourself.

Improve inventory accuracy.

The area of improving inventory accuracy is the biggest cost reduction opportunity.  There is no easier way to count and reconcile inventory than with bar code technology.  We see it every day in the auto parts store, grocery stores, and other businesses.  Shipping the correct product is another big area of cost cutting.  Using bar code shipping procedures can reduce runbacks, over ships, wrong ships, and incorrect weights.  One important tip is that if your inventory is not labeled in about 80% of your items, bar codes are not very effective.  This is probably one of the main reasons you guys haven’t deployed this technology.

Making your employees more productive.

This area is not trivial.  Bar coding physical inventories are extremely accurate and if deployed properly can speed up the process.  When using bar code technology for shipping, it is not only extremely accurate, but also allows pickers to be more productive.  Over ships, under ships, wrong picks, and weight inaccuracies can virtually be eliminated by using bar code centric shipping systems.  This not only saves your pickers time, but the time of many other employees.  

These technologies can be expensive to implement, so they should be phased in slowly with a careful eye on return on investment.  They are an excellent tool for controlling inventory; which has been discussed in previous newsletters where we have pointed out how good inventory control can bring solid bottom line savings to your companies.

BAR CODES MAKE SENSE TO REDUCE COSTS

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