We see lot numbers applied to many of the products we use in everyday life, from toiletries and medicines to food products, drinks, and cars.
Different companies have different ways of assigning lot numbers, but generally, the codes help manufacturers identify information about their products, like which materials were used to make them, where they came from, when they were produced, and — if they are perishable — when they will expire.
Here, we’ll look at why lot numbers are important and what they help businesses do.
What is a lot number?
A lot number is a unique code that manufacturers assign to a batch of goods they’ve produced in the same run using the same ingredients, parts, or materials.
Is lot number the same as batch number?
Yes. Lot numbers are often referred to by different names, including, batch number (generally used in the UK), code number, or lot code.
What is lot tracking?
Lot tracking is the system used to track, trace, and access information about the products throughout your supply chain, from end to end. This is done with the help of barcodes, scanners, and inventory management software.
For example, if you make and bottle ketchup, a tracking system will show you the lifecycle of each bottle, including where the ingredients came from to make it. Once you’ve shipped it, you’ll be able to track its journey from your manufacturing plant, to the warehouse, through to your customers.
It’s scary to think about a product recall but it pays to be prepared
What is lot control?
Lot control is the process of managing your batches of goods and products. It enables you to organise them, see how they are performing, understand what issues they might have, and shift them around as necessary. For example, if you need to recall a batch of goods or redistribute them.
Over time, it will also allow you to see trends around certain products and suppliers, as well as crucial data like how long they are spending on the shelf.
The importance of lot control
The importance of lot control is most obvious when something goes wrong with a product (we’ll look into this more below). But aside from emergency situations, lot control is key to sustainability and maintaining a competitive edge in today’s complex business world.
1. Stay organised
Firstly, the process helps keep you organised by making it easier to differentiate similar products with slight variations; for example, a regular and sugar-free version of a soft drink, or two batches of t-shirts made with different colour dyes.
2. Identify issues quickly
Secondly, when one of your products has a defect, lot control helps you provide quality customer service by pinpointing the issue quickly – including issues with the materials or parts, an operator in need of more training, or a machine in need of maintenance. By getting to the source of the problem, you’ll be in a better position to determine the best course of action to rectify the situation.
3. Reveal trends
Thirdly, lot control can provide valuable business insights by revealing trends like which batch of products are selling the most (and at what time of year), and whether there’s any correlation between the suppliers you’ve used and your most profitable items.
4. Prevent counterfeit products
Finally, lot control can help you stop counterfeited items from entering your inventory. If your products are susceptible to fakes, tracking your lots will help you identify where they are entering your supply chain so that you can take action to prevent more from coming in.
While some businesses manage their lots manually, analytics and automation are becoming ever more crucial, particularly in complex supply chains where the margin for human error is higher. If you don’t already have it, it’s worth looking into a good quality software solution that will fit your business. Bear in mind that many inventory and supply chain software will have lot control capabilities built-in.
Lot numbers and product recall
Here’s where lot control becomes critical: if your product causes someone to fall ill, suffer injury, or results in their death, it’s crucial to the safety of your customers and the future of your business to recall items from the same batch urgently.
In regulated industries like pharmaceutical and automotive manufacturing, robust lot tracking is often a legally required capability. But as any company that has had to perform a recall will know, having a lot control system makes good sense in any scenario.
It can help maintain your brand and reputation, and could also save you a significant chunk of time and money. By understanding which batch was affected by an issue, you’ll avoid having to recall every similar item within a broad date range whether or not they are faulty or contaminated – a potentially monumental and costly task.
You’ll also be better able to investigate the issue and determine things like where the parts or ingredients for that lot came from and whether other batches might be affected.
Lot numbers and contamination
The food and beverage industry relies heavily on lot control. With many companies using mass-production methods and complex supply chains, the risk of food contamination is one that needs to be monitored closely – and it’s not hard to see why.
In the US alone, food recalls rose 10% from 2013 to 2018, according to the Public Interest Research Group. But the issue affects companies around the globe. We’ve all heard stories of brands having to pull huge swathes of products from the shelves that are not safe to customers, like foods contaminated by Salmonella, or by foreign objects like pieces of metal, plastic, or glass.
In a situation like this, lot control and tracking is crucial to identifying the affected batch quickly, communicating the recall to customers, and tracing the source of the contamination to limit any further risk to customers and your brand.
Being prepared for a scenario like this is key. You don’t want to get caught on the back foot if you’re ever forced to perform a recall, so it’s worth making sure your business is prepared for one.
Lot numbers and food allergies
Food allergies are another common risk in the industry. Nut allergies, for example, can be highly dangerous or lethal, and while manufacturers may do their best to avoid cross-contamination with different products (such as with chocolate bars), even trace levels can be deadly.
When it comes to allergens, many recalls are either because of cross-contamination, or labelling issues such as missing labels, incorrect or incomplete ingredient lists, or lists being printed in a foreign language. It’s important in a scenario like this that similar products can be recalled quickly if need be.
Lot numbers and expiry
Another area where lot numbers show their value is with products that have an expiration date. Any business selling perishable items will want to monitor these, shift them before they are unusable, or get them off the shelves once they are.
Food products make up a big chunk of this category, but any product with organic materials will eventually go off, including some toiletries, paints, and of course, medicines.
By including expiration dates in lot numbers, you can monitor and set up alerts for goods that are close to expiry, and take the right course of action when the time comes.
Lot numbers and inventory control
Lot numbers are essential for managing and understanding the movement of your inventory and spotting trends around your batches of goods.
It’s also key for shifting the right products at the right time. Like most manufacturers, you’ll want to make sure that older stock is sold before newer stock. Lot numbers help you do this with data around production dates and the time your products are spending on shelves.
Lot numbers and waste reduction
Inventory waste can cost businesses huge amounts of money which is why many companies put a lot of effort into maximising their product sales before items become unsellable.
For products that are slow-moving or near expiry, you can use lot numbers to automate activity like marketing campaigns, discounts, or offers to help sell these off more quickly.
We see this kind of activity when retailers bundle up single items like bottles of beer into a pick-and-mix pack, offer two-for-one deals on body lotions, or simply discounts single items. Lot control helps you identify which products would benefit from offers like these.
Lot control helps your warehouse team keep track of where stock is.
Who uses lot number tracking?
Many industries use lot number tracking to manage different types of products, including:
- Children’s toys
- Shoes and clothing
- Paints and building materials
- Cleaning products
- Fire extinguishers
- Phones and electronics
- Firearms and fireworks
Two of the most common industries to use lot numbers are food and medicine manufacturers:
Lot number tracking in food & beverage manufacturing
We’ve looked at some of the key reasons why the food and beverage industry relies heavily on lot tracking – and these largely centre around the health and safety of consumers.
But in today’s world, many people want to know more than whether their food and drinks are safe – they want to know things like how local they are, whether they are organic, and how they were produced.
Lot tracking gives manufacturers more detailed visibility of their products, including where they came from and how they’ve been farmed or produced. With this visibility, they can address consumer concerns like these with more certainty and confidence.
Where there are issues such as poor labour practices or harmful farming methods, businesses can also hold their suppliers to account and demand better practices in future.
Lot number tracking in medicine
Like traceability with food and beverages, lot tracking and control is hugely important for the pharmaceutical industry. Medicine can expire, become contaminated, or cause unintended side effects and reactions – all of which can result in serious illness or death. The ability to recall these products quickly, or to trace ingredients, is essential.
Counterfeit products is another issue that crops up for the pharmaceutical industry, and one that is a real concern in the fight against coronavirus. As vaccines are shipped around the world in complex supply chains, lot tracking helps health professionals administer vaccines with confidence, which will ultimately help countries recover from the many impacts of the pandemic more quickly.
Tracking also helps prevent medicine in circulation from falling into the black market or the hands of consumers struggling with substance addiction. According to the World Health Organization (WHO), it also helps lessen costs on health systems by reducing inefficiencies and combating fakes.
Lot number tracking and corporate CSR
Today’s consumers are highly conscientious of how their products are made, where they come from, and whether they are ethically sourced and produced.
Now, more than at any other time in history, they have the means to research the brands they buy easily, and to understand whether these brands meet their ethical standards.
The food industry is a major example of this. Consumers want to know their fish has been sustainably sourced, their meat and dairy products are cruelty-free, and the beans used to make their coffee and chocolate have been fairly traded.
The same goes for other industries, like clothing manufacturing and timber milling, where customers want to know that their products weren’t made using poor labour practices, and haven’t caused major environmental damage.
Companies that fall foul of ethical practices risk losing money and customers, so it’s essential they understand their supply chain fully.
Lot tracking can play a key role in this. Understanding where your ingredients and materials come from and how they are produced helps give businesses valuable insight into the practices and methods their partners use, and the social and environmental impact these may have. It means that you can hold your suppliers and partners accountable – or switch them completely if they fail to meet the right standards.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.