Reading between the lines: using bar-code technology is a smart way to keep track of business data.

Bar codes--those irregular sequences of stripes printed on most product packages--are like a Swiss army knife for keeping track of almost anything--from raw materials to finished goods. Although bar codes most often are used at supermarket checkout counters to enter products' retail prices in cash registers, they're so adaptable they can be put to work in the front office, the back office, the factory and the warehouse. As the list of their applications grows, CPAs are helping their employers and consulting clients implement the technology; they're also using it in CPA firms to track workpapers and tax records. This article explains how bar coding works and tells how it can be used.

END OF THE PAPER TRAIL?

Basically, bar coding is an encoding system. If something has to be tracked or counted--and it's big enough to bear a label no bigger than a pin head--it's a candidate for bar coding. Big things--freight cars, for example--can be encoded, as can individual sheets of paper, bananas, floppy disks and automobile parts. Once encoded, such items can be counted, sorted and located, which makes bar coding a perfect technology for anyone who has lots of things to track.

For example, tracking inventory probably is bar coding's second most popular application. If each product in a retail store or warehouse is encoded, workers will be able to zip through the counting procedure at yearend as well as generate more accurate inventory reports throughout the year. Since the information is collected in electronic form, rather than on paper, it can be analyzed easily by computer.

Bar-code technology is quite simple: The printed lines encode data such as a product's price, warehouse location, manufacturing date or almost any other information specific to the item they identify. They are read by an optical scanner (either a hand-held device or a freestanding model like the ones used in supermarkets) that converts the code into computer language for storage and analysis.

BARRING MISTAKES

Bar codes are a more efficient means of entering repetitive data into a computer than keyboards. A portable bar-code scanner, for example, can capture information in any location and later load it into a computer. Not only is the technology fast and convenient, but it's also accurate. Data input studies have found that, on average, even expert typists made one error for every 300 keystrokes. In the case of numbers--as opposed to letters--such errors are hard to uncover. Bar-code scanners, on the other hand, read the data flawlessly.

To fully understand its utility, consider the typical way inventory is recorded manually: Each counter has a sheet with item numbers or descriptions and their counts. When the counting is done, the count sheet is given to data entry staff, who enter the data into a computer using a keyboard. Any number of errors can be introduced at any stage of the process: A sheet might get lost between counting and data entry, the counter might write the count next to the wrong item number, the counter might write the wrong item number or the keypunch operator might mistype the item number or count or not be able to read the counter's writing.

With bar coding, the counters scan each item's bar code and enter the resulting count on a keypad. The collected data can be entered into the computer as each count is made (in real time) or added automatically at the end of the count (in batch mode). No later keyboard entries are required and transcription and identification problems are reduced.

Bar-code systems can be configured, for example, to scan inventory moving along a production line. Other uses for bar coding include accumulating the costs by job of numerous small parts used in repair orders, tracking clients for time and billing purposes and collecting work-in-process information on a factory floor. Also, a CPA firm might track workpapers as they are removed and returned to the files. Fixed-asset systems also are a prime candidate for bar coding because the technology speeds the entry of serial numbers.

In some cases, bar coding is a necessity: Large retailers are so dependent on the technology they require their vendors to sell them only bar-coded goods and shipping documents.

THE BASIC INGREDIENTS

A bar-code system starts with a bar-code label. Many companies print bar codes on all their product packages or labels, so for many retailers and wholesalers much of the work already is done.

Software for printing bar codes can be rudimentary or sophisticated. It's often packaged with special hardware. Rudimentary systems have limited printing flexibility and graphics capability. More powerful packages provide greater control over a label's layout and can read information from dBase-compatible databases and convert the data into bar-code labels. Specialized packages allow a bar-coding feature to be added to database software.

Many business software packages have bar-code printing features as well. For example, MAS 90 Evolution/2 from State of the Art, Inc. features bar-code- and label-printing capabilities in its accounting modules. RealWorld, Inc. sells Synchronies Inventory Plus, which supplements RealWorld's accounting modules with bar-code capabilities. Macola, Inc. offers a bar-coding add-on that prints bar codes and imports inventory transactions recorded remotely by a data collection device. Computer Associates International, Inc. has entered into a relationship with Symbol Technologies, a company active in bar-code scanning systems, to provide vendor-approved software and hardware offerings for many of its products. ScanPAC enables ACCPAC Plus Accounting's Order Entry and Inventory Control packages to print bar-code labels. ScanPAC includes a laser scanner, cables, documentation and software. It permits unlimited bar codes per item, so items can be identified by part number, universal product code number and so on.

The choice of printer depends on the type of bar-coded documents or labels needed, the quantity of those documents and the quality necessary. Bar-code printers produce high-quality labels quickly and come in portable versions that work without a computer. Standard dot-matrix printers can produce labels and bar-coded documents; laser printers provide higher quality and more readable bar codes. Thermal transfer printers can print on many unusual materials, including polyester, but cost $2,000 and up.

The next piece of equipment a client or employer will need is a scanner. Two important considerations are the type of scanner and how it connects to the computer. The least expensive hand-held scanner looks like a pen. An operator aims the pen's light beam at the bar code and moves it across the label. More expensive models, using a technology called charged coupled devices (CCDs), do not necessarily require physical contact with the bar code. A third type, hand-held laser scanners, generally are more expensive than CCDs but can read bar codes from farther away without compromising accuracy. Other units, like those at the supermarket, have a built-in decoder so the clerk and the customer can identify the item being scanned. The less expensive models require separate hardware or software decoders to recognize and translate bar codes.

Data collection devices collect information remotely for transmission to a computer at a later time. Some simply collect information from an attached bar-code scanner; others have numeric or alphanumeric keyboards for more flexible data capture. Most units have a display for user feedback; many can be programmed to prompt the user for the information that should be entered.

FIRST STEPS

Users unfamiliar with bar coding should start with a pilot project. Two companies sell kits for beginners:

* Wynston Technologies, Inc.'s Bar Code Kit costs $299 and contains everything companies need to get started. The company welcomes questions about bar coding at [phone].

* Vertical Technologies' SCAN-ONE, which costs $219, is designed for use with portable computers.

Bar-code technology is only beginning to catch on, and its applications are limited only by the user's imagination. It's worthwhile to brainstorm to identify innovative uses for it in a client's or employer's organization. The technology is relatively low-tech and can make almost any repetitive data entry job easier and reduce the number of errors.

EXECUTIVE SUMMARY

* BAR CODING IS A FAST, efficient way to keep track of almost anything--from manufactured goods to tax records. The technology is relatively low-tech and can make almost any repetitive data entry job easier and more accurate.

* THE TECHNOLOGY IS SO adaptable it can be put to work in the front office, the back office, the factory and the warehouse. It's catching on in CPA firms, too.

* THE MOST WIDESPREAD application of bar coding today is entering products' retail prices into cash registers at supermarket checkout counters. Tracking inventory probably is bar coding's second most popular application.

* MANY BUSINESS SOFTWARE vendors have added bar-code printing features to their packages.

* THERE ARE DIFFERENT options for connecting bar-code scanners to a computer: A board can be installed inside the computer that has a link to the scanner or the scanner can be attached to the computer's serial (communications) port.

* WITH THE TECHNOLOGY IN ITS infancy, bar-code applications are limited only by the user's imagination. CPAs may want to brainstorm with their clients or employers to discover new uses for the technology. In addition, CPAs should consider adding the technology in their own offices.

BAR-CODE COMPETITION

Bar coding is not the only way to collect data and track products. These are some of the competing technologies:

* "Smart keypads" are keyboards used by fast-food outlets and distributors that have a limited number of items to track. Each button on a smart keypad represents a different product, such as a cheeseburger or a milkshake.

* Cards with magnetic stripes--such as bank automatic teller machine (ATM) cards--can store far more information than bar codes and are changed more easily. The technology has drawbacks: It's relatively expensive, and information can be read only at close range.

* Optical character recognition (OCR) is used by many companies to enter large volumes of information already in typed form. With OCR, a computer "reads" normal printed characters and converts them to a computer format. While OCR equipment can read more complex data, its speed and error rates are inferior to those of bar-code technology.

* Some municipalities use "smart cards"--cards containing computer chips--to automate toll collection and vehicle identification. Such chips hold more information than bar codes, can be reprogrammed easily and can be read at long range even when the target is moving fast. Their main drawback is that they are expensive.

* Voice input/output is one of the newest technologies. A person's voice (or some other sound) is used to input data into a computer. While interesting, this technology is not yet very practical. It is slow, has high error rates and requires a powerful computer for any meaningful task. However, this technology is being researched extensively, and there is reason to believe these drawbacks will be overcome soon.

FOR MORE INFORMATION

Here's where to call or write for more information on bar-code technology and for product or ordering information for the products mentioned in this article.

REFERENCES

Books

* The Bar Code Book By Roger C. Palmer Helmers Publishing, Inc. 174 Concord Street P.O. Box 874 Peterborough, New Hampshire 03458 Phone: [phone] Price: $29.95

* Using Bar Code--Why It's Taking Over By David Jarrett Collins and Nancy Nasuti Whipple Data Capture Press P.O. Box 1625 Duxbury, Massachusetts 02331 Phone: [phone] Price: $34.95

Magazines

* ID Systems Data Capture Press 174 Concord Street P.O. Box 874 Peterborough, New Hampshire 03458 Phone: [phone]

* Automatic I.D. News Advantstar Communications, Inc. 7500 Old Oak Boulevard Cleveland, Ohio 44130 Phone: [phone]

PRODUCTS AND VENDORS

* Bar Code Kit Wynston Technologies, Inc. 1409 Corporate Drive McHenry, Illinois 60050 Phone: [phone]

* Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788 Phone: [phone]

* Macola Macola, Inc. 333 East Center Street Marion, Ohio 43302 Phone: [phone]

* MAS 90 Evolutioin/2 State of the Art, Inc. 56 Technology Irvine, California 92718 Phone: [phone]

* SCAN-ONE Vertical Technologies 3575 Market Street Suite 240 West Valley, Utah 84117 Phone: [phone]

* ScanPAC Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788 Phone: [phone]

* Synchronics Inventory Plus RealWorld Corp. 282 Loudon Road Concord, New Hampshire 03301 Phone: [phone]

ERIC E. COHEN, CPA, heads Cohen Computer Consulting, Rochester, New York. A member of the New York State Society of CPAs and the American Production and Inventory Control Society, he is the computer columnist for the Rochester, New York, Business Journal.