Warehouse Barcode Systems: Setup and Best Practices

A warehouse barcode system uses scannable labels on storage locations, products, and shipments to track inventory movements in real time through a warehouse management system (WMS). Without barcodes, warehouse pick error rates run 1-3% according to the Warehousing Education and Research Council (WERC). With barcode-verified picking, error rates drop below 0.1% — a 10-30x improvement. For a warehouse shipping 1,000 orders daily, that's the difference between 10-30 mispicks and near-zero. This guide covers the equipment, barcode formats, and scanning workflows that make barcode systems work.

What to Barcode

Location Labels

Every storage position in your warehouse needs a unique, scannable identifier:

• Rack locations: Each bay, level, and position (e.g., A-01-03-B = Aisle A, Bay 01, Level 03, Position B)
• Bin locations: Smaller storage units within racks
• Floor locations: Staging areas, dock doors, quality hold areas
• Bulk storage: Pallet positions in bulk or floor-stack areas

Location barcodes use Code 128 because it handles alphanumeric location codes efficiently. Print these on durable labels — warehouse location labels should last years, surviving dust, humidity, and forklift traffic.

Product Identification

Products entering your warehouse already carry barcodes:

Individual units: UPC-A or EAN-13 on consumer packaging. Scan these when picking individual items for orders.

Cases/cartons: ITF-14 on outer shipping cases identifies what product is inside and at what packaging level. Scan at receiving to log case-level inventory.

Logistics labels: GS1-128 on supplier shipping labels encodes GTIN, batch number, expiry date, and quantity. Scan at receiving to capture all supply chain data in one scan.

If your products don't carry barcodes (raw materials, custom items, bulk goods), create internal barcodes using Code 128 with your own SKU or part number system. Our Code 128 generator creates these labels free.

Internal Labels

Beyond locations and products, consider barcoding:

• Pallet license plates: Unique identifiers for each pallet, linking to contents
• Equipment: Forklifts, pallet jacks, carts — for maintenance tracking and assignment
• Containers: Totes, bins, and reusable containers that move between locations
• Dock doors: For automated routing of inbound and outbound shipments

Equipment

Barcode Scanners

Key scanner specifications to evaluate:

• Scan distance: How far the scanner reads reliably. Warehouse scanners typically read from 15cm to 15m depending on model and barcode size.
• Drop rating: Rugged scanners survive 1.5-2m drops onto concrete. Consumer devices don't.
• Battery life: A full-shift battery (8-12 hours) prevents mid-shift charging downtime.
• Scan speed: Dedicated scanners decode in under 100ms. Smartphones may take 500ms-2s.
• Connectivity: Wi-Fi for real-time WMS updates. Bluetooth to pair with mobile devices. Some scanners store scans locally and batch-upload.

Label Printers

Thermal transfer printers use a ribbon to print on labels, producing durable barcodes that resist fading, moisture, and abrasion. Use for location labels and any label that needs to last months or years.

Direct thermal printers use heat-sensitive label stock — no ribbon needed. Labels fade over time (weeks to months) when exposed to heat or sunlight. Use for shipping labels and short-term identification.

Labels and Media

• Location labels: Use polyester or polypropylene with thermal transfer printing for maximum durability. Adhesive should be permanent and rated for your warehouse temperature range.
• Product labels: Standard paper labels work for normal environments. Use synthetic materials for cold storage or high-humidity areas.
• Shipping labels: Standard 4x6" direct thermal labels are the industry norm for carrier labels.

Warehouse Management Software (WMS)

Your barcode system needs software that translates scans into inventory transactions:

Entry-level options ($0-100/month):

• Spreadsheet + scanner (manual process, works for very small operations)
• Free/low-cost inventory apps (inFlow, Sortly, Stockpile)
• Our web-based scanner for occasional lookups and verification

Mid-range WMS ($100-500/month):

• Fishbowl, SKULabs, ShipHero
• Support receiving, putaway, picking, shipping workflows
• Integration with e-commerce platforms and shipping carriers

Enterprise WMS ($500+/month):

• NetSuite WMS, SAP EWM, Manhattan Associates
• Advanced features: wave planning, slotting optimization, labor management
• Suitable for large, complex operations

The WMS dictates your barcode workflow — when to scan, what to scan, and what actions follow each scan. Choose software before designing your barcode system, as the WMS requirements determine barcode format, label content, and scanner specifications.

Core Workflows

Receiving

When shipments arrive at the dock:

1. Scan the dock door barcode to record which door the shipment arrived at
2. Scan each case barcode (ITF-14 or GS1-128) to log received inventory
3. Verify quantity against the purchase order or advance ship notice (ASN)
4. Assign a putaway location — the WMS suggests optimal locations based on product velocity, size, and storage rules
5. Print pallet license plates if palletizing received goods for bulk storage

Benefits: Eliminates manual count sheets, catches short-ships and wrong-item deliveries immediately, and creates a timestamp record of when inventory entered the warehouse.

Putaway

Moving received inventory to storage locations:

1. Scan the item or pallet barcode
2. Scan the destination location barcode
3. Confirm the putaway in the WMS

The WMS now knows exactly where every item is stored. This eliminates "where did we put that?" searches and enables directed picking.

Picking

Fulfilling orders by collecting items from storage:

1. Receive pick list on scanner or mobile device (directed by WMS)
2. Scan the storage location to confirm you're at the right spot
3. Scan the item to confirm you're taking the right product
4. Confirm quantity picked

Pick accuracy: Without barcodes, pick error rates typically run 1-3% (1-3 wrong items per 100 picked). With barcode-verified picking, error rates drop below 0.1%. For a warehouse shipping 1,000 orders daily, that's the difference between 10-30 customer complaints and near-zero.

Packing and Shipping

Preparing orders for shipment:

1. Scan each item being packed into the shipping container
2. Verify all items match the order
3. Generate shipping label with carrier barcode (Code 128 for tracking number)
4. Scan the shipping label to confirm label matches the order
5. Scan the dock door or carrier bin for outbound routing

Cycle Counting

Ongoing inventory accuracy verification:

1. WMS assigns count tasks for specific locations
2. Scan the location barcode
3. Scan each item in that location
4. Report count — WMS compares to expected inventory
5. Investigate discrepancies when counts don't match

Regular barcode-based cycle counts maintain inventory accuracy above 98%, compared to 85-95% accuracy common in manual-count warehouses.

Implementation Steps

Phase 1: Foundation (Week 1-2)

1. Map your warehouse — document every storage location with a consistent naming scheme
2. Choose barcode formats — Code 128 for locations, match supplier formats for products
3. Generate and print location labels using our barcode generator
4. Install location labels throughout the warehouse

Phase 2: Equipment (Week 2-3)

1. Deploy scanners — start with receiving and shipping stations
2. Set up label printers — at receiving (for internal labels) and shipping (for carrier labels)
3. Configure WMS — connect scanners to software, define scan workflows
4. Test end-to-end — process test transactions through receiving, putaway, picking, and shipping

Phase 3: Go-Live (Week 3-4)

1. Train staff on scanning procedures and WMS workflows
2. Run parallel with old system for 1-2 weeks to catch issues
3. Conduct full physical inventory using barcode scanning
4. Switch to barcode-only operations once confident in accuracy

Phase 4: Optimization (Ongoing)

1. Monitor scan compliance — are all required scans happening?
2. Track error rates — compare pre-barcode and post-barcode order accuracy
3. Adjust workflows — refine pick paths, storage locations, and scanning steps based on real data
4. Expand coverage — add barcoding to areas not yet covered (quality hold, returns, etc.)

Common Mistakes

Skipping location labels: Barcoding products but not locations means you still can't find anything. Location labels are the foundation of a warehouse barcode system.

Using consumer-grade equipment: A $30 Bluetooth scanner works at a desk. It breaks on the first warehouse floor drop, can't scan from forklift distance, and dies mid-shift. Invest in warehouse-rated equipment.

Over-engineering the first implementation: Start with receiving, putaway, picking, and shipping. Add advanced features (wave picking, cross-docking, labor management) after the basics are solid.

Not training staff: Scanning is simple, but understanding why each scan matters — and what to do when a scan fails — requires training. Untrained staff develop workarounds that defeat the system's accuracy.

Ignoring label durability: A location label that fades in 3 months or falls off in cold storage creates a gap in your system. Match label materials to your environment.