Author: Extensiv Aug 24, 2022 10 Min READ

Complete Guide to Barcode Scanning for 3PL Warehouses

10 Min READ
Complete Guide to Barcode Scanning for 3PL Warehouses


Barcodes have become an integral part of selling and shipping goods. Historically, manual processes have proven ineffective and error-prone. Organizations looking to stay ahead of the competition must embrace innovation or risk being left in the dust as their customers seek other modern options. Barcodes optimize all aspects of commerce, inbound/outbound logistics, and shipping processes.

  • Brick-and-mortar stores often use them for both purchases and returns.
  • Third-party logistics (3PL) warehouses use barcode scanning to track packages and inventory throughout the warehouse.
  • Shipping carriers rely on barcode scanners to effortlessly track and locate shipments during the logistics process.
  • Accounting often uses barcode scanners when invoicing.

Boost efficiency with mobile scanning through Extensiv

The third-party logistics market will expand at a CAGR of 6% from 2022 to 2028, reaching a value of USD $1347160 million by 2028 according to the Global Third-Party Logistics (3PL) Market Report. Competition between 3PLs has never been fiercer. 3PLs that want to rise to the top have to bring their A-game. Customers and end consumers expect perfection, accuracy, speed, and productivity.

Warehouses looking to take advantage of the rapid growth of ecommerce, which saw a 7.3% year-over-year increase in Q2 2022 compared to Q2 2021, can’t afford errors from a manual picking process. By automating warehouse best practices with barcode scanning, 3PLs will reap myriad operational benefits. Automation with barcode scanning has become a necessity to ensure productivity, efficiency, and growth.

Understanding Shipping Barcodes

A barcode appears as a machine-readable pattern made up of parallel lines with varying widths printed on a shipping label. A scanner can effortlessly read the pattern for rapid identification.

During the shipping process, scanning of the barcode takes place during each stage of the delivery process, ensuring that a package effectively reaches its destination. Barcode scanning helps guarantee that merchandise moves correctly from the ecommerce retailer or manufacturer to the fulfillment center and then to the final destination.

Information accessed on a barcode includes:

  • Customer name
  • Contents of the box
  • Shipping mode
  • Delivery address
  • And more

Barcode Scanning for 3PLs

All 3PL warehouses and shippers use shipping barcodes to track ecommerce inventory and online orders during transit and delivery.

Below are the main ways that a 3PL warehouse uses a barcode scanner:

  1. Ecommerce distributors, manufacturers, suppliers, and merchants send inventory to a 3PL warehouse. The 3PL will scan the barcodes (either parcel or freight shipments). Each 3PL has its own processes in place to prevent order delays, guarantee inventory identification, and prevent any potential fees.
  2. Once picked and packed, the package has a barcode label attached. The 3PL will then move the shipment on to the proper carrier. Once the carrier has the parcel, they will also scan the item as it leaves the 3PL warehouse for shipment to the consumer. 
  3. A 3PL will normally manage returns for their ecommerce partners. Returns typically ship back to the 3PL, and the 3PL must then scan the barcode shipping code on the label, packing slip, or some other documentation to effectively receive the return and put it through processing.

Barcode Types and 3PLs

3PLs warehouse uses several types of barcode scanners.

Below we will examine the main types.

Shipping Barcodes

Shipping barcodes work well for shipping labels and receiving slips. A 3PL scans shipping barcodes whenever they receive inbound inventory or during the outbound process of shipping packages either direct-to-consumer or wholesaler.

The barcode scanning helps the 3PL staff keep track of everything that goes on in the warehouse and with the products such as inventory replenishment or delivery exceptions, which end up lost or stuck in transit prior to reaching the end consumer.

Product Barcodes

A 3PL warehouse will place product barcodes on all products received, stored, or shipped. The 3PL then relies on the product barcode to find the storage location of the products in their individual bins, shelves, or pallets within the fulfillment center.

Undoubtedly, the use of barcodes on individual products has revolutionized the way that a 3PL warehouse functions. The barcodes increase the workforce’s efficiency while streamlining all functions for even greater speed.

Placing barcodes on new SKUs that arrive in the 3PL fulfillment center improves accuracy across all functions. A 3PL can rapidly fulfill orders across multiple brands using the barcodes to make sure that the correct product is always shipped to the right consumer from the correct brand.

Mobile Barcode Scanners

All warehouse employees should always have a mobile barcode scanner on their person. The mobile barcode scanner conducts automatic updates on all systems such as the 3PL's warehouse management system (WMS) every time the employee uses the device.

Benefits of Barcode Scanning for 3PLs

Below are just a few of the main reasons why 3PLs rely on barcode scanning throughout their logistics operations.

Accurately Count Stock Levels

A 3PL can automate all inventory tracking with barcode scanners. Scanning the barcodes of products automatically updates the 3PL’s warehouse inventory count with 100% accuracy as opposed to manual counting, which leads to errors. Also, inventory counting using a pen and paper takes an excessive amount of time that warehouse teams could spend conducting other functions.

The barcode scanner keeps the 3PL’s WMS up to date on all inventory counts. It helps ensure that everyone in the warehouse and all their ecommerce customers always function as a singular team with complete inventory transparency.

Up-to-Date Reporting

A barcode holds more than just the SKU number. The code helps a 3PL warehouse generate reports that reflect exact sales and stock levels. Knowing exactly how many items the warehouse has on-hand lets the 3PL staff know when to restock.

Minimize Errors

Human error occurs, especially when carrying out manual processes such as counting and tracking warehouse inventory levels. The percentage of errors can increase rapidly in a warehouse that sorts thousands of products.

Barcode scanners effortlessly keep track of all stock coming and going out of the warehouse to cut costly errors which can quickly impact the 3PL’s bottom line and harm the organization’s reputation with customers and consumers.

Adding Barcodes to Products

If you are a 3PL operator and have not added barcodes to your process, then you’ll need to discuss the addition of barcodes with your customers. You can buy label packets from most office supply stores, and with the labels and templates, you can effortlessly print up barcodes and attach them to the products.

You should always contact all customers to discuss existing non-barcoded products in the warehouse. They can then decide either to affix barcodes to the products or focus on depleting the remaining inventory of non-barcoded products to stop any commingling of barcoded and non-barcoded products. Such steps will help you better find the inventory and will provide a clear picture of the current stock levels.

Understanding the Journey of the Barcode and 3PL Order Process

3PLs use barcodes in all operational steps within the supply chain, from the time the products ship from the manufacturer to when the package finally reaches the consumer.

Nowadays, innovative 3PLs make sure that every physical movement within the warehouse has a digital counterpart for correct tracking.

Below are the uses of barcodes during the supply chain journey:

Products Shipped from Manufacturer, Supplier, or Ecommerce Partner

Products that have barcodes arrive from the supplier or manufacturers facility. Before the inventory batch ships from the supplier, manufacturer, or ecommerce partner, they will place the barcode label on the packs and any additional information.

After Product Arrives at the Warehouse

When the 3PL warehouse staff receives products from the ecommerce retailer, supplier, or manufacturers, they will scan the product to ensure that the correct products and quantities were delivered.

The 3PL warehouse staff will again scan the products before storing the inventory in its various warehouse storage locations. The barcode information helps the warehouse staff always know location and quantity of the inventory.

Upon a Product’s Retrieval from Storage Location

Any time an order arrives, a picking list automatically generates. An assigned pick ticket reveals the item's exact location and the quantities of the remaining inventory. A picker then goes to the inventory’s warehouse location, scans the product, and examines the location before moving on to the next product or order for picking.

The process automatically removes the ordered package from the inventory count. If the inventory starts to show signs of depletion, an automatic alert triggers to the merchant, who will then take care of replenishing the 3PL's supply of the depleted inventory.

After Carrier Picks Up the Package from the 3PL Warehouse

Once an order undergoes packing, a barcode label is affixed to the mailer or box. Shipping carriers who pick up at the 3PL warehouse will scan the package when the item leaves the facility. This stage of the scanning process is crucial because it effectively shows that the package has left the 3PL warehouse facility and entered the transit stage.

During the Transit Process

Often shipments must travel a considerable distance as many items go from one regional sorting facility to another. The carrier uses barcode scanning to create a roadmap of the shipment’s location. This information proves exceptionally useful if a hold-up should occur. Consumers can track their packages through out the journey and know an expected delivery date, in many instances right down to the hour the package will arrive.

During last-mile delivery, the package goes from the final carrier hub onward to its final destination. The local facility will scan the item before it goes to the consumer.

Upon Arrival at the Shipping Destination

Upon arrival at the package’s final destination, the carrier scans the barcode one last time to create confirmation that the package has reached its destination. In most cases, the consumer has the item. However, if the delivery is unsuccessful for some reason, then the package returns to the local sorting facility to await another delivery attempt.

Occasionally, a shipment goes to a B2B ecommerce partner, who will also use the same shipping barcode as part of their own inventory process. They adhere their own barcodes onto the new inventory.

Common Barcode Formats Used for Shipping and Inventory Storage  

A wide assortment of barcodes exists, and each format has its pros and cons. Ecommerce merchants and 3PLs all have their favorite based on what works best for their processes or products. In many instances, a barcode type that works well for highly regulated medical products might prove unnecessary for use on less regulated items.

Alphanumeric Barcodes

Alphanumeric barcodes work well at tracking and collecting data. They have the ability to hold more data than numeric bar codes.

Common alphanumeric barcodes include:

  • UPC
  • MSI
  • EAN
  • Codabar

Numeric Barcodes

As the name reveals, numeric barcodes rely on numbers only. Retailers, especially in the clothing industry, regularly hang tags containing numeric barcodes on items throughout the store. The simple barcodes work well for basic functions such as inventory management. They also provide consumers with ease-of-use when it comes to self-checkout, which has become popular at a wide array of brick-and-mortar stores such as Walmart, Target, Old Navy, and more.

Data Matrix Codes

Data matrix codes work well for smaller items. The labels fit small products and have become common throughout logistics operations. The US Electronic Industries Alliance (EIA) recommends the use of data matrix codes on electronic components. They are similar to QR codes but provide far faster readability and have high fault tolerance.

Radio Frequency Identification

Many have heralded radio frequency identification (RFID) as the wave of the future. Undoubtedly, RFID has the distinction of being the newest barcode technology to appear in some time. Although RFID holds the classification of being barcode technology, the two differ considerably while sharing many similarities.

RFID has the capability of reading barcodes singularly or in batches. Unlike typical barcode readers, RFID does not need a close distance for an accurate read. RFID has the capability of reading at a considerable distance which speeds up inventory processing. 

In addition, RFID carries out:

  • Frequent updates on all scanning locations
  • Inventory check-in
  • Ongoing counting
  • Shipment verification

3PL warehouses use RFID tags directly on pallets. The RFID readers at the dock doors can then automatically scan the pallets when loading them onto trucks. RFIDs placed at exits, checkpoints, and entrances effectively track inventory as it comes and goes out of the warehouse.

The prohibitive cost of RFID is still one of the downsides to the technology, coupled with the need for specific readers. Currently, only a limited number of RFID equipment manufacturers exist, which drives up the cost of the technology. The high initial costs involved in focusing only on RFID remains prohibitive for most ecommerce retailers and 3PL logistics providers.

Physical Barcode Options

Barcodes vary depending on the products. For example, a clothing tag has a barcode so the retailer can quickly identify the item without having to embed the barcode onto the actual item such as with an adhesive, which might damage the material.

Adhesive Barcode Labels

Barcodes used on packages at a 3PL appear as a simple label with adhesive on the back. The label, fashioned from synthetic materials, does not wear off during warehouse storage or transit. The easy-to-locate label does not disrupt the product box. You can either peel off the adhesive barcode label or place another label over the top of the barcode if needed.

Hang Barcode Tags

Retailers favor hang tags for retail items and clothing. Simply clip off the tab with a pair of scissors at the time of purchase. The hang barcode tags are typically affixed using a tiny piece of plastic or string to the item.

Outer Packaging Barcodes

Outer packaging barcodes work by affixing the barcode directly to the product’s packaging. They are not hooked to the content of the package. A candy bar wrapper, fresh meat product from the butcher, or other food items will often feature the barcode as a part of the outer packaging of the item. You can discard the packaging and barcode after opening the item.

Taking Mobile Barcode Scanning to the Next Level with SmartScan

Extensiv offers SmartScan, which allows a 3PL to take their barcode scanning to the next level while doing away with manual, paper-based methods that result in frequent errors. With SmartScan, a 3PL will experience increased efficiency and accuracy throughout all of their warehouse logistics operations. Not to mention, the entire process creates a streamlined paperless experience for your entire warehouse team.

Hardware Requirements for SmartScan

SmartScan was designed with modern software architecture in mind to create a seamless experience using hardware coupled with tablets and smartphones. A 3PL can then pick the correct hardware to meet their unique warehouse needs, budget, and customer requirement.

Barcode tags and labels rely on scanners. The scanners scan the tag to locate inventory for picking. The scanners coupled with innovative software create greater visibility across inventory. The mobile interface streamlines picking and receiving of all inventories.

When choosing a WMS scanner, you’ll want to think about the types of barcodes your warehouse commonly uses. Most use 1D or 2D barcodes.

  • 1D barcodes display all information in a single direction via vertical lines. 1D barcodes are normally only used for raw materials and internal warehouse inventory management. 1D and similar laser scanners offer low cost and accuracy.
  • 2D barcodes have the ability to store more data in both horizontal and vertical directions using 2D shapes. Examples of 2D barcodes include QR codes. Most 3PLs do not use 2D barcodes due to the expense.

Handheld scanners provide portability coupled with long range. They work well for long-range scanning to find products stored on racks because the scanners can effortlessly detect the barcodes on the shelves. They also provide real-time data capture, which helps save time.

Wearable devices have impressive long-range capabilities. They work well for products not typically moved by hand.

There are three main categories of barcode scanners for 3PLs:

Warehouse-Grade Barcode Scanners

3PL operations often rely on warehouse-grade scanners due to their rugged design. They can withstand daily use in a tough warehouse environment while still providing long battery life, long-range scanning of up to 70 feet, and strong Wi-Fi capabilities. 

Retail Grade Scanners 

A retail grade scanner provides reliability which makes it an ideal choice for 3PLs and ecommerce retailers.  

The devices provide:

  • Forward picking
  • Packing
  • Pick to Bin

They function as an all–in-one device that uses a combination of smartphone with built-in scanner.

Consumer Grade Scanners

SmartScan runs on tablets and smartphones, which run either iOS or Android. A 3PL warehouse can pair smartphones or tablets with consumer grade Bluetooth scanners. The solutions work well for any 3PL who wants to start using a warehouse barcode scanner. It features a low acquisition cost and requires extraordinarily little (in some cases no) configuration.

Mobile Scanning and WMS

Once you choose a mobile scanner for warehouse workflows, you can easily access all inventory data within your 3PL’s WMS and share the data captured with the mobile barcode scanning with all warehouse customers to provide optimum transparency for inventory and order accuracy.

A 3PL warehouse can also opt to use an order verification with their mobile scanning process to ensure order tracking, control, and monitoring for increased accuracy. Hardware and software work together to let you better control, track, and monitor your entire supply chain operations. 

Are you ready to implement the use of barcode scanning practices in your 3PL warehouse? Contact the skilled team at Extensiv to enjoy a demo today.

FREE REPORT Proven Ways to Improve Warehouse Profitability Get the guide for a five-point warehouse tune-up.  

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