Lot Tracking Defined: Understanding Common ERP Jargon

Mark Canes

What is Lot Tracking?

Lot tracking refers to a system that has the ability to properly track product lots (as in manufactured lots or batches) along the entire supply chain – from the manufacturer, through supplier and distributor to the end customer. Sometimes referred to as batch tracking, lot tracking helps your business with product traceability to keep track of which of your customers received specific groups (or shipments) of items and when they were received. The manufacturer and/or supplier you purchased from and date in which the items were purchased is also recorded allowing you to track an individual group of products (or shipment) from your supplier to your warehouse and then ultimately to your customer. Lot tracking is also used to manage inventory according to production or expiration date.

Lot tracking is an important concept to understand, and for some businesses, it's an integral component of distribution inventory software.  This is especially true for businesses that deal with perishable goods, potentially harmful products, regulated items and products with dye lots. Lot tracking is a core component in achieving FDA / ISO / CFIA compliance for many businesses.

Lot Tracking with Software

Lot tracking software allows companies to keep track of which customers received specific groups/batches (or shipments) of items and when they were received. The manufacturer and/or supplier's information and date these items were purchased are also tracked. Lot tracking software allows companies to easily and quickly retrieve information electronically about any particular group of products (or shipment) along the entire supply chain - functionality imperative in the face of a product recall.

Product recalls affect a variety of industries and the inability to track products along the supply chain can break a company when faced with a product recall. Virtually any industry can be affected, such as consumer products (think children's products and furniture), automotive, and then especially food, medical and pharmaceutical products.

Lot tracking or batch tracking allows product to be traced, end-to-end, from the manufacturer through the supplier to the customer.  The process is used to keep track of which customers received specific lots, allowing managers to account for product movement via various auto-generated reports. A lot or batch number can be assigned to one or many units of product that are produced or purchased on various dates and can tie into an expiry date (if applicable).  An advanced lot tracking system helps automate the process and allows users to track product movement, create lot reports and facilitate recalls when necessary.  This gives business owners an auto-generated list of products affected by a recall and the customers it was sold too, allowing them to quickly and efficiently contact those involved. It also allow you to perform lot costing – tracking actual costs instead of FIFO or average. In addition, lot tracking software helps manage inventory based on lot number or expiration dates.