What Is a Purchase Order? The Complete Guide

It’s hard to imagine the modern world without barcodes. They are on almost every product we buy, from food to clothes to electronics. We tend to take it for granted that this technology will be there to make our lives easier.  But have you ever wondered about the history of barcode technology and barcode scanners? Have you asked yourself: When was the barcode invented, and how did it become so ubiquitous? In this article, we’ll answer those questions and take a brief look at the history of this fascinating technology. What Is a Barcode? Let’s start by explaining what a barcode is. A barcode (often spelled as two words, ‘bar code’) is a machine-readable representation of data typically used to track inventory or products. Barcodes can be found on almost any consumer product today, from food items in the grocery store to books at the library.  Barcodes work by encoding data in a series of parallel lines of varying widths. The widths of the lines are read by a scanner, which converts them into digital data that a computer can process. Before we delve deeper into the barcode history, here are the most common types:  The Universal Product Code (UPC), used on almost all retail products in the United States The European Article Number (EAN), mainly used in Europe International Standard Book Number (ISBN) A Barcode Scanner A barcode scanner employs data capture technology to read barcodes on products in retail stores, identification cards, and postal mail. A typical scanner consists of three main components: an optical reader, a decoder, and a cable connecting the two.  The optical reader is the part of the product code scanner that "reads" the lines in a barcode by shining a light on it and converting the reflected light into an electrical signal. This signal is then sent to the decoder, which converts it into digital data that a computer can read. The First Barcode We’ll take you back to 1948, the year when the first barcode was invented and created by Bernard Silver, a graduate student at Drexel Institute of Technology in Philadelphia, and Norman Woodland, an inventor and a Drexel alumnus.  The two men came up with the idea while working on a project for a local supermarket chain, whose owner asked the institute for help in developing a way to read product information automatically during checkout. The barcode history timeline continues with Silver and Woodland realizing that a system of lines and spaces could be used to encode information that a machine could read. They got the idea from Morse code, which uses a series of dots and dashes to represent letters and numbers. The initial barcode was designed as a “bull’s eye” made up of a series of concentric circles. Silver and Woodland filed a patent for their invention in October 1949, but it was in 1952 that it was patented. However, a powerful 500-watt incandescent bulb they had built into it and a bulky oscilloscope didn’t make the system practical enough for commercial use.  Collins at Sylvania and KarTrak System The next figure in the turbulent history of barcodes was David Jarett Collins, an engineer at Sylvania Electric Products Inc. He was among the first to realize a need for an automated system to track and identify railroad cars. Working on a problem, he developed a KarTrak ACI (Automatic Car Identification) system in the 1960s.  The system used a pattern of blue and orange reflective stripes applied to the sides of railroad cars. A photoelectric sensor was used to read the stripes and could automatically identify a particular car as it went by.  Collins’s system is yet another piece of the puzzle that answers the question, “When was the barcode invented?” It was a much more efficient and upgraded version of the original Woodland-Silver barcode.  The new method soon became widely accepted and was set as the US standard in 1968. However, it was abandoned in the late 1970s due to technical difficulties, high costs, and poor read accuracy. A Gamechanger - The Introduction of Lasers Collins formed the Computer Identics Corporation in search of a new market for his barcode technology. This time he turned to helium-neon lasers, which were invented in 1960 by Theodore Maiman.  Lasers are, obviously, more precise than the 500-watt incandescent bulbs Silver and Woodland were using and can be focused into a very fine beam of light. This made them ideal for reading barcodes. Much before the first barcode scanner was invented, Collins incorporated a mirror that enabled the code to be reached from multiple angles, making things much easier and more reliable.  Collins and his Computer Identics Corporation installed the new barcode scanning system at a General Motors factory in Flint, Michigan, in 1969 to monitor the production of car axles. This marked the start of barcodes’ commercial journey. UPC Is Born After the successful installation at General Motors, the next step was to develop a system to be used on all products in a store. In 1966, the National Association of Food Chains (NAFC) formed a committee to develop such a system. RCA Corporation was among the committee’s members, and as it purchased the rights to the Woodland-Silver patent, it became one of the main players in the history of the barcode. However, the winner of the unique technology race was IBM, with its linear UPC (universal product code) system, which was ultimately selected as the NAFC standard instead of RCA’s bullseye code. The UPC was first scanned commercially on June 26, 1974, on packages of Wrigley’s chewing gum at a supermarket in Troy, Ohio. The barcode had finally arrived as the standard for product identification and tracking.  The UPC code consists of 12 digits, with the first six digits identifying the manufacturer, the next five identifying the product, and the last check digit used to verify that the barcode has been read correctly. The Usage of Barcodes Today Since the barcode invention and commercial deployment, retail has never been the same. Barcodes have become an integral part of our lives and are used in various ways.  We use them to track inventory, for security purposes, in libraries, print labels, and get information about a product. In addition, barcodes are utilized in many other industries, such as health care, manufacturing, and transportation. With the development of POS systems (point of sale), barcodes have become even more important, as they are used to price and track products at the time of purchase. In libraries, books’ ISBNs (international standard book numbers) are now barcodes used to keep track of inventory. Knowing barcodes’ origin, one could barely imagine their usage in hospitals. Yet barcodes are now printed on patients’ wristbands to help reduce medication errors. Barcoded tickets are also widely used at airports and concert venues to help keep track of people and prevent counterfeiting.  Indeed, barcodes have come a long way since their humble beginnings and continue evolving as our needs change. The Introduction of QR Codes In the 1990s, barcodes took another leap forward with the introduction of QR codes (also known as matrix-based 2D codes). QR stands for “quick response,” and these two-dimensional barcodes can store more information than traditional barcodes.  They contain the finder, alignment, and timing patterns that serve to determine the code’s orientation, distortion, and coordination.  When was the matrix barcode invented, then? The QR code history started with the Japanese corporation Denso Wave in 1994 when they were developed to track vehicles during the car manufacturing process at Toyota. In the beginning, they were simple 2D codes, but they continued to develop until the Japanese Industrial Standards (JIS) registered QR codes in 1999.  Later, new forms of the code were developed: In 2004, the world welcomed the first micro QR code that could be printed in a small space. Four years later, the iQR code enabled rectangular code modules and boasted 80% higher data capacity. Finally, FrameQR was developed in 2014 and brought a “canvas area” to the code. This allowed companies to add branding and design elements to their codes more freely. Thanks to those who invented the barcode, we can now use QR technology to store website URLs, contact information, and small amounts of text. It can also be used to trigger actions, such as opening a URL in your browser or adding a contact to your address book.  The Future of Barcodes As barcodes continue to evolve, we can expect to see even more uses for them in our everyday lives. Now that we know the answer to the “How long have barcodes been around?” question, we can only imagine what the future holds for this technology.  With the advent of cloud-based inventory management software, barcodes are becoming even more important for managing products and tracking inventory in real time, no matter where you are.  We are also likely to see more uses for QR codes as they become more widely adopted. So, whether you’re using a barcode to keep track of your inventory or scanning a QR code to get information about a product, there's no doubt that these little symbols are here to stay. Final Thoughts A combination of barcodes and barcode scanners is critical to managing inventory for businesses of all sizes, especially in the grocery industry. With a long history that dates back to 1948, barcodes have come a long way, and they continue to evolve as our needs change. Laser technology made it possible to read barcodes much faster, and the QR code was introduced in the 1990s to store even more information. Today, barcodes are used in many industries, such as health care, manufacturing, and transportation. We hope you won’t take them for granted the next time you see them. In this article, we explored who created the barcode and how its history brought it to its important place in business today.

Do you ever wonder how those little black-on-white lines can hold so much information? Or how do barcodes work, and why are they so important to businesses? In this article, we will explore the world of barcodes and learn how these simple markings can do so much. Stay tuned for an in-depth look at one of the essential pieces of technology in the modern world. What Is a Barcode? A barcode is a machine-readable code in the form of numbers and parallel lines printed on product packaging. Barcodes were first developed in the 1970s from an earlier idea based on Morse code. They have since become an essential tool for businesses of all sizes. Barcodes can be printed on labels or directly onto products and are read by scanners that are connected to a computer system. Barcodes are used extensively in retail and have helped streamline the checkout process. In addition, barcode technology can be used to track inventory levels and product movement throughout the supply chain. As barcodes become more ubiquitous, they are also being used in other industries, such as health care and manufacturing. How Does a Barcode Work? Barcodes are read by optical scanners that use a beam of light to scan the code. The scanner converts the light reflections into electrical impulses sent to a computer system. The computer system then decodes the impulses and translates them into the product information stored in the barcode.  What’s also important to note is that barcodes can store a large amount of information in a very small space. This means that businesses can track a variety of product data, such as price, color, and size. Types of Barcodes All barcodes can be split into two categories - linear and two-dimensional. Linear barcodes, also known as one-dimensional (1D) barcodes, are the most common type. They are composed of a series of parallel lines that represent numbers or other characters. Two-dimensional barcodes are less common but are becoming more popular due to their ability to store more information. These barcodes are composed of a series of dots or squares that can be read in two dimensions. Now, let’s take a closer look at the different barcode types. UPC The most common type of 1D barcode is the Universal Product Code (UPC). UPC barcodes are used extensively in the retail industry and can be found on nearly every product sold in a retail store.  The universal product code consists of 12 digits divided into two parts: The first six are the manufacturer’s identifier, and the last six are the product’s identifier. The UPC barcode is printed on every product sold in stores and is a vital part of the retail industry. Thanks to the UPC, retailers can efficiently track inventory and sales and ensure that customers get the right products. EAN Code The European Article Number (EAN) is another 1D barcode example used extensively in Europe. EANs are very similar to UPCs but have a few key differences.  EANs are composed of eight or 13 numbers depending on the product size. If the product is small, such as a book, it will have an 8-digit EAN. If the product is larger, such as a piece of furniture, it will have a 13-digit EAN. These numbers combine a country code, company code, and article number, while the last digit represents the check digit. EANs are often used on products sold internationally, as scanners in any country can read them. This makes them a vital part of the global supply chain. Data Matrix Code Data Matrix codes are 2D barcodes that can encode a large amount of data in a small space. They are made up of black and white squares that form a big square or rectangle and are used in industries where tracking and traceability are critical. These codes have a maximum encoding capacity of 3,116 numerical characters and 2,335 alphabetic characters. Each Data Matrix has its own perimeter finder and timing pattern, and they are made up of square or rectangular blocks of black and white cells. Data Matrix codes may store both large and small symbols. A barcode scanner can more easily read the code if there is a blank space around its perimeter. PDF417 Code PDF417 is a type of 2D barcode used to store information. The name stands for Portable Data File 417. PDF417 codes are used in various contexts, including but not limited to driver’s licenses, passports, and other identification documents.  The information stored in a PDF417 code can include text, numbers, and other data. These codes are read by scanning them with a barcode reader. The reader decodes the information, displays it on a screen, or prints it out.  PDF417 codes are also used in some financial transactions, such as mobile payments. In these cases, the code typically represents a unique identifier for the transaction. PDF417 codes have been used since the early 1990s and are now one of the most common barcode types. QR Code QR codes are becoming increasingly popular, especially as a way of sharing information or accessing content quickly and easily. But what exactly is a QR code? Simply put, a QR code is a two-dimensional barcode that can be read by a smartphone or other devices with a camera.  When scanned, the QR code will direct the device to a specific website or online content. QR codes can be used for various purposes, including sharing contact information, providing directions, or linking to a video or social media account.  Businesses have also begun using QR codes to offer customers special deals or promotions. While QR codes are most commonly used with phones, they can also be scanned with laptops and tablets. So, the next time you see a QR code, go ahead and give it a try. Benefits of Using Barcodes Barcodes have become essential to modern life, appearing on everything from groceries to library books. While they may seem like a simple way to handle inventory tracking, barcodes offer businesses various financial benefits. Here are some of the key benefits of using barcode systems: Improved accuracy: Barcodes can be read quickly and accurately, which reduces the chances of human error. This is especially important for businesses that need to track a large number of items. Reduced costs: Using barcodes can help businesses save money on labor costs associated with inventory management. Barcodes can also be used to automate the ordering process, which can lead to further cost savings. So if you’re unsure how to use a barcode system, consider hiring a professional to help get you started. Faster transactions: Barcodes can be read quickly, which helps speed up transactions. This is especially beneficial for businesses that experience high volumes of traffic, such as supermarkets and department stores. Improved customer service: Barcodes can help businesses keep track of sales data and customer purchase history. This information can be used to improve marketing efforts and customize the shopping experience for individual customers. Improved security: Barcodes can be used to track products and prevent theft. This is especially important for businesses that sell high-value items or handle sensitive information. As you can see, barcodes offer a variety of financial benefits for businesses, large and small. How Does a Barcode Scanner Work? A barcode scanner is a device that can read and interpret barcodes. It encodes the data from the barcode into a form that a computer can read. The computer then uses this data to look up information about the product, such as the price, in a database. Barcode scanners come in various shapes and sizes, but they all work using the same basic principle. So, how are barcodes read? A barcode scanner contains a light source, a photosensor, and an electronic decoder.  The light source is used to illuminate the barcode. The photosensor is used to detect the reflected light from the barcode. The electronic decoder is used to interpret the data encoded in the barcode. Barcode scanners can be handheld or fixed. Handheld barcode scanners are portable devices that can be held in one hand while scanning barcodes. Fixed barcode scanners are mounted on stands or other surfaces and are used to scan barcodes placed within the scanner’s range. Barcode scanners are commonly used in retail settings for pricing and inventory control. However, barcode scanners can also be used for other purposes, such as tracking assets or collecting data. Final Thoughts Barcodes are essential to many businesses, helping track inventory and product movement throughout the supply chain. By understanding how they work, you can ensure you’re making the most out of them. There are different barcode types, so choose the one that best suits your needs.

Inventory accounting follows and marks the changes in inventory assets. This allows businesses to track how much inventory they have, what it is worth, and when it needs to be replaced.  It helps businesses avoid overstocking or undersupplying products, which can lead to financial losses. In this article, we will guide you through the advantages of this type of accounting and show you how it can lead to a more successful business. What is Inventory Accounting? Simply put, this is the process of tracking and reporting the value of a company's inventory. The goods that make up the inventory are placed in one of three categories: raw materials, work-in-progress, and finished goods. This is important to know, as your inventory can go from one category to the next until it is sold. Keeping track of all three categories is part of good business practices as it makes it much easier to calculate your profits at the end of an accounting period. It’s a vital tool for businesses of all sizes because it provides essential information about your company's assets and can also help improve decision-making, increase efficiency, and boost profits. Inventory Accounting Terms You Need to Know Before choosing the most suitable accounting method, it would be beneficial to get acquainted with two key terms - cost of goods sold (COGS) and ending inventory (EI) Cost of goods sold (COGS) can include materials, labor, and shipping. COGS is a key figure in many financial calculations, such as gross margin and operating expenses.  There are several different methods for calculating COGS, but the most common is to use beginning inventory plus purchases minus ending inventory. This method gives the company a good idea of the actual cost of its goods and allows for more accurate financial planning. Ending inventory (EI) is the merchandise that a company has on hand at the end of an accounting period. The ending inventory is essential for keeping a steady inventory balance because it represents the merchandise that will be used to generate sales in the next accounting period.  Accordingly, companies must carefully manage their ending inventory levels to ensure they have enough merchandise to meet customer demand.  Different Methods of Accounting for Inventory Management  There are several different inventory valuation methods used by businesses to determine the cost of their inventory. The most common ones are the first-in, first-out (FIFO) method and the last-in, first-out (LIFO) method.  The FIFO method assumes that the first items purchased are also the first items sold, while with LIFO, the assumption is that the last items purchased will get sold first.  Other less common inventory accounting methods include the weighted average and specific identification methods.  The weighted average method calculates the cost of inventory based on the average price of all units in stock, while the specific identification method tracks each item individually from the moment it enters the supply to when it is sold on.  We’ll get into each of these methods more to bring you the complete picture of their advantages and disadvantages. But no matter which inventory accounting policy is used, accurate inventory records are essential for proper financial reporting.  The Right Method for Your Business The choice of valuation method can have a significant impact on a company's bottom line.  As a result, accountants and financial managers must understand each method's pros and cons before choosing one for reporting purposes. FIFO Method The FIFO accounting method, or "first in, first out," is a method used to calculate the cost of the inventory on hand. The assumption with FIFO is that the first items acquired will be removed from the stock before the others. It is most often used in manufacturing and retail environments where products have a shelf life or expiration date. When using FIFO, the first inventory purchases are assumed to be sold first and are therefore charged to the cost of goods sold.  This method can help to prevent spoilage since older items are more likely to go bad before newer items.  While the FIFO inventory accounting method is not always the most efficient way to determine the cumulative inventory value, it can be a helpful tool for keeping track of stock levels and ensuring that materials are used in a timely manner.  It can help businesses avoid obsolescence, as older items are less likely to be sold if they can’t compete with newer items in stock. For example, stocking older iPhones isn’t likely to be profitable as the new model will be much more desirable than its previous generation.  The FIFO method is all about efficiency - by ensuring that the items sitting around the longest are used first, we can avoid waste and ensure everyone gets what they need.  LIFO Method LIFO stands for "last in, first out." It's a method of accounting for inventory management in which the most recent products added to inventory are the first ones sold.  The main advantage of LIFO is that it closely resembles the real-world flow of inventory, which can give business owners a more accurate picture of their actual profits and losses. LIFO can help businesses maximize their profits by selling goods that are likely in high demand. In some cases, LIFO can also help to improve customer service levels by ensuring that the most recently received items are the ones that are shipped out first.  This method can also have some disadvantages, however. For example, if prices rise, businesses using LIFO will report higher costs of goods sold and lower profits than those using other methods. As a result, LIFO is not always the best choice for businesses. Also, LIFO inventory accounting can lead to difficulties in managing inventory levels, as businesses may find themselves with a surplus of older items that are no longer in demand.  Weighted Average Method The weighted average accounting method uses the average cost of a company's goods sold during a period to determine the value of its ending inventory.  The weighted average cost is calculated by taking the total cost of goods available for sale and dividing it by the total number of units available for sale.  This method is a lot simpler than both FIFO and LIFO methods. It doesn’t offer the same level of accuracy as those two, but it does represent an efficient way to calculate your overall profit over a certain fiscal period.  Specific Identification Method This method is best used when accounting for stock comprising a small number of high-priced items like cars, machines, or jewelry.  That’s because this method assigns a specific cost to each unit of inventory rather than averaging the cost across all of them. The process is generally done by tracking inventory from the time it is purchased until the time it is sold, which requires additional resources, and, therefore, isn’t for businesses with a high number of different items that need to be tracked. How to Manage Your Accounting A company's inventory is one of its most important assets. It represents the raw materials, finished goods, and work in progress that a company has on hand to support its operations. As such, it is essential to have an accurate valuation of inventory in financial reporting. While many businesses choose to outsource their inventory accounting, there are several benefits to doing it in-house.  The most important benefit is that you'll have complete control over your data. This means you can customize your reports to fit your specific needs and ensure that the information is always accurate.  With good inventory management software and POS system providers that permit third-party interfacing with accounting software, you will be able to track inventory items as they move through the system. If you can find affordable accounting software, you'll also save money by avoiding the fees associated with outsourcing. Ultimately, accounting inventory by yourself can give your business a valuable competitive advantage. Whichever way you manage your accounting, doing so will offer several advantages. It can: Help keep track of inventory levels and value, Enable better detection of obsolete inventory, Help avoid overstocking or undersupplying products, Provide useful information for financial reporting, Help save money on inventory costs. Bottom Line In our inventory accounting guide, we showed you why this is such an essential tool for small businesses and how to use it to your advantage.  This type of accounting allows businesses to track their inventory levels, value their inventory, and make informed decisions about purchasing and selling merchandise.  It can also help businesses to manage their cash flow and provide information about when inventory levels are low and need to be replenished.  Overall, inventory accounting is a valuable tool that can help small businesses to run more effectively and efficiently.