Lot Tracking: Software & Best Practices for Your Inventory Management System


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The ecommerce supply chain consists of several moving parts, starting with finished goods delivered by the manufacturer to storing inventory, to fulfilling and shipping orders to customers.

Many times, finished goods are distributed across multiple sales channels and distribution centers, which can make it a challenge to keep track of inventory. Add in products that require more specialized storage and tracking, such as those that can expire or potentially be recalled, and you have quite the complex needs. 

That’s why it’s important to have an inventory tracking system in place to easily trace where batches of products came from and where they’re stored. There are several ways to organize and track inventory, and one the most common ways is to use lot tracking.

In this article, you will learn how lot tracking works, which products require it, and how to implement a lot tracking system using industry best practices.

What is lot tracking?

Lot tracking is a system used to trace parts or ingredients associated with a group of products back to a manufacturer or supplier. Lot tracking is also used to organize inventory by production or expiration date. 

Which products need lot tracking numbers?

Many products can benefit from a lot tracking system, though it is more expensive to do so as each lot needs its own storage space and can’t be stored with similar batches of the same product. 

Of course, there are some products that lot tracking becomes an essential. The US Food and Drug Administration (FDA) is a government agency responsible for the safety of the following products sold or manufactured in the United States. 

Any product that requires FDA-approval (due to expiration date or contains ingredients that require regulation) must use a lot tracking system. Here are some examples of product types regulated by the FDA:

Lot tracking is a warehouse management best practice that helps to organize and store ecommerce inventory to ensure quality control, traceability, and proper fulfillment. 

For instance, if you’re worried about your finished products surpassing their expiration dates, you can use lot tracking system to ensure that the items that first entered the FDA-approved warehouse are also the first to be fulfilled.

This type of inventory valuation method is known as “FIFO” (first in, first out), which helps to dramatically reduce instances of products going bad before they’re delivered to customers.

Why is lot tracking important to inventory management?

Lot tracking is an important inventory management process that helps businesses trace products, most commonly by expiration date, manufacturer, or production date, to comply with regulations and to act promptly in case of a recall. Lot tracking also helps ecommerce businesses keep inventory organized to make sure a certain batch of products are being fulfilled first.

Here are some other ways lot tracking helps businesses manage inventory.

1. Get specific data of product lots

Have you noticed a series of products being returned from the same batch? With lot tracking you can secure customized batch-specific reports from your warehouse to identify which group of products is not meeting customers’ needs. For example, this can help with returns management so you can identify what batch of inventory is causing a high volume of returns quickly. 

2. Have full supply chain overview

Lot tracking can help you optimize the supply chain by keeping track of your inventory in real-time. With lot tracking, you can store inventory based on a shared attribute, so you know where batches of products are stored and which products are being fulfilled first.

3. Eliminate human error

Lot tracking also helps with improving order accuracy. Lot tracking eliminates the need to manually track inventory, so you can avoid common picking mistakes, such as sending out an item that’s expired. Implementing software that allows you to set up lot tracking can also help you manage moving inventory much easier, including the ability to conduct inventory audits and warehouse audits more efficiently.

4. Help with recalls

In case of a product recall, you need to be able to act quickly. By reliably tracking products based on a certain attributes, you can trace which products or lots are being recalled, when they were produced, and where they are currently being stored. This way, you can quickly remove faulty batches from one or more distribution centers before more items are fulfilled and shipped. 

3 inventory lot tracking best practices

Lot tracking has the ability to improve both your order fulfillment and inventory management processes. Here is an overview of lot tracking best practices to consider and that you can easily incorporate into your logistics operations

1. Fulfilling at the lot level

Lot tracking can improve your fulfillment process, especially when it comes to products that have an expiration date. By implementing inventory management software, you can assign lot numbers to a group of products based on expiration date to make sure the oldest items are being shipped first.

2. Use a barcode scanning system

One of the best ways to reduce manual work is by tagging each lot with a barcode using an inventory scanner system. By scanning barcodes, you also avoid wasting time physically inputting data for every lot. This functionality can help save on labor costs and reduce human error, while speeding up the retail fulfillment process.

3. Use fulfillment distribution centers

With lot tracking, you can split inventory across multiple fulfillment distribution centers and still be able to comply with FDA regulations. For instance, if you partner with a third-party logistics (3PL) company like ShipBob, you can assign a number to a batch of inventory so that they are stored separately. This helps to ensure that right items are being stored properly, fulfilled correctly, and easily traceable.

How ShipBob uses lot tracking within their supply chain system

ShipBob uses lot tracking to help ensure product quality during the fulfillment process. From ShipBob’s dashboard, you have the option to assign a lot number to specific items stored in our fulfillment centers. After we receive your warehouse receiving order (WRO), we will store the items in separate locations, according to their lot number. You can learn more about our lot tracking process here.

Our lot feature allows you to separate items based on their lot numbers. When you send us a lot item, we will not store it with other non-lot items, or other lots of the same item.

ShipBob also uses the first in, first out (FIFO) inventory allocation logic designed to identify shelves that contain items with an expiry date first and always ship the nearest expiring lot date first. If you have  items stored in different bins — one with no lot date and one with a lot date — we will always ship the one updated with a lot date. 

“ShipBob was the exact solution I was looking for. We have easy ways to manage subscription orders as well as expiration dates and lot numbers, so inventory goes in First In, First Out (FIFO).” 

Leonie Lynch, Founder & CEO of Juspy

What’s more, ShipBob’s Inventory Status page gives you a clear view of your inventory data, including lot and expiration date, per fulfillment center. This allows you full visibility into what items are on hand, fulfillable, backordered, and more. 

“With ShipBob, we are able to mark any combination of SKUs as a unique bundle and select the component SKUs right through the dashboard. Each time that bundle is fulfilled by ShipBob, we can see the individual components that are physically picked, and we know that the order went out as expected.

ShipBob also allows us to make changes to bundles on the fly with complete control and visibility, which is important in monthly subscription boxes, holiday bundles, and many more scenarios.”

Gerard Ecker, Founder & CEO of Ocean & Co.

To learn more about how ShipBob can help with inventory optimization, click the button below.

What is lot tracking?

Lot tracking refers to when a batch, set quantity of goods, or raw materials from a single manufacturer is assigned a a lot number. This system allows you to keep a record of inventory and logistics details such as expiration date, product ingredients, manufacturer or supplier, and production date.

How do I lot track with ecommerce?

Online stores can track shelf life of perishable goods and the origin of each damaged or recalled goods with a batch number. Lot traceability, from warehouse to customer, may be enabled by using technology such as an inventory management system to easily track where batches of products are stored. 

What are the benefits of lot tracking?

Lot or batch tracking can be used to ensure that returned, recalled, missing, or damaged products are traced back to their batch. What’s more, with lot tracking, you can organize inventory and fulfill orders by expiration date — thus ensuring perishable products are shipped before they go bad.

Written By:

Kristina is the Director of Marketing Communications at ShipBob, where she writes various articles, case studies, and other resources to help ecommerce brands grow their business.

Read all posts written by Kristina Lopienski