Lot Tracking Defined: Understanding Common ERP Jargon

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. So 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.

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 supplier's information and date these items were purchased are also tracked. Lot tracking software allows companies to easily and quickly retrieve information about any particular group of products (or shipment) along the entire supply chain - functionality imperative in the face of a product recall.

According to the U.S. Food and Drug Administration, Q4 of 2012 saw the highest amount of food recall activity in the past 2 years, with over 552 recalls announced, involving 18.4 million food and beverage products. So don’t think a recall can’t affect your business - and the inability to track products along the supply chain can break a company when faced with a product recall. However, recalls are not just a concern for those in the food industry. Virtually any industry can be affected, such as consumer products (think children's products), 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.  Not only is lot tracking a core component in achieving FDA/ISO/CFIA compliance for many businesses, it also enables a company to perform lot costing and significantly minimizes the costs associated with a product recall.

Lot Tracking and Traceability Whitepaper