Using a GS1 QR Code for Tracking Inventory Efficiently
Untracked inventory can disrupt production and supply chains, potentially lose sales, delay deliveries, and waste resources. Even then, at least 43% of small businesses in the US either don't track their inventory at all or use a manual process to do so.
However, getting detailed product information and transparency is not difficult, particularly when we have advanced ways to access information online.
We’re talking about GS1 QR codes for tracking components and finished goods. These barcodes can be packed with all the essential information, including batch numbers, use-by dates, and much more.
But how do these codes work for inventory management, and how are they beneficial for tracking? Let’s dive in and take a look.
What is the GS1 QR code?
The GS1 QR Code is a 2D barcode standard developed by GS1. It is designed to carry structured product identifiers such as the GTIN, batch number, and expiry date.
Powered by the GS1 Digital Link standard, it can direct scanners to online product data, user guides, traceability records, or compliance documents, depending on how it’s set up.
These codes can help support inventory tracking, product authentication, quality control, and recall processes when used with the right systems.
Here's everything you can access through a simple scan:
- Brand and product information
- Traceability
- Authentication
- Price information
- Certifications of compliance-related data
- Returns management
- Offers & promotions
The core of inventory management
Inventory management is more than just knowing what’s in stock; it’s about understanding where each item is, what stage it’s in, and whether it’s moving efficiently through your supply chain.
Whether you’re tracking raw materials on a factory floor or finished goods in a warehouse, the goal stays the same: avoid shortages, reduce waste, and keep operations running without guesswork.
To manage inventory effectively, businesses often categorize stock based on its position in the supply chain.
Manufacturing Inventory
Manufacturing inventory is usually divided into three categories: components, work in process, and finished goods.
Components: Raw materials are the basic inputs used to manufacture products. They can be classified as:
Direct materials: Incorporated directly into the final product (e.g., fabric in clothing, steel in automobiles).
Indirect materials: Support production but are not part of the final product (e.g., lubricants, cleaning supplies).
For example, a textile manufacturer uses fibers, dyes, and yarns as direct materials, while water, lubricants, and packaging are indirect materials.
Efficient tracking of raw materials is crucial for maintaining smooth operations and minimizing production delays.
Work in Progress: WIP refers to the unfinished materials and products in the manufacturing process. Once a component undergoes modification, such as cutting, dyeing, or assembly, it turns into WIP material.
Making WIP part of inventory depends on a business's production cycle. Businesses with a smooth production process, like automotive or electronics, don't need to track their WIP inventory intensively.
Finished Goods: Finished goods are ready to be sold to customers in warehouses, distribution centers, and retail stores. It’s best to sell them as soon as possible to generate profit, earn revenue, and minimize costs.
Distribution and retail inventory
On-Hand Inventory: Refers to goods physically present and available for sale in warehouses, retail stores, or distribution centers. This includes both products displayed to customers (like items on store shelves) and backstock reserved for replenishment.
The primary goal is to balance inventory levels, keeping enough stock to meet customer demand without overstocking, which ties up capital and increases storage costs. Effective management of on-hand inventory ensures businesses can fulfill orders promptly while minimizing excess or obsolete stock.
Out-of-Stock Inventory: A stock-out occurs when customer demand exists but the product is unavailable due to poor planning, supply chain delays, or unexpectedly high sales. This directly leads to lost revenue, dissatisfied customers, and potential damage to brand loyalty.
To mitigate stock-outs, businesses employ strategies like maintaining safety stock buffers, improving demand forecasting, and strengthening supplier coordination. Proactive measures are critical, as recurring stock-outs can drive customers to competitors.
In-Transit Stock: In-transit stock comprises goods that have been ordered but are still en route, moving between suppliers, warehouses, or retail locations. This category is vital for calculating lead times and planning replenishment cycles.
However, delays caused by shipping disruptions, customs hold-ups, or logistical bottlenecks can disrupt operations and trigger stock-outs. Real-time tracking and strong supplier relationships help businesses anticipate and manage in-transit inventory risks, ensuring smoother operations.
Current challenges of inventory tracking
Manufacturing Industry
Manufacturers face significant inventory management challenges, including demand forecasting inaccuracies, excess or obsolete stock, and supply chain disruptions.
Raw material shortages, production delays, and inefficient warehouse layouts can lead to bottlenecks, increasing carrying costs, and reducing productivity.
Additionally, lack of real-time visibility into work-in-progress (WIP) inventory makes it difficult to optimize production schedules.
Manual tracking methods and siloed data systems further complicate inventory accuracy, leading to mismatches between physical stock and digital records.
Without proper traceability, manufacturers also struggle with recall management and compliance with industry regulations.
Distribution & Logistics Industry
Distributors and logistics providers grapple with inefficient tracking systems, delays in order fulfillment, and poor inventory visibility across multiple locations.
The lack of standardized barcoding or RFID systems can lead to misplaced shipments, incorrect stock levels, and increased shrinkage. Cross-docking challenges, transportation delays, and fluctuating demand further strain inventory accuracy.
Additionally, manual data entry errors and reliance on outdated software contribute to inefficiencies in replenishment cycles.
Distributors struggle with overstocking or stockouts without real-time updates, leading to lost sales and higher operational costs.
Retail Industry
Retailers face stockouts, overstocking, and inaccurate demand forecasting, leading to lost sales or excessive markdowns.
The rise of omnichannel retail has introduced complexities in inventory synchronization between online and physical stores, often resulting in mismatched stock levels and fulfillment delays.
Shrinkage due to theft, damage, or administrative errors further impacts profitability. Many retailers still rely on manual stock counts, which are time-consuming and prone to human error.
Additionally, seasonal demand fluctuations and supplier lead time variability make it difficult to maintain optimal inventory levels, affecting customer satisfaction and retention.
Inventory Management Statistics
- Global missed sales due to stockouts in the retail sector: $1 trillion annually
- Businesses that have unintentionally sold an out-of-stock product: 34%
- Business finances affected by failure in inventory tracking: 62%
- Average U.S. retail business inventory accuracy: 66%
- Small businesses struggling with limited visibility in inventory: 63% (as of 2024)
- Lost sales due to stockouts: Account for 40%
- The top issue in 46% of warehouses today: Human error
The Benefits of Using GS1 QR Code for Tracking Components and Finished Goods
Real-Time Tracking
GS1 barcodes for retail offer 24/7 visibility to warehouses and inventory. A business can instantly track its raw material quantities for informed procurement decisions. For example, a manufacturing plant can monitor its steel stock levels in real time and place a purchase order when the supply reduces.
Similarly, QR codes on finished products provide up-to-date information on stock status, preventing overstocking or shortages. Retailers can accurately access popular product demand and avoid lost sales due to out-of-stock items.
Minimizing Human Errors
GS1 QR code for manufacturing eliminates manual data entry and reduces human errors.
When you scan GS1 2D barcodes on your smartphone or tablet, you can instantly access accurate and up-to-date information about raw materials and finished goods.
This precision eliminates the risk of human mistakes in data collection and transfer, increasing the reliability and efficiency of inventory management.
Product Safety and Traceability
The QR code tracking system offers exceptional product safety and traceability. By assigning QR codes to both raw materials and finished goods, businesses can precisely monitor their journey from origin to the end user.
Consider the automotive sector. By assigning unique codes to components like engines, transmissions, and electronic systems, manufacturers can track their origin, production date, and any need for modifications.
This information is essential for identifying defects, conducting recalls, and improving the overall quality of the vehicle.
Workflow Tracking
GS1 QR codes for tracking components and finished goods streamline workflow by providing real-time data.
In logistics, GS1 product identification QR codes on pallets accelerate the loading process by verifying item quantities and destinations. During shipping, scanned codes track product movement and location.
Warehouse staff can use QR codes on shelves for picking, packing, and processing. For example, warehouse staff can scan the QR code to verify the accuracy of the product to avoid mistakes and increase the delivery process.
Faster order processing and Delivery
QR code scanning speeds up the order fulfillment process by providing accurate information about a product's quantity and location. Then, warehouse staff can swiftly locate and pick up items without any errors or delays.
For example, a grocery store can efficiently process online orders by scanning QR codes to ensure that the correct items are packed. This precision improves order completion, reduces shipping time, and enhances customer satisfaction.
GS1 digital link QR codes: A vital key to quick and accurate product tracking
Tracking stock is an essential part of inventory management. Existing traditional methods often struggle with challenges like real-time data, accuracy, and product security.
Using a GS1 QR code for tracking inventory is a practical solution. These codes help reduce human error and improve operational efficiency by giving structured, scannable access to product data.
They also support workflow automation and traceability across production stages when integrated with software systems.
From manufacturing to retail, the codes enhance visibility, prevent stockouts, and ensure product safety. If you’re a business owner seeking innovative inventory management solutions, consider QR TIGER.
We offer a dynamic GS1 QR code generator that can help transform your business operations with accuracy, efficiency, and profitability.
FAQ
Can QR codes be used for tracking?
Only dynamic QR codes (redirecting via a tracking URL) log scans. They record IP, device, time, and location via web analytics. Static QR codes (direct links) don’t track unless the destination site does.
What is the difference between GS1 QR codes and QR codes?
GS1 QR codes embed a unique GTIN and other product data and link to a range of digital information, unlike standard QR codes, which typically only link to a single URL.
What are the benefits of GS1 Digital Link QR codes for inventory tracking?
GS1 QR codes make tracking products easy, give real-time updates, and help find where products are, reducing mistakes and speeding up supply chain processes..
How to start creating GS1 QR codes?
To make your first GS1 QR codes:
1. Pick a product for the initial pilot.
2. Sign up on QR TIGER/GS1 and visit the generator page.
3. Type in your product's special ID (GTIN). You can add more information, like batch numbers and expiration dates.
4. Choose if the QR links to one page or many, and add those links
5. Click "generate QR code."
6. You can change how it looks if you want, as long as it follows the GS1 QR code printing guideline
7. TEST. The best results come from using a barcode verifier to check scannability
8. Finally, download and put it on your product's packaging.
DISCLAIMER: We acknowledge that GS1, as well as the materials, proprietary items, and all related patents, copyright, trademark, and other intellectual property (collectively, “intellectual property”) relating to its use, are the property of GS1 Global, and that our use of the same shall be in accordance with the conditions provided by GS1 Global.
