/ What is Barcode?

What is Barcode?

By :Pooja

Updated : JAN 19 2026, 04:26 AM

A barcode is a machine-readable graphic used for product or person identification and storage of pertinent data about them. It is a square or rectangular image with a pattern of black and white lines of varying thickness and height. Known as bars, these lines show data that a barcode scanner or reader may scan and decode. A barcode serves primarily to enable quick, automatic tracking of data and easy access to information. Barcodes simplify inventory control, point-of-sale transactions, and other commercial operations by encoding data in a visual form, therefore improving speed and accuracy in many different sectors.

History of Barcodes

Barcodes have evolved since the early 20th century, including notable milestones. In the 1940s, machine-readable codes were proposed, but barcodes didn't revolutionise retail until the 1970s. The Marsh Supermarket in Troy, Ohio, performed the first barcode scan on June 26, 1974, launching barcode history. A multi-pack of Wrigley's Juicy Fruit chewing gum was scanned due to its size and barcode printing difficulty. Marsh Supermarket head of research and development Clyde Dawson was the first "shopper" to engage in the scan, while Sharon Buchanan was his cashier. The checkout equipment from the National Cash Register and the pricing machines from Hobart Corporation helped barcodes become widely used. This event, which launched the Universal Product Code (UPC), marked the beginning of barcodes' evolution from simple product identification to sophisticated, globally standardised systems used in retail, healthcare, and logistics.

Advantages of Using Barcodes

Barcodes become essential when business processes start relying on speed, consistency, and system driven decisions. They are not just identification tools. They act as control points inside operational workflows where accuracy and timing directly affect output, cost, and service levels.

1. Improved accuracy at operational control points

Every operation has moments where errors carry forward. Receiving goods, picking items, issuing invoices, or allocating assets are all points where a single wrong entry can disrupt downstream processes. Barcodes remove manual interpretation at these stages. Each scan confirms the correct item, quantity, or reference before the process moves forward. This prevents error accumulation across billing, reporting, and inventory reconciliation and helps operations stay predictable as volumes increase.

2. Faster execution of repeatable tasks

Operations depend on repeatable actions that must be completed consistently across shifts and teams. Barcode scanning reduces the time needed to perform these actions by replacing manual checks with a single scan. Stock updates, order confirmation, asset handovers, and returns processing all become faster and more consistent. When connected to operational systems, barcode scans trigger automatic status updates, which reduces delays caused by handoffs between teams.

3. Lower operational cost

As processes scale, manual verification becomes expensive and difficult to manage. Barcodes reduce dependency on experienced staff for routine tasks by embedding checks directly into the workflow. Using thermal labels for barcodes allows businesses to support high volume operations without increasing print or replacement costs. Fewer corrections, fewer exceptions, and fewer manual interventions translate into lower operating expenses over time.

4. Process visibility and traceability

Many operational issues arise not from lack of data but from lack of traceability. Barcodes create a time stamped record every time an item or asset moves through a process. This makes it easier to trace delays, identify process gaps, and verify compliance. In environments where movement is continuous, fixed-mount barcode readers enable automatic scanning without interrupting the workflow, ensuring consistent data capture even during high throughput operations. This visibility supports better planning, faster issue resolution, and improved process accountability.

Barcodes also simplify onboarding by reducing the need for process memorisation, ensure consistent execution across teams, and help operations remain stable as systems, volumes, and workflows evolve.

How Barcode Works?

Barcodes are strings of black and white bars with different widths that indicate numbers, characters, or other symbols. A laser or camera-based scanner reads a barcode's pattern and converts it to a system or computer-readable format.

Every scan represents a moment where a physical action is checked before it is allowed to move forward. What appears as a simple pattern of bars functions as a control signal that confirms whether a process step has been executed correctly.

Here’s a step-by-step guide to how a barcode works:

a. Barcode capture where decisions are made

Scanning happens at points where confirmation is required. Materials arrive. Assets move. Stock changes location. A scanner reads the bar pattern using light reflection and spacing recognition. That capture does not describe the item. It identifies it. The scan confirms that the right object has reached the right step before the process proceeds further.

b. From visual pattern to system identity

Once scanned, the pattern is converted into binary values based on zero and one logic. This value holds no business meaning on its own. Meaning is applied when the identifier reaches connected systems. ERP platforms interpret it as a material record. Warehouse management systems interpret it as a stock movement. Enterprise asset management systems interpret it as usage or custody change. The barcode becomes the shared reference across operational layers.

c. Validation before action

Systems do not act immediately. They check. Quantity rules. Location rules. Batch rules. Process permissions. In operational flows tied to material movement or equipment usage, barcode scans may work alongside SCADA driven controls to verify inputs before allowing transfers or consumption. This reduces reliance on operator judgement and keeps execution aligned with defined process logic.

d. Transaction logging and continuity

Each confirmed scan creates a time stamped record. Inventory adjusts. Assets change status. Process steps move forward. The update travels across systems that depend on consistent data. In complex operational flows such as the digitizing transfer process of commodities, barcode scans act as verification points that keep physical movement, automation signals, and enterprise records aligned without manual reconciliation.

Barcodes simplify data gathering and improve accuracy in inventory management, checkout, and asset monitoring, making them vital in modern business.

Components of Barcode

A barcode is designed so that machines can interpret it the same way across locations, systems, and workflows. Each component plays a specific role in ensuring the barcode can be scanned reliably, mapped correctly to master data, and processed inside enterprise systems. This is central to how barcodes work in detail within operational environments.

These are the main parts of a barcode:

a. Quiet zone:

The quiet zone is the blank space that appears before and after the barcode. It exists to isolate the barcode from surrounding print elements such as text, borders, or packaging graphics. Scanners rely on this clear boundary to detect where data begins and ends. Without a quiet zone, scanners may misread adjacent elements as part of the barcode, leading to failed or incorrect scans.

Operational value

Prevents scan failures on crowded labels and packaging
Ensures consistent readability across different printers and scanners
Supports high speed scanning in automated labelling systems

b. Number system digit:

The number system digit defines the category or classification of the item being identified. In UPC based standards, this digit signals how the rest of the code should be interpreted. It does not describe the product itself. Instead, it helps systems apply the correct processing logic when the barcode is scanned.

Operational value

Enables system level categorisation without manual tagging
Supports rule based processing in POS and inventory systems
Helps standardise data interpretation across trading partners

c. Manufacturer code:

The manufacturer code identifies the company responsible for the product. This code is assigned by GS1, the global standards organisation that governs barcode allocation. GS1 ensures that each manufacturer code is unique worldwide, which prevents duplication and conflicts across supply chains.

The presence of this code explains why barcodes remain consistent across retailers while pricing and internal identifiers change. The barcode identifies ownership and origin, not commercial terms.

Operational value

Ensures global uniqueness across suppliers and markets
Supports interoperability across ERP and supply chain systems
Enables seamless integration with partner and retailer database

d. Product code:

The product code is assigned by the manufacturer and distinguishes one item from another within the same manufacturer range. This code does not store price, tax, or discount information. Instead, it acts as a reference key that links the physical product to records stored in a database. This separation allows businesses to change pricing, availability, or attributes without reprinting barcodes.

Operational value

Supports dynamic pricing without relabelling
Enables accurate SKU level tracking across systems
Reduces rework during product updates or packaging changes

e. Check digit:

The check digit exists solely for validation. It is calculated using the preceding digits and allows scanners to verify that the barcode was read correctly. If the calculated value does not match, the scan is rejected.

This component prevents incorrect transactions from entering systems due to partial scans, damaged labels, or signal interference.

Operational value

Reduces transaction errors at scan points
Prevents incorrect inventory or billing updates
Improves data quality across automated workflows

Because of these parts, barcodes can store and send correct information about products, making them a useful tool for tracking, managing inventory, and setting prices.

How These Components Support Business Operations

Each barcode component contributes to operational stability in different ways.

Quiet zones support scan reliability in high density labelling environments and automated labelling systems
Number system digits enable rule based processing without manual classification
Manufacturer codes ensure global standardisation enforced through GS1 governance
Product codes enable database driven workflows where pricing and attributes remain flexible

Together, these elements allow barcode technology to function as a dependable identification layer across inventory management, supply chain execution, and enterprise reporting.

Barcode Applications in Various Industries

Barcodes increase productivity, decrease errors, and track items and assets in many enterprises. Below are some prominent barcode applications across industries:

1. Retail:

In retail, barcodes are utilised for pricing, inventory, and checkout. Fast and accurate barcode scanning speeds POS transactions. Fruits and vegetables use GS1 Databar barcodes for batch numbers and expiration dates. Stock management is simplified as expired products are not sold. Barcode systems simplify reordering and stock-out prevention by tracking stock levels in real time. Walmart and other big stores use barcodes to automate inventory and reduce stock checks. Barcodes link with payment systems, enabling UPI and digital wallet payments and improving checkout.

2. Healthcare:

Barcodes are useful in healthcare for patient tracking, prescription management, and equipment monitoring. Wristbands with patient ID and medical information barcodes reduce errors and improve care. Medication barcodes ensure that patients receive the appropriate prescriptions and dosages, boosting safety. Hospital Barcodes for Medication Administration (BCMA) systems reduce medication errors and improve patient safety. Barcode medication administration reduced drug mistakes at the Cleveland Clinic.

3. Logistics and Warehousing:

Logistics and warehouse management solutions track freight, inventory, and locations with barcodes. Due to its versatility, logistics uses Code 128 barcodes to track shipments, identify products, and manage warehouse inventory. Real-time supply chain tracking with barcodes reduces errors and ensures product placement. Barcode scanning helps UPS track and deliver shipments on time. This system saves time and updates clients on shipments.

4. Manufacturing:

Barcodes track industrial quality, assets, and processes. To assure quality and punctuality, barcodes track materials, tools, and equipment throughout production. Real-time quality inspections help manufacturers enhance product quality. For instance, barcodes help General Motors (GM) organise production line components. GM uses barcodes to eliminate errors and boost output. Asset management barcodes track and maintain machinery, decreasing downtime and extending life.

In short, barcodes improve operational efficiency, eliminate errors, and track products and assets across sectors. Barcodes boost company processes and help organisations remain ahead in today's fast-paced environment in retail, healthcare, logistics, and manufacturing.

Ways to use barcode

Barcodes can boost efficiency, streamline procedures, and improve consumer experiences. Companies in many industries use barcodes for retail management and security. Below are some significant barcode uses:

1. Retail and inventory management

In retail operations, barcodes act as transaction triggers rather than simple identifiers. A scan confirms the item, applies pricing logic, and updates stock at the same time. Inventory movement is recorded as it happens, feeding live data into inventory systems and, where applicable, a warehouse management system that controls replenishment and picking.