If you've ever been to a retail store, you'll have noticed that just about every aspect of that store's operations ties back to barcodes. The humble UPC, invented way back in 1973 by IBM's own George Joseph Laurer began with a request to Big Blue by a group of supermarket executives looking for a way to speed up checkout lines. In the years since, it has become as close to a universally accepted technology as you'll find in any industry – in fact, countless industries.

And in many ways, it was the foundational technology that made almost all retail and supply chain automation possible. Businesses now use barcodes to track inventory. They use them to power consumer discount club cards. They even print them on invoices and other documents to facilitate simple tracking and other back-office processes.

But it's important to remember that for all their uses, barcodes are a technology that's closing in on fifty years old. And they are already bumping up against some limitations that make their continued use a hindrance to modern, data-intensive business automation systems. And as a result, there's a growing consensus in the business community that the time has come to settle on a successor technology. And that decision will shape the future of automation in countless industries. Here's a look at the trends driving the need for change, and what the early signs of the transition can tell us.

Businesses Crave More Data

At the core of the latest push to move away from the venerable barcode is a need for businesses to gain greater visibility into their supply chains and retail operations. Right now, there's a natural limit to how much data you can squeeze into a single barcode, making them of limited use in today's automation-heavy processes. For example, as warehouses and other elements of the supply chain move closer to fully autonomous robotic operations, they require a way to ingest huge amounts of information using computer vision solutions at a single glance.

It's the very same issue that drove the creation of the QR code by Japan's Denso corporation in 1994. At the time, the auto parts manufacturer struggled to maintain control of its inventory system because its workers needed to scan upwards of a dozen barcodes affixed to each box in their inventory every time an item was removed or added. With QR codes in place, a portable scanner could read up to 7,000 characters from each code (as opposed to roughly 20 in a UPC) from any angle at about ten times the speed.

The Options Under Consideration

According to recent research on the subject by information standards organization GS1 US, 92% of brand owners and 82% of retailers plan to transition away from UPC within the next five years. The plan is to move to a 2D code system (QR codes or similar), digital watermarks, RFID tags, or a combination of solutions. And we're already seeing some of the groundwork for the shift became apparent.

Throughout 2020, big brands went all-in on QR codes, using them to provide new options for consumers during the coronavirus pandemic. And at the same time, technology firms like Scandit rolled out computer vision apps that turned off-the-shelf smartphones into high-throughput code readers. That push went a long way toward increasing public acceptance of the technology, making QR the early favorite to succeed UPC. And at the same time, the same GS1 US study revealed that 84% of retailers are already in the process of upgrading their POS systems to support the shift.

At the same time, however, RFID technology has leaped out of its initial supply chain roles and into consumer-facing applications. A laundry list of brands ranging from Target and Macy's to Lululemon and Victoria's Secret now use RFID as a primary means of inventory control. In that setting, RFID allows inventory systems to have perfect item movement visibility that 2D codes cannot provide. And they also provide a necessary data stream to power next-generation retail automation solutions, because they can act like homing beacons for robotic order pickers and touchless checkout systems.

A Hybrid Solution Likely

There are compelling reasons that might lead one to believe either 2D codes or RFID tags will eventually become the one true replacement for aging UPC-driven systems. But the truth is that it's likely that we'll soon see retailers deploying both solutions – but that they'll power different aspects of their operations.

For example, it's reasonable to expect that 2D codes will be adopted almost exclusively for conveying data to consumers and employees in retail settings. This is because the adoption costs are negligible due to the ready availability of consumer technologies like smartphones making them a simple drop-in solution.

But it's also likely that RFID tags will become the foundation of future business automation solutions. They offer far richer data conveyance and far more flexibility than any printed code could ever accomplish. For instance, there are already RFID systems that offer location tracking to within 10 centimeters – making them a perfect guidance data input for any robotic system.

So, at the end of the day, RFID will likely become the more relevant technology for those in the automation industry. But there will always be a role for printed codes, as they are already so ingrained in innumerable automated workflows. And the fact that the well-worn UPC will end up needing no less than two successors is a powerful testament to how important – and successful – the technology is. And for that, its inventors would surely be proud.