14.02.2009

Barcode Use in ERP Systems

For companies transitioning to or planning for ERP use in their organizations, ability to use barcodes constitutes a priority. This is such a hot topic that at times it is included in the list of critical goals of the ERP implementation. In fact, while many companies do not quite understand what barcode use will entail, they believe its use will solve many of their problems. So what exactly does barcode use provide for you and your organization? 

Barcodes defined and used internally in an organization actually serve as labels. They are nothing more than depictions as parallel lines of varying widths of the information and definitions specified for materials codes, job orders, materials lot numbers or serial numbers, for input to barcode readers and computers. Viewed as such, they might not be considered noteworthy. After all, this information is already contained within the system in terms of more meaningful character codes. But in reality, for an organization that has started its use of ERP, the essential importance of barcodes with respect to information flow cannot be overlooked. 

We can summarize the two benefits of barcode use in terms of ERP systems as follows:

 

  • Realization of rapid information flow due to rapid entry of data.
  • Completion of data entry with the minimum amount of errors.

 

Both of these two factors have in common the entry into the system of specific information by barcode reader devices. When viewed as such, barcode use may be considered as necessary only to utilize these barcode reader devices. In reality, the reader devices are the ones providing all of the benefits. 

In daily life, supermarkets and department stores are the places where we most encounter barcodes. At the checkout register, the barcode of the product we are purchasing is read in and the price is reflected directly onto our receipt. Now imagine a crowded store where the predefined codes for the items you are purchasing are manually entered in by the cashier. You can easily visualize the slow process, as well as the errors that will be introduced as nondescript codes of seemingly random characters are being entered. 

Let's now consider the example above for your own organization. You are using an ERP system, but the data that your system relies on is being entered by personnel who may not completely be at ease using computers. When a materials transaction takes place in your warehouse, you may not be certain whether the transaction incorporates the correct lot and serial numbers, or better yet, the correct materials code. And further down the line, you may face surprising results when an inventory count is performed. 

Again, using the same ERP system, you wish to have real-time access to production related information. However, how convincing will be the information you obtain from the system, if you have reservations about the accuracy and punctuality of the job completion data that has been entered for the corresponding job orders? It is more than likely that at the time you have to generate your report, the data from the production department have not yet been entered into the system. So in each such case, you will have to call certain individuals to get to the data in question. On the other hand, in case of an implementation where barcodes are used, operators that perform data entry relating to materials transactions in a warehouse do so by scanning in the labels of the materials using barcode readers. Thanks to these devices with fault rates of 1 in 3 million operations, you will minimize operator errors and monitor your inventories in a healthy manner. 

Let's now consider the same situation in terms of the capture of production data. Using barcode readers, the operator transfers into the system such information as job orders, operation codes, operator IDs, and job center codes, using data entry screens which require a minimum of data entry. In this manner you will have achieved rapid and error-free entry of data. As rapid and error-free data entry also implies real-time realization of these transactions, you will now have access to production start and end timestamps. If we assume that you are in a position to accurately calculate unit costs for your labor, equipment and prep. activities, then obtaining realized cost data for your products is no longer just a dream. 

What should be emphasized here is that barcode use should really be considered as a tool within the overall ERP system. The system itself is the entity that will be performing the transactions. Therefore, to obtain the most benefit and convenience from the use of barcodes, it is fundamental to have an ERP system software that operates correctly, and delivers its expected functionality. 

Ilhan Etemoglu 
Industrial Enginner