Barcoding 101 for Manufacturers:

What You Need to Know to Get Started

Plex Online At a Glance

White Paper • This paper highlights what manufacturers need to
know to take advantage of barcoding to improve their
business performance.

• The benefits of barcoding are improved accuracy,

efficiency and traceability, along with an ease in
adhering to customer or regulatory requirements.

• Implementing barcoding as part of an integrated SaaS

solution enables manufacturers to optimize
its benefits.

• Examples from real-life manufacturers highlight how

barcoding helps improve operations for companies of all
sizes and in many different industries.

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Barcoding, also known as Automatic Identification (Auto ID), is a method of

encoding information into a machine-readable pattern of predefined bar and
space patterns that can be quickly and accurately read by a scanner and a
computer. Part numbers, purchase order numbers, lot numbers, or any other
information can be encoded into a barcode.

The basic operation used in barcoding is quite simple. A barcode containing

product data is printed on, or adhered to, a product. That code is read by
a reader with a photodiode that can record the light patterns. The scanner
then produces an electronic signal that exactly matches the printed barcode
pattern, and sends the barcoded information to a computer where the data
is decoded and recorded just as if it had been entered by hand. Barcoding is
used for product identification and tracking in almost all industries, including
manufacturing.

“Barcoding enables users to work faster

and eliminates the need to correct data
entry errors.”

Benefits
The benefits of barcoding include the following:

Improved Accuracy
Precise data produces accurate reports on any operational function of a
company, leading to better quality products, improved decision-making, more
accurate forecasting, and reduced costs. The typical accuracy rate for human
data entry is 1 error per 300 characters. With barcode scanners, the accuracy
rate can be a good as 1 error in 36 trillion characters. For most manufacturers
the goal is 100 percent accuracy, and barcoding is the best tool to achieve that.

Improved Efficiency
Barcoding enables users to work faster. Depending on the operation or
application, there is significant time savings in using barcoding vs. using a
keyboard. Barcoding also eliminates the need to correct data entry errors.

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Consider the time required to record the receipt of ten cartons. It would
take approximately two minutes or more to write down product codes and
serial numbers compared to about ten seconds to scan the barcodes. Because
barcoding captures data in real time, decisions can be made more quickly
and this, in turn, speeds production. In addition, barcoding helps companies
make more effective use of human resources. A shipping/receiving dock does
not need a person dedicated to counting inventory if it is scanned as it is
unloaded.

Improved Traceability
Since barcodes permit automated and more accurate recording of information,
work in progress can be tracked precisely. Quite a bit of time can be spent
tracking down the location or status of projects, folders, tooling, instruments
such as gages, materials, or anything else that moves within an operation.
Barcodes help users more quickly isolate quality, warranty, or safety issues
while minimizing disruption to production. Users can better identify defects,
reducing in-process costs and virtually eliminating the need for product recalls.

Ease in Adhering to Customer or

Regulatory Requirements
Over time, manufacturing industries and large
customers, such as the U.S. government, have
developed product coding standards for their
suppliers. Uniform barcoding patterns, or
“symbologies,” have been pre-established to
automatically meet these standards.

Very often, regulatory agencies, or customers, impose the standards as strict

requirements for their suppliers. The uniform coding and data collection
enabled by barcoding ensure that correct product data is captured and
relayed in a manner that is universally compliant.

Best Practices
Today’s manufacturers utilize barcoding in all areas of their businesses. Here
are some examples:

• Metalform manufacturer improves shipping and receiving operations.

A multi-state metalformer uses scanners in its Shipping and Receiving
operations to scan arriving material and departing products. Barcoding

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has replaced the company’s previous manual processes and accelerated

the department’s operations, leading to improved supplier and customer
satisfaction.

• Automotive manufacturer enhances assembly checking and component

tracking. A provider of forged metal components to the automotive
industry has been using barcoding to track assembly and locate parts in the
production process. Employees scan incoming components and upload the
scanned data. That data then is automatically compared with bills of lading
to ensure correct assembly sequencing. As the parts undergo various stages
of assembly, employees use handheld readers to scan them and denote
their new locations.

• Assembly supplier establishes direct part marking, gains new business.

An automotive assembly supplier had an opportunity to win new business
from a customer that required encrypted direct part marking for all of its
incoming parts. By launching a customized barcoding process, the supplier
was able to establish such a process and obtain the business. Today, each
part the supplier produces is identified by a unique serial number, and
that number is encrypted in the barcode. The encryption offers counterfeit
protection demanded by the customer which had, in the past, been required
to pay warranty costs on the failure of (counterfeit) components that it
hadn’t actually manufactured.

• Global manufacturer handles physical inventories in half the time.

A global supplier of vibration damping and sealing materials has been
utilizing barcoding for several years. Among the advantages barcoding
has brought to its operations is a speedier physical inventory process.
Before it implemented barcoding, the supplier’s semiannual physical
inventories took two full shifts and at least 60 employees. Now that all
products are barcoded and lift trucks are equipped with scanners, the
entire process takes less than one shift, two trucks have been redeployed,
and eight fewer employees are required to complete the process.

• Food manufacturer improves traceability and cost tracking. A leading

global manufacturer of frozen entrees and sauces barcodes its work-in-
process inventory. The company produces more than 400 food products,
each based on a different recipe. When an employee scans a barcode on a
work order, it shows all the items required for that step in the product’s

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recipe. The employee then scans the pre-measured and barcoded raw
materials for the step to ensure that the product contains the right
ingredients. This process is more efficient and accurate than the previous
manual process. The barcode data also enables the company to improve
its products’ traceability and monitor production. Barcodes are also used
for tracking of employees’ hours in all departments, and in the distribution
and shipping areas for warehouse pick lists. All of this data feeds into cost
calculations on a real-time basis.

Industry and Customer Requirements

Manufacturers who embrace barcoding
will need to familiarize themselves with
“Now that all its
the barcode symbologies required by
products are their customers or industries, and even
barcoded, one more important, they will need to select
the best software or software system to
company completes meet their needs.
physical inventories As mentioned earlier, there are a variety
in half the time and of barcode symbologies, or bar/space
patterns, in use today and each has a
with eight fewer different capability to encode data.
employees.” The UPC symbologies used in retail
applications contain 12 numeric digits,
for instance, and are considered the simplest form. General purpose Code 39
or Code 128 symbologies can encode variable-length alphanumeric data up
to about 30 characters in length.

Data Matrix symbologies are the most advanced and complex forms. They
are made up of two-dimensional matrices of black and white “cells” vs. bars.
The most common uses for Data Matrix symbologies are for small parts and
products as they can encode up to 50 characters into very small barcodes,
readable at sizes as small as 2 or 3mm2.

Most manufacturing companies that utilize barcoding follow symbology

standards established by their industries.

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Software Systems
Once they have become familiar with their symbology requirements,
manufacturers need to select software systems to drive their barcoding
applications. The software is what accumulates and processes the barcode
information entered through
the scanners.

Many existing computer systems are

capable of interacting with barcode
technology, or a simple barcode scanning
device can be connected to computers
in its network that can automate the
input of barcoded data just as if it were
manually keyed, creating stand-alone
“island” barcoding operations. However,
software can be very inefficient if it was not
designed to work specifically with barcodes. Many applications have not been
designed to use automated data collection and therefore won’t provide all of
the benefits associated with barcoding.

That’s why it’s important that whichever Enterprise Resource Planning (ERP)
software system manufacturers utilize, they should ensure their system has
been specifically designed to work with barcodes. In island systems, the
barcode printer has no direct interaction with the rest of the manufacturing
enterprise; but when it is part of a “barcode-aware” ERP system, the
printer can take direction from other processes and print and encode data
automatically when the server directs it to. Better yet, today’s manufacturer
should consider utilizing a Software as a Service (SaaS) solution which
includes fully integrated applications for virtually every operation.

Equipment Needs
ERP systems providers who focus on manufacturing are generally well-
equipped to advise their customers which printers and readers they need to
perform their barcoding printing and scanning, or to provide the equipment
as part of their overall business agreements.

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There are three types of printers suitable for barcoding: laser, direct thermal,
and thermal transfer. In addition to printers, barcode users also need to obtain
readers. There are three types of readers available: fixed, portable batch, and
portable radio frequency (RF).

Portable batch readers are the type of readers most commonly used in
manufacturing. They store data for later batch transfer to a host computer.
The most common batch reader is the “wedge,” which is attached through the
keyboard interface, physically wedged
between the keyboard and the computer
“The software is
or mainframe terminal as a second
what accumulates keyboard.

and processes Barcoding equipment may be purchased

information entered separately. However, it is important
that the levels of complexity between
through scanners” barcodes, printers and readers are closely
aligned or they may not operate smoothly.

System-Wide Improvements
As barcoding takes hold in manufacturing, it is important for companies to
be ready to take full advantage of it. For instance, once data entry on the
production line is automated, can the company increase its production? If
each product now has a unique barcode, can the company fulfill customized
solutions? Once inventory is monitored in real time, can the company’s
warehousing costs be trimmed? There are many hidden gains to barcoding
that can only be experienced if barcoding is approached with the big picture
in mind.

While barcoding has limited benefits when used to perform isolated functions,
it has virtually unlimited potential when it is part of an integrated system
supported by improved business processes. These are the main reasons
manufacturers exploring barcoding are wise to consider the solutions offered
by ERP systems providers like Plex Systems.

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Plex Online Makes Barcoding Part of

Competitive Advantage
The best practices described in this document are the real-life
experiences of Plex Online users. They reveal the ways that an integrated
SaaS systems solution can help manufacturers use barcoding to achieve
quantifiable business results.

Plex Online, developed by Plex Systems, is a SaaS solution that includes

fully integrated barcode printing and scanning capabilities, including all of
the functions described in this paper. Plex Online offers industry-leading
features for virtually every department within a manufacturer, including
Manufacturing Execution Systems (MES) and Quality Management Systems
(QMS) for the shop floor, Customer Relationship Management (CRM) for
sales and marketing, Supply Chain Management (SCM) for procurement,
and ERP for finance and management. Plex Online’s fully integrated model
delivers a “shop floor to top floor” view of a manufacturer’s operations,
enabling management to run its business at maximum efficiency.

*“Measuring the ROI of ERP: Keeping Projects Alive Just When You Need Them the
Most” benchmark report by Aberdeen Group, a Harte-Hanks Company.

About Plex Online

Plex Online, built on a “Software as a Service” (SaaS) model, offers more than 350 functional modules, providing
manufacturers instant access to vital information and management functions using a simple Web browser. The
on-demand solution features product lifecycle management (PLM) functions such as program and change
management, enterprise resource planning (ERP) functions such as accounting and finance modules, customer
relationship management (CRM) features such as order entry and tracking, manufacturing execution systems
(MES) functions such as production scheduling and machine integration and supply chain management (SCM)
functions such as supplier quality and traceability.
www.plex.com

www.plex.com | 1.888.454.PLEX
No. 1 Rated ERP Solution for Manufacturers