From Factory Floor to Retail: The Story of the QR Code

A two-dimensional barcode invented to track automotive parts in Japan is now set to complement or replace the EAN/UPC code on your packaging. Here’s how we got here:

Have you scanned a QR code today? To open a menu, authenticate a product, connect to Wi-Fi, get info on a product you bought. It’s become so embedded in daily life that it’s easy to forget the QR code has a proper origin story — and it starts not in Silicon Valley, but on the production lines of a Japanese automotive parts manufacturer in the early 1990s.

With GS1’s Sunrise 2027 initiative now driving the biggest change to retail barcoding in half a century, this feels like the right moment to trace the QR code’s journey from industrial workhorse to the backbone of connected packaging.

The barcode reaches its limits

To understand why the QR code was needed, you have to appreciate the frustrations of industrial barcoding in the late 1980s and early 1990s. There has always been a need for traceability in the automotive, aerospace, and other industries, and traditionally, lot or serial numbers would be cast into components or added using technologies such as dot peen or chemical etching.

There was clearly a need for traceability marks that could be machine-read to automate the data collection process as production increased. In 1974, Code 39 was developed by a team at Intermec, which was working with Boeing on traceability for aircraft parts. Code 39 was the first barcode that could encode alphanumeric characters (A-Z, 0-9 and some special characters), and it became well established in a number of industries, including aviation and military. Code 128 was introduced in 1981 – another linear barcode with higher density than Code 39 and capable of encoding all 128 ASCII characters, hence the name.

These linear barcodes were a big step up from manual data entry, but they had real limitations. They could only encode ASCII characters, which was a significant problem in Japan, where manufacturers needed to capture kanji and kana alongside alphanumeric data. The codes were quite large, not ideal for small items, and data density was still low, meaning that tracking a single automotive component often required scanning multiple barcodes to capture all the relevant part, batch, and routing information.

Birth of the QR code

By the early 1990s, users of Denso Wave barcode readers, a division of Denso Corporation at the time part of Toyota Group, were asking the same question: how can we handle more data more efficiently?

In 1992, a small development team led by engineer Masahiro Hara set out to create a two-dimensional code that could store significantly more data while being read at high speed. Two-dimensional codes already existed, but they were slow to scan and poorly suited to the reality of factory floors, where labels get smeared with grease and scanned from awkward angles.

Eighteen months of development later, the team had a design that could store approximately 7,000 numerals — a dramatic leap from the limited capacity of Code 39 and Code 128 — and could be read more than ten times faster than competing 2D codes. Crucially, it could also encode kanji, kana, and other character sets that the ASCII-only linear barcodes simply couldn’t handle. The design was reportedly inspired by the board game Go, with its grid of black and white stones influencing the alternating-square pattern.

One of the cleverer innovations was the inclusion of three square position detection patterns in the corners. Hara’s team analysed countless printed materials to identify the pattern of alternating black-and-white areas least likely to appear in existing print. The ratio they settled on — 1:1:3:1:1 — allowed scanners to recognise the code’s position and orientation almost instantly, regardless of scanning angle. Built-in error correction meant the code could still be read even when partially damaged or stained. On a factory floor, that matters.

In 1994, the team released their creation and named it the QR code — Quick Response code — reflecting its core advantage of speed.

Availability: the decision that changed everything

Having a technically superior code was one thing. Getting anyone to adopt it was quite another.

What made the QR code’s trajectory unusual was a decision taken right at the start: Denso Wave would patent the technology but would not charge licensing fees for standardised codes. Hara and his team believed the code would only reach its potential if it could be used freely by as many organisations as possible. For the mid-1990s, that was a remarkably forward-thinking move, and it removed the single biggest barrier to adoption.

Making the QR code available to others worked. Other automotive manufacturers adopted it quickly. From there, the QR code spread to electronics, food, pharmaceuticals, and logistics. Traceability was a major driver — particularly after food safety scares, such as the BSE crisis in the UK, which pushed industries to make supply chains more transparent. The QR code offered a compact, resilient way to encode detailed production and logistics data directly onto products and packaging.

International standardisation followed: AIM International in 1997, the Japanese JEIDA standard in 1998, and later ISO/IEC 18004. Standards organization GS1 adopted QR codes as a standard in 2012, using the same syntax as GS1 128 and GS1 Datamatrix. In 2014, the development team received the European Inventor Award’s Popular Prize — recognition of just how globally embedded the technology had become.

The smartphone catalyst

For its first decade, the QR code remained largely an industrial tool. That started to shift in 2002, when Sharp (Japan) released the first mobile phone with a built-in QR code reader. Consumers could suddenly interact with codes directly, and brands began printing them on advertisements, packaging, and tickets.

Adoption outside Japan was slower. For years, scanning required a dedicated app — just enough friction to keep it niche. The real inflection point came when Apple integrated native QR code scanning into the iPhone camera in 2017, with Android following suit. No extra app, no extra steps.

Then came COVID-19. The pandemic created overnight, universal demand for contactless interactions. Restaurants swapped physical menus for QR codes. Vaccination certificates were encoded in them. Payment systems in markets from China to Kenya already relied on them heavily, and the pandemic accelerated that trend everywhere else. By the time the world reopened, the QR code had gone from an occasionally useful curiosity to something billions of people used without thinking twice.

Enter GS1 Digital Link

If the smartphone era made QR codes consumer-friendly, the next chapter is about making them supply-chain-smart — and, for the first time, bringing QR codes into the world of retail barcoding. That’s where GS1 Digital Link comes in.

To set the scene: since the 1970s, the retail world has run on EAN/UPC barcodes. The Universal Product Code (UPC) was adopted in 1973, and on 26 June 1974, a pack of Wrigley’s chewing gum became the first product scanned at a supermarket checkout. The European Article Numbering (EAN) system was introduced in 1977. For over fifty years, these linear codes have done one job — encoding a Global Trade Item Number (GTIN) for price lookup at the point of sale — and they’ve done it reliably for more than fifty years. But the GTIN is all that’s included, no batch/lot data, no expiry dates, no link to digital content.

GS1 Digital Link changes this. The concept is elegantly simple: take that same product GTIN and encode it into a structure that includes a web link (URI), other information such as a date/lot code, best-before or expiration date, and a serial number, and package it into a QR code or Data Matrix. The result is a single code that works at POS for checkout and, when scanned by a consumer’s smartphone, connects to online resources — product information, allergen data, sustainability credentials, recall notices, promotional content, or whatever else the brand makes available.

A GS1 Digital Link URI looks something like: https://example.com/gtin/01234567890128/lot/ABC123/exp/20261231. It contains the GTIN along with additional data like batch number and expiry date, structured according to GS1 Application Identifiers. Because it’s a web address, the brand can update what the link resolves to at any time – without changing the code on pack.

For anyone who’s wrestled with on-pack real estate, this is significant. Instead of carrying a UPC for the checkout, a separate QR code for marketing, and perhaps a Data Matrix for supply chain tracking, a single GS1 Digital Link QR code serves all those functions at once. It’s the moment the QR code — born on the factory floor — finally enters the retail barcode’s domain.

Sunrise 2027: the transition begins

GS1’s Sunrise 2027 initiative sets the target for retailers worldwide to have POS systems capable of scanning 2D barcodes alongside traditional linear codes.

It’s important to be precise about what Sunrise 2027 is and isn’t. It’s not a regulatory mandate, and it doesn’t mean linear barcodes are being switched off. The ambition is that by end of 2027, a critical mass of POS systems globally will read 2D codes, giving brands the confidence to use them as primary identifiers. During the transition, GS1 recommends dual-marking — printing both an EAN/UPC and a 2D code on pack — so products scan seamlessly regardless of whether a retailer’s equipment has been upgraded.

The initiative is well underway. Pilots are running in over 48 countries, representing around 88 per cent of global GDP. Major retailers are testing scanning infrastructure, coding and marking equipment manufacturers are positioning their solutions, and GS1 has published detailed guidance on optimal placement for dual-marked packs.

What this means for packaging professionals

For those of us in the packaging world — design, converting, print, packaging engineers and managers, brand management — the implications are practical and immediate.

There’s the physical design challenge. QR codes need adequate module size and quiet zones to scan reliably, and placement on curved, textured, or heavily decorated surfaces demands careful planning. If you’re running flexible packaging or working with small-format packs, you’re going to need some creative problem-solving, especially if you need to continue with your EAN/UPC next to the 2D during the transition.

Then there’s the data infrastructure behind the code. A GS1 Digital Link QR code is only as useful as the digital content it resolves to. Brands need resolver services, clear decisions about what to share with consumers, and processes to keep data accurate and current. This isn’t a one-time print job — it’s an ongoing digital commitment, and that’s a mindset shift for organisations more accustomed to treating packaging as a static deliverable.

And there’s the supply chain opportunity. Encoding batch numbers, serial numbers, and expiry dates into a single scannable code opens up possibilities for improved traceability, more targeted recalls, better inventory management, and stronger anti-counterfeiting measures. For industries already under regulatory pressure on traceability — food, pharmaceuticals, medical devices — it aligns neatly with existing compliance requirements.

From car parts to connected packaging

Quite a journey. A two-dimensional code designed in the early 1990s to overcome the limitations of Code 39 on a Japanese production line is now set to become the primary interface between physical products and the digital world. Masahiro Hara and his team at Denso Wave couldn’t have predicted QR codes would end up on restaurant tables and vaccine certificates, let alone that they’d eventually be positioned to succeed the EAN/UPC barcode at retail checkouts worldwide.

At its heart, the QR code’s story is about open standards and practical engineering. Denso Wave’s decision not to charge licensing fees created the conditions for mass adoption. GS1’s Digital Link standard is now building on that foundation, bringing the QR code full circle — from industrial traceability tool to the next generation of retail product identification.

Whether your organisation is deep into 2D barcode planning or just thinking about it, the direction of travel is clear. That square symbol Masahiro Hara sketched out over thirty years ago is likely to become a key feature on your packaging.

Further reading

What happens when GS1 2D codes are scanned at checkout

The GS1 2D barcode implementation guide

Will I have to change all my barcodes?