Comparison of Barcodes and RFID in Supply Chain Management


Lenin Karthikeyan
Assistant Professor - Senior Scale
School of Business
Manipal University
Dubai Campus, UAE


Barcodes plays an important role in the aspect of Supply Chain Management. Barcodes helps the business integration processes within SCM to be relatively easy, simple and efficient. Barcodes provide simple, direct, precise, reliable and affordable way of communicating and tracking information (data) about people, objects and documents.

What is a barcode?

A barcode is an optical machine-readable representation of data. A typical bar code usually consists - series of parallel, adjacent bars and spaces. These predefined bar and space patterns or "symbologies" are used to encode small strings of character data into a printed symbol.  Or in other words Barcodes are "printed horizontal strips of vertical bars used for identifying specific items". The first barcode system was developed around the 1940s and 1950s, since then people have become very accustomed to their use, through common applications such as in retail and grocery markets

Though for several years the usage of barcodes have been used in shipping and manifesting systems until now many warehouses are not aware of fully utilizing this technology. They are not realizing the fact that moving from a very manual operation to one that uses barcode technology can yield significant benefits like helping to reduce costs and increase the control of the warehouse operation.

Benefits of Barcode

  • There will be a significant decrease in clerical costs since barcodes eliminates the need for manual data-entry functions at the same time saving time and energy
  • Fewer errors
  • Increases in overall inventory accuracy
  • Ability to track employee performance that can increase productivity
  • Improved scheduling of warehouse activities
  • Barcodes will increase the document processing speed and can be used to associate related documents, expediting retrieval.
  • Automatic sortation of cartons and luggage on conveyor belts and palletizers.
  • Lot tracking.
  • Time/attendance and labour reporting.
  • Automating warehouse operations, including receiving, put away, picking and shipping.

Other advantages of using Barcodes are as follows:

    (i) Reduce cost incurred in maintaining excessive inventory levels
    Using barcode technology combining with Just-In-Time stock method allows companies to assess accurately when they run out of stock and proactively approach suppliers and place assignments to replenish stock levels. Thus barcodes indirectly reduces the dependence on huge buffer stocks.

    (ii) Advances Quality Control
    Barcodes capture information which include timelines, serial numbers, supplies used, and other vital information like location, identification etc. If a quality defect is detected or suspected in a batch barcodes enable quick identification of the affected units.  It also helps manufacturers to log information regarding destination to make sure that supply quality is maintained properly.

    (iii) Yield better returns on Investment

    The investment made in barcode technology is refunded in less time compared to other technologies that make an attempt to improve business performances. Top quality information captured by barcodes will allow tighter supply chain and established business processes and thus they provide an incredible value and gives high ROI for businesses.

    (iv) Cost Efficiency

    Using barcodes in a large scale reduce overhead cost and improve efficiency. This is achieved by eliminating human errors, increased visibility and reduction in labour.

    (v) Affordability

    The simplicity of barcodes is one of their most appealing aspects. According to Thompson 2003 since their inception, typical barcode printing costs have dropped to less than a cent per barcode As the two core ingredients used to produce a barcode are ink and paper, they will remain relatively inexpensive compared to alternative technologies in the near future, such as RFID that makes use of silicon chips

Uses of Barcodes

Barcodes have a multitude of uses in many industries and sectors from health care, insurance, Exhibitions to automotive industries and they provide tangible benefits like improving workflow, increase in security levels and facilitate a more streamlined checking and locating of stock. Some examples of barcode uses are:

  • In healthcare - A patient ID barcode is used on all associated documents relating to that person blood test result etc which enables easy and secure identification and association of information to that patient for their entire medical history.
  • Airlines - Airlines use barcodes on boarding passes to cross-check passenger details before boarding and to track passenger baggage
  • Events  Tickets are barcoded to enable automatic entry into the venue
  • Parcel tracking - Barcodes are used to track parcels and confirm delivery

Barcode labels come in many different forms depending on the way in which you intend to utilise them.

Types of Barcodes

Barcodes come in different types. But most of the widely used barcodes in Supply Chain Management belongs to two types. They are mainly 1D and 2D Barcodes.

1D Barcodes

Barcodes that represent data in widths (lines) and spacing's of parallel lines, are called 1 dimensional (1D) barcodes or symbologies, they are originally called as linear barcodes.
These 1D barcodes, called "Universal Product Codes", consist of 12 numerical digits. These barcodes can be seen in products which we use in our day to day life. These Linear barcodes developed into many different forms, and they were the standard for tracking products for decades. The low amount of storage space and lack of flexibility however, led to the development of the next type of barcode.

2D Barcode

2D barcodes or otherwise called "Matrix Code" available in patterns of squares, dots, hexagons and other geometric patterns. The advantage of 2D barcodes over 1D barcodes is that they boast a higher storage space and the ability to store more than just a handful of numbers. If we see the latest version they can store thousands of alphanumeric characters and some can even store characters from other languages! The most familiar form of these barcodes are QR codes, where the user can scan the code with their smart phone to decode the data rather than needing a special hardware scanner, like with 1D barcodes to do so

RFID  Technology

Barcodes have become a universal tool used by organisations in SCM since the early 1970s and it is now a multi-billion dollar business.  However, mounting pressure from  a variety of areas is driving organisations to further increase efficiency, which has  lead to the rise of RFID.  RFID which has been identified as an alternative technology to barcodes in SCM  uses "tags that emit radio signals and devices called readers that pick up the signal", with the ability to hold large amounts updateable information and is not limited by optical scanning. RFID tags can even be implanted in human and animal bodies. They work efficiently across visually and environmental challenging conditions such as human body, paint, smoke, fog, snow ice, and other, where barcodes and other optically read technologies do not work.

Some of the benefits of RFID tags over barcodes are related with the capacity to store information in the tags which is dynamic i.e. can be updated as and when required. RFID does not require line of sight for read outs and the tags can be read in a multiplexed fashion.  In addition these tags have the power to encompass specialized functionalities like monitoring of temperature, humidity etc which the barcode does not have.

Fig 1 shows the advantages and disadvantages of Barcodes vs. RFID


McCathie Luke and Michael Katina (2005),  Is it the end of barcodes in supply chain management?, University of Wollongong, research online.

McCathie (2004), The advantages and disadvantages of barcodes and radio frequency identification in supply chain management, University of Wollongong, thesis Collection.

Lenin Karthikeyan
Assistant Professor - Senior Scale
School of Business
Manipal University
Dubai Campus, UAE

Source: E-mail April 15, 2014


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