Will a Barcode System Solve Your Manufacturing Inventory Problems?

By Mike Hart

Manufacturing companies with chronic inventory problems pay a heavy price in terms of shortages, expediting costs, excess stock, wasted time, and missed deliveries. 

Will a barcode system solve these problems and guarantee inventory accuracy?  Not likely. 

What Causes Inventory Problems? 

Chronic inventory problems are symptoms of a poor process workflow out in the shop.  Purchasing is done manually and is driven by expediting.  Raw material and components are grabbed as needed without regard to bill of material specifications.  Inventory is updated well after the fact based on inaccurate bills of material.  Location control is lax or non-existent.  Frequent physical inventories are required. 

Bar Coding Can Help, But…

To be sure, bar code scanning will force you to stop some of these bad processes.  But a barcode system is no panacea. 

First of all, you need something to scan.  All kinds of things you buy for manufacturing do not arrive with barcodes.  Therefore, massive item labeling is required, which complicates the receiving process and creates potential bottlenecks getting items to stock or issued to jobs.    

Due to the efficiency of supply chains today, much of your purchasing is to order, which means that many items are received to work center staging areas for immediate use in jobs.  A lot of effort will be wasted identifying and labeling items for bar code scanning that get immediately consumed by your jobs. 

It Can’t Function All by Itself

You can’t implement a bar code system all by itself.  It must be integrated with the following processes -- PO receipts, job issues, job receipts, sales order picking, stock counts, and stock transfers.  If these processes are not operating smoothly in the first place, imposing a bar code system on top of bad processes has zero chance of success. 

Is It Really Needed? 

The fact is, if you get these basic inventory processes functioning correctly, using a manufacturing software system, your inventory problems will largely go away.  In other words, if you implement a good process workflow, you will likely conclude that little is to be gained with all the extra cost and effort required to implement and manage a barcode inventory system. 

Address Basic Processes First

Be wary of consultants or vendors that push bar code systems as the primary solution to inventory problems.   Any good consultant will stress basic processes first, such as maintaining accurate bills of material, using MRP settings and automatic PO generation, updating inventory in real time, and using cycle counting and location control.  Bar coding should only be considered after these processes are in place, when it can then be fairly judged whether it is worth the considerable time, effort, and cost.        

Mike Hart is the co-founder and President of DBA Software Inc., a leading provider of manufacturing software for small businesses.

Comments

[Clarence French]

This is essentially true, however barcoding can be used for ACCURATELY inputing and tracking job labor and job movement on the production floor. We have found that it is difficult to get employees to fill in travellers, timesheets and other documents accurately. Scanning would help to address this problem.

[Anthony Boyd]

the other benefit of barcoding is that the shop floor team don't need to be computer savvy. our shop floor team don't have any computer skills but asking them to learn windows and DBA is just beyond practicality.

[John Mayner - EPR consultant]

It is true that a bar code system helps a lot, I would say. After the implementation of sucha a system for a client of ours, they became 70% faster with organizing their inventory.

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This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone. Thnaks for sharing this post!

[Caroline Grandy]

DBA is so close to being ready for Barcode input.
It has the capabilities to print the labels at PO receipt & Inventory/Job receipt levels, therefore the labeling part is already automated... all that is missing is the Barcode (this applies to job travellers, packing slips, etc). As previously mentioned in the comments Barcoding is supposed to replace data input (by humans) which can have typing errors. We know this with the input of the labour entries (& boy there can be a lot to fix); this applies to anything when a person has to input data into the system.
I think that Mike Hart & your programmers at DBA need to re-think this very important & time saving tool.

[mike taylor]

We have recently started researching an ERP system for our small but growing company. Our exposure to military customers and support products demand a bar coding system. I dont beleieve bar coding functions can take the place of an oversight program for accountablity but we have to incorporate a bar coding system into our ERP system that we're now reviewing DBA for. I was hoping to find a seamless handshake within the DBA models.

Mike Taylor

[Maillot Bresil]

I would like this!!!