RFID vs barcodes: making the right inventory management decision

This article explores what their main benefits are, then looks at why you should choose one over the other.

Benefits of RFID in inventory management

RFID (short for “radio frequency identification”) technology uses radio waves to automatically identify and track tags attached to objects. Ergo, it’s a great solution for monitoring goods in your inventory (both those stored in your facilities and as they pass through the supply chain).

Here are some of the benefits.

• Automated storage and distribution tracking

As RFID tags can be attached to individual items, pallets, or containers, you can track goods seamlessly as they move through the different stages of storage and distribution. This eliminates the need for manual data entry or scanning and makes the whole process more efficient and less prone to human error.

• Enhanced visibility and inventory control

When businesses need real-time visibility into their inventory, RFID can be a great help, particularly in conjunction with enterprise resource planning (ERP) tools, which align all business processes and operations around a centralised information hub.

Using Sage ERP for inventory control, you can set your RFID data to feed through automatically to other business-critical systems. This allows you to respond immediately to changes in stock levels and manage the resupply process efficiently. You can also use other logistics and delivery management systems to give you a full overview of where your products are.

• Speedy inventory counting and reconciliation

One of the more useful aspects of RFID readers is that they can scan multiple tags at the same time. The consequent speed and efficiency of this allow businesses to carry out inventory counts on a more frequent schedule.

The result? You can keep a much closer eye on your stock. If there are discrepancies, you’ll find out about them quickly. You’ll also be able to deal with any potential problems with minimal disruption to regular operations.

• Durable physical tags 

RFID tags are typically designed to be durable, robust, and capable of withstanding the rigors of rough handling or humid environments. They’re usually made of tough materials such as plastic or metal. This is one reason why many businesses use RFIDs for traceability. 

When an RFID tag is attached to an item, it stays there until it’s removed.

Benefits of barcodes in inventory management

Barcodes are more familiar to most people than RFID tags. They were first invented in the 1950s and have since become ubiquitous on physical products. Even after all these years, they still have their place. Their main advantages are:

• Simple and cost-effective implementation

Barcodes are incredibly cheap to generate, meaning there’s little in the way of upfront investment required. Labels can be easily printed and applied, while scanning devices are widely available at a low cost. They can also be read using modern smartphones or tablet devices, so you don’t need to buy a dedicated scanner at all.

This makes barcodes a great option for small businesses that might need to be cautious with their budget. That said, it's always worth considering the long and short-term gains. Although barcodes are cheaper, RFID tags last a long time and make inventory counting faster.

So, it can be worth testing the two options and comparing what brings greater savings in the long run by using tools like online accounting software or ERP software. Then you'll be able to collect and clearly monitor the data and determine what has a bigger impact on cash flow. Just make sure that your software is location-specific so that you remain compliant with the local regulatory environment wherever you’re based, be that in the UK, the USA, or elsewhere. 

• Broad compatibility with current systems and tools

As barcodes have been around for so long, the ecosystem to support them is already there. This means they’re highly compatible with existing systems and tools.

Barcode scanners can be used with all kinds of software, including inventory management tools and point-of-sale systems. Businesses that utilise enterprise resource planning software can even use them to integrate everyday inventory and sales data into their reporting via the cloud, reducing the need for manual data entry.

• Wide accessibility and serviceability

Since barcode labels can be printed using standard printers, they’re a widely used solution. This broad accessibility means it’s a straightforward matter for businesses to acquire the necessary equipment and supplies for implementing a barcode system. 

On top of which, if any issues do crop up, there are plenty of support resources available to help troubleshoot and maintain barcode systems.

• Intuitive operability with less need for employee training

Let’s face it: scanning barcodes is pretty easy. All it requires is aiming the scanner at the barcode label and triggering the scanning process. There’s never a need to worry that a new joiner might not be able to do it on day one. Therefore, there’s no necessity for complex or expensive training programmes.

Things to consider when choosing between RFID and barcodes

Although both of these technologies can be useful for inventory management, there are some marked differences between them. So, how should you decide which to use?

• Data storage requirements

RFID tags have the ability to store larger amounts of data compared to barcodes. In fact, the chip inside can typically handle an impressive 2,000 bytes plus. This makes it ideal for tracking complex information. For example, if you need to keep track of expiration dates or batch numbers, you can do this with RFID tags.

That said, if you only need a basic product identifier, barcodes will do the job just fine. Bear in mind that all goods of a particular type are generally given the same barcode, so you won’t be able to track individual items like you can with RFID.

• Infrastructure and operational needs

One of the biggest benefits of barcodes is they don’t need a lot of supporting infrastructure. As they can easily be printed on ordinary labels, they can generally be used with any kind of packaging. 

On the other hand, implementing RFID technology involves deploying RFID readers and antennas, as well as overcoming the challenges of integrating it with existing systems. This adds up to a significant investment in terms of money and effort. RFID systems also require a suitable network infrastructure for data transmission.

While this makes them useful for cutting-edge processes like embedded vision, it does mean they’re only a realistic option for businesses with larger inventories or a need for real-time tracking and visibility.

• Inventory and item compatibility

While barcodes are easy to implement, they do have their flaws. For one thing, they have to be fixed to a flat or only slightly curved surface for scanning purposes.

As it’s not dependent on visual scanning, RFID technology can be used with items that are difficult to barcode or need non-line-of-sight scanning. RFID tags don’t have to be affixed to the outside of goods either. They can instead be embedded into items such as metals, liquids, or goods stored in bulk containers.

• Employee capacity and capability

As we’ve already mentioned, barcodes win this round. They’re simple to use and need no specialist training to operate. RFID systems, on the other hand, generally require specialised knowledge of RFID infrastructure, reader operation, and troubleshooting techniques.

RFID vs barcodes: the takeaway

While RFID offers enhanced capabilities, data storage, and item compatibility, it does come with higher implementation costs and operational complexity. Conversely, barcodes provide a simpler and more cost-effective solution but are limited in terms of available data storage.

Ultimately, the RFID vs barcode decision depends on your specific needs. If you take into consideration your budget and the kinds of products you deal with, you should gain a good idea of which option will better suit your business.