Precisely knowing what is a lot number can prevent your business from unforeseen and expensive product recall situations. When businesses have to recall a whole lot of their products because of any serious defects, the recall process can get really time-consuming, and leads to a heavy loss to the business.
Further, lot numbers are also related to compliance with government guidelines in the operational business area. It is mandatory for manufacturers to assign lot numbers to their products, such as medicine, foods, automobiles, hazardous products, and similar goods based on the rules of the jurisdiction where they are operating.
What Is a Lot Number?
A lot number is the identification number or computer-generated code allotted to a certain group or batch of products from a single manufacturing unit. In many countries, the lot number is also known as the 'Batch Number' used to track the product details dispatched from the company.
A lot number carries various information elements such as the production unit details, where it has been manufactured, date of manufacturing, expiry date, location, or other combination of essential data.
Sometimes, the lot number is useful to recall the dispatched batch from the market or warehouse if defects are found in the product. It maintains the credibility of the business by reducing defective pieces that are already circulated in the market.
Here we have learned all about what is a lot number. Now, let's take an example of a lot number to understand its importance and usage.
Lot Number Example
An electric scooter company recalled one and a half thousand of its vehicles from the market as the vehicles were catching fire. These vehicles were inspected, and all systems were diagnosed by the engineers for reapproval and recirculation in the market. Managing these challenges was only possible by referring to the lot number; otherwise, the company would have to withdraw all the units from the market, which would be nearly impossible and highly expensive as well.
A lot number is typically found on the outside of the packaging. For cars, a lot number is combined with the serial number of the vehicle to form the Vehicle Identification Number, which is another lot number example. Further, a lot number enables manufacturers to control inventory, and also it helps in calculating the expiry date, manufacturing date, and the source of raw material purchases that are used for production.
For example, in the case of food items like fruits, the manufacturer or the consumer may inquire about the location from where the fruits are being grown or exported for sale. In case bird flu has occurred in a certain area which impacts the production of fruits grown in that area, such an event requires the manufacturer to recall the whole batch of fruits from the market. At this time of crisis, lot numbers help the manufacturer with inventory control techniques and warehouse management.
Lot numbers also help business owners to monitor their stock in a controlled way so that they neither flood the market nor produce a scarcity of products with respect to the demand in the market. Lot numbers further assist the manufacturer and the consumers with quality service and control as well.
How to Identify Lot Numbers?
Generally, a lot number is found on the package, but its position may vary as per the manufacturer's preference. Often, the lot number can be framed at the top, bottom, or sides of the package. For instance, in beverage cans, you will find the lot number at the bottom side, which fetches a series of letters, numbers, or even barcodes. You will find a level or stamp on the package which signifies the lot number or batch number of that product. A typical lot number example is, it is denoted by 'lot' or 'Batch', which is the lot number symbol. For example, 'lot#'.
Forming the Lot Number
Generally, there is the process of forming a lot number so that the inspection officer or authority can easily identify the batch of the concerned product. It is a mixture of the alphabet and a series of numbers.
Alphabet - identifies the manufacturing month of the product
| A | January |
|---|---|
| B | February |
| C | March |
| D | April |
| E | May |
| F | June |
| G | July |
| H | August |
| I | September |
| J | October |
| K | November |
| L | December |
Series of numbers - identifies the date of manufacturing and date of expiration.
- The first two digit tells the manufacturing date.
- The next two digits tell the manufacturing year.
- Then the next 6th and 7th digits will identify the month of expiration.
- The 8th and 9th digits will identify the year of expiration.
Let us understand it with a practical lot number example:- If the product has a lot number like this, lot#B-24220623, it means the product was manufactured on February 24, 2022, and has an expiry on July (06) in the year 2023. Note:- Every company or Industry uses different nomenclature practices to assign a lot number, which may follow different patterns.
Where Should You Place the Lot Number on Products?
When it comes to inserting a lot number on products, you do not need to have a fixed rule for it. You can place the lot number on the side or below the description box of the products or near the barcode or stock-keeping unit (SKU) code However, the standard practice to place a lot number is to keep a white rectangular box on the package below the ingredients list. And then print or stamp the lot number of that product. Another idea is to place the lot number (especially on the container) at the top or the bottom.
Generally, the packaging process is the same for all the products, and only the lot number is printed later after the product has been manufactured and is ready to dispatch. Hence, you can leave a white rectangular space on the packaging to print the lot number at the final stage.
What Is the Difference Between Lot Numbers vs. SKUs?
So far, we have understood what is a lot number in detail, and where you can find or place it on the package. However, you can also see other information like SKU along with lot number imprinted in an alphanumeric format, and often people may assume that the SKU and the lot number are the same, but they are not.
SKU or Stock Keeping Unit is an alphanumeric code assigned by retailers internally for identifying and tracking product variations and circulation. It helps you manage sales inventory and the popularity of different variants to make key decisions within the company. SKU is an integral part of inventory control management that can be used to plan strategic productions at the manufacturing unit, followed by the supply and demand ratio among the consumers.
On another side, a lot number doesn't specifically lie in the scope of variants but in the whole batch of the same production cycle. It is also helpful in inventory control and gives a unique identity to the lot that contains all the raw materials and manufacturing information for easy tracking of production. To make it more clear, let's understand lot numbers and SKUs with an example.
If you are a t-shirt manufacturer, then a 'red color t-shirt' and a 'white color t-shirt' will have different SKU numbers as they are different variants. Now, if those red and white t-shirts were produced in the same batch (say in the month of January), then the lot number would be the same for both the t-shirts as the lot number doesn't change based on variants of the same products.
When Should You Use a Lot Number?
You can take the reference of lot numbers mainly for quality control and to track production batches. However, lot numbers may be allotted for some other reasons too which are listed below.
Follow Standard Norms
Hazardous goods like pharmaceuticals, chemicals, and battery products are liable to carry the lot numbers in their package. This is because the government can order to recall the whole lot if any issue occurs, which is significant for the security of the citizens.
For Perishable Products
The products that can spoil or perish must also carry the lot number. These products are preserved food, meat, contained food, dairy products, and other types of products that are needed to be retrieved back from the store after the expiry. Assigning a product with the lot number helps businesses to identify the expiry date for a whole lot which supports them with seamless lot number tracking.
For example, if your company manufactures sweets in January, then this lot (January lot number) should be dispatched earlier than the sweets manufactured in February. In this scenario, it is difficult to identify which product was manufactured earlier in the cluttered warehouse. So, the lot number here enables the inventory manager to identify the products easily and dispatch them accordingly.
A lot number is also extremely important if your product is encountering errors and tracking problems. The lot number check helps to identify the problems and fix the challenges, especially for businesses that have large production units with a big warehouse and lots of products. This kind of lot control can help track down the products from the unit till it reaches the store. This ensures quality control and thus minimizes errors.
What Is Lot Control?
Lot control refers to the practice of tracking the lot or batch in inventory that was manufactured under the same condition. Lot control can be used to trace back products in the same batch to the warehouse, back to their origin. This can be significant for identifying the condition, situation, and raw material used to manufacture the particular products. It lets the inventory manager analyze the reason for the defect to take essential steps.
Lot number helps to track packages at every stage as it identifies the problematic lot. They are specifically important when the time comes for any correction or recall. It traces all the information regarding the product specifications, conditions, time of manufacturing, and more. Lot controls help businesses to track down every product, whether it is in the market, warehouse, on transportation, or going obsolete. The whole batch can be retrieved, and the proper treatment can be followed by analyzing the whole data of manufacturing.
When your product passes certain checkpoints like warehouse, store, and transportation, then the lot number on the product is recorded by the receiving agent. This data will be sent to the higher manager for proper lot control. The lot, which is lying in the warehouse and is getting spoiled, can be disposed of to avoid the circulation of defective (expired) goods in the market. This will improve customer satisfaction as the products they buy are always in great condition when they buy. Lot control is essential if you have a big manufacturing plant with a massive inventory with busy movements of goods all day. It gives control over the movement of products and their quality. But the reality is it consumes a huge amount of human resources to monitor everything manually. To simplify this, TranZact, a cloud-based software provides the complete solution for lot control and related services. If you want to automate your inventory, batch-tracking functionality, and production progress, TranZact is the best software for your business.
How to Track Lot Inventory?
Another key component of lot control is to track lot inventory. Inventory is the accounting of the goods and products available in stock. It incorporates all the tangible goods which are kept for sale and raw materials, as well as items required for production. Managing product lots in inventory is a complex process, especially when it is done manually. It is subjected to human error when done without the help of software and technology.
To efficiently manage lot inventory, first, you need to have the required infrastructure for tracking and storing data. However, if you don't have the right resources and systems for data management then lot monitoring can be challenging. It's also important to have employees with the right training to be able to deliver the best result. To simplify this you can outsource the work to get free lot number tracking assistance and support.
Once you have the right infrastructure, hired trained employees, and adopted the required inventory control software, then tracking your lot inventory will be easier. Now let's look at the following steps to track lot inventory in a simple way.
Step 1: Batching
This step involves making a batch of your goods where you can group the lot number to any combination like processing date, creation date, or location. TranZact provides automated batch-tracing facilities to organize goods and inventory.
Step 2: Labeling
Here you need to define the criteria for providing code (number) to be easily identified by the authority. You can also put the barcodes on the package; upon scanning, it will give all the information in an easily written form. For labeling, you need to build the necessary equipment that operates manually to print serial numbers. So, to turn this complex and expensive process into a simple one, you can use software that will allow you to assign serial numbers, barcodes, and lot numbers to the product.
Step 3: Scanning
When the product enters or leaves the warehouse, the scanning of the barcode or serial number is done to maintain data accuracy. This ensures prioritization of the lot which is lying around for a long time and needs to be dispatched when the demand arises.
Step 4: Monitoring
Monitoring is done for supplier audits and when a product crisis occurs. Reports are made based on selling activities, defects, and returning of goods. It gives all the visibility of product processing and sales performance. Monitoring is key when the company needs to recall the products as well.
4 Best Practices in Lot Number Tracking
We have come up with four best practices in lot number tracking for smooth inventory management. This will help your business grow faster by managing all the demand beforehand.
Clear and Concise Lot Allotment
The lot number should be clear and concise with easy readability. Don't use highly complex nomenclature for lot numbers that demand a higher amount of time from new members of the team to learn to read and understand. Lot numbers should be easy to understand that could be interpreted by the store owners as well.
Classification of Products by Lot
It is vital to keep inventory up to date and not just limited to identifying the product only. The lot assignment system will help you in the classification according to the production unit, expiry & manufacturing date, and raw material used.
Lot Should Be Systematic
The allotment of the lot number must be done as per the production of goods. So, the first batch must get the first lot number, and the sequence must be in the same manner. This will make the unit systematic and will kick out the confusion about managing the products with early expiry.
Expiration Date Check
Some products have a shorter lifespan or are about to expire soon. In such cases, you can give discounts to clear the expiring lots and increase net revenue.
9 Benefits of Lot Number Tracking
To Maintain Adequate Data
It is essential for businesses to maintain data for inventory as the same gives a clear picture of the goods at a glance. The data will give you adequate information about the production, quality, and efficiency of work. Managing such data also helps you analyze if employees are skilled enough or if additional training is required. Human errors may occur while conducting quality checks but accurate lot tracking helps to detect these errors and tell you which lots had defective items. Facts and graphs always represent the best data on business progress.
Improve Quality Control
Lot number helps in improving quality control by managing expiry, breakage, and supplier issues. This helps to deliver quality products to consumers. If defective products get shuffled in the market and consumers are alternatively buying defective products, then they will lose faith in the brand. In this way, lot number tracking enables manufacturers to provide customers with detailed product information and quickly respond to any quality or safety issues.
So quality control keeps a check on the product and instantly isolates defective products by rechecking the whole lot. It also traces the product which expires during transportation and brings it back before it reaches its final destination.
Tracing Products
You can easily trace the product with lot numbers as it monitors the lot 'entry' at every possible step. From leaving the warehouse to reaching the store, the products are recorded in the entry list. This helps in tracking the products for various purposes like transportation delay, quality control, or market demand issues.
Managing Warehouse
Warehouse management requires the identification of every product so that it can keep checking for product availability. Lot numbers support this by providing identification to the products with various information encoded inside.
Manage Product Recall
The most significant use of lot number tracking is to recall the product. It may be considered the primary function along with other functions. Its advanced tracing ability tracks down the whole lot in the market and retrieves it for quality check or deposition if the product comes out to be harmful or requires major changes. Further, lot number tracking ensures better decision-making for manufacturers with valuable data on production, inventory, and quality, thereby improving operations and profitability.
Enhanced Inventory Control
Seamless management of goods movement is important for the business to manage production. Accurate lot number tracking helps to ensure optimum levels of inventory and avoid excess manufacturing where goods tend to go obsolete. It enables them to reduce waste by identifying and addressing slow-moving products. This helps to avoid financial damage to the business where lot management can work well for inventory control and business profitability.
It also helps to improve supply chain management by providing real-time visibility into the supply chain, enabling manufacturers to track the movement of materials and products from one location to another.
Manage Warranties
Addressing product warranties needs all details, including manufacturing, purchasing date, and the dispatch date. For instance, if your company manufactures vehicles, electronics, or spare parts, then the warranties can be considered with reference to time. Here, the lot number helps in labeling serial numbers for better identification to accept or reject the claimed warranties. It enables companies to monitor the quality of their products more closely by providing data on each batch's production and distribution history.
Regulating Complaints
Pharmaceutical, food, beverage, dairy, and similar businesses operate under strict government guidelines because here human health is concerned. So when a few complaints arise within a particular time frame, then the produced lot can be referred for quality check, resulting in regulating complaints. Also, lot number tracking can provide a competitive advantage, as it enables manufacturers to improve efficiency, reduce costs, and enhance product quality, all of which can lead to increased customer loyalty and market share.
Eliminate Human Error
When lot number tracking is automated, it is subject to less or no human error. The software or computer is precise and can conduct heavy audits in no time. This ensures the work is done efficiently without limited human intervention, and the same will benefit you in lot number tracking and management by saving you from resource expenses as well.
How Will a Lot Number Tracking Software Help?
Getting the assistance of the lot number tracking software will excel your system as it is much better than manual tracking. The software will give you accurate, error-free, and productive results when dealing with lot number management. It helps to automate lot-tracking operations by eliminating hectic paperwork and manual interventions involved in the process.
A lot number tracking software can automate the complete tracking and monitoring process, reducing the risk of manual errors and improving accuracy. The software can quickly trace products throughout the supply chain, from the manufacturer to the end-user, ensuring that the right products are delivered to the right location. Businesses can gain real-time visibility into their inventory levels, product movements, and delivery status. This allows them to make data-driven decisions and respond quickly to any issues that arise.
With a software, businesses can select the type of lot tracking that suits their business easily. There are two types of inventory management systems for lot number tracking:
- Periodical Tracking: The tracking is done after a certain period, like once a week or a month.
- Real-time Tracking: The tracking is done instantly when the inventory reaches or leaves the warehouse.
Further, lot number tracking software enables businesses to quickly and accurately identify and notify customers who may have purchased affected products, improving customer service and satisfaction levels. By tracking lot numbers, businesses can identify and isolate specific batches of products that may be defective or contaminated, reducing the risk of a widespread product recall.
By automating and streamlining the tracking process, lot number tracking software can help businesses reduce waste, optimize inventory levels, and lower operating costs, ultimately leading to enhanced business growth.
Simplify Your Inventory With Lot Number Tracking Automation
Lot number tracking is helpful in better inventory control, better compliance, and improved accounting metrics which is essential for business productiveness and smooth supply chain management. So, after knowing what is a lot number and its benefits, you can now adopt the best lot-tracking tool for your company to accelerate your business efficiency.
TranZact simplifies lot tracking and batch tracing, providing real-time insights on inventory movements. It specializes in helping thousands of SME manufacturers and entrepreneurs to effectively manage their businesses with a cost-effective solution.
FAQs on Lot Number
1. Where is the lot number printed?**
The lot number is printed on the label, near the barcode, or bottom side of the package.
2. How do I check the lot number?
You can check the lot number by looking for all capital letters saying "lot#" or in the form of a serial number on the label.
3. Who assigns the lot number?
The manufacturer of the goods assigns the lot number.
4. Can we track the lot number?
Yes, tracking lot numbers is easy by digitizing them and tracking them using a barcode scanner and software.
