Lot Tracking Explained: A Comprehensive Overview

From drug companies to carmakers, manufacturers in many industries use lot-tracking systems to trace the movement of every item they buy throughout their supply chain and everything they produce, so that they can optimize their inventory management. This is especially true of growing businesses that deliver an increasingly wide range and volume of products, requiring them to manage increasingly complex supplier, inventory and distribution processes.

Effective lot tracking provides manufacturers with visibility of raw materials, components and finished goods across the entire life cycle of their products from sourcing and manufacturing to distribution and returns. This level of traceability makes it easier to identify and resolve inefficiencies and problems in the manufacturing process, which not only makes teams more accountable but also leads to faster problem resolution. Lot tracking is also a powerful tool when managing product recalls, helping manufacturers to quickly identify, locate and recall defective goods to ensure the safety of their customers and mitigate any negative impact on their reputation.

Keep reading to learn how lot tracking works, its benefits and the best practices that leading manufacturers employ to master their inventory management, maximize their efficiency and fuel growth for their organizations. There’s also discussion about how cloud-based inventory management software helps manufacturers implement robust lot-tracking processes that scale and grow with their business.

What Is Lot Tracking?

Lot tracking is an inventory-management technique in which manufacturers build complete and up-to-date records of every raw material and finished good in their organization, broken down by batches that are also called lots. These records include “upstream” information, such as data on suppliers and the components used to produce a given batch of products; product data, such as model names, serial numbers and expiry dates (in the case of perishable goods); manufacturing data; and “downstream” data about the company’s distributors that received products from the batch and, ultimately, the customers who bought them.

Lot tracking is vital for manufacturers that want to deliver the highest standards of product quality and service to their customers, which simultaneously builds long-term loyalty. For instance, ecommerce businesses that promise next-day delivery and easy returns must be able to trace goods with pinpoint accuracy regardless of whether the goods are within their warehouse, passing throughout their distribution networks or en route to or from customers.

A growing prevalence of product recalls has highlighted the importance of lot tracking for manufacturers, which must do everything in their power to ensure the quality of their goods and must be able to trace the root cause of defects so that they can address them right away. Lot tracking not only drives better customer outcomes, but it also helps businesses improve their compliance with standards and requirements to avoid costly fines from regulatory bodies, such as the U.S. Food and Drug Administration (FDA) and Department of Agriculture (USDA).

Key Takeaways

• Manufacturers use lot tracking to monitor and record data about their goods in batches as they move through the product supply chain, from the delivery of raw materials to production processes and from inventory management to distribution.
• Lot tracking delivers a range of benefits to manufacturers, including enhanced inventory management, improved product quality, automated recordkeeping and better regulatory compliance.
• To avoid the time, cost and risk of errors associated with manual data entry, leading manufacturers increasingly use lot-tracking software and scanners/sensors that are integrated with their broader inventory and warehouse management platform(s).

Lot Tracking Explained

Manufacturers can use lot tracking to gain a granularly detailed picture of the sourcing, production, inventory and distribution processes related to every product they produce. Lot tracking enables businesses to see exactly which materials were used to create a given batch of goods, including the suppliers that contributed to the products and the quantities used. Lot tracking systems also allow manufacturers to see and document which quality controls were applied to a given batch of goods, as well as who conducted and signed off on those tests, bringing accountability to quality-control processes.

Manufacturers also use lot tracking to trace goods that have left their warehouse, recording which distributors have received products from the batch in question and which products have been sold to customers. Today’s lot-tracking solutions can get even more granular, providing manufacturers with insights into which customers have received their purchases, be they grocery stores that made bulk orders of breakfast cereal to restock their shelves or individuals buying their favorite artisanal coffee directly from the roaster.

How Does Lot Tracking Work?

In practice, lot tracking involves grouping products into distinct batches, labeling them with the same lot number or barcode, and then tracking each lot through each step of its life cycle from receiving to shipping to delivery. Lot tracking can be used to track raw materials, like the screens and semiconductors used to produce advanced smartphones, or finished goods, like the phones themselves.

By grouping and tracking inventory in this way, manufacturing businesses gain visibility throughout their supply chain. This comprehensive view of operations opens the door to new manufacturing efficiencies, improved logistics and faster issue resolution — which, in turn, lead to improved customer satisfaction and reduced risk exposure.

Life Cycle of a Lot

Every lot in a manufacturing business goes through a series of operations, all of which are recorded as the life cycle of that lot. The first step in the life cycle is the receipt of raw materials that are all labeled with a unique barcode and assigned a lot number. From there, raw materials are sent to the shop floor to be integrated and assembled into finished products that are stored in a warehouse. Throughout the process, handlers simply scan each item’s unique barcode to see where they should send it next.

Lots of finished goods are stored in inventory until it’s time for the orders to be picked and shipped to customers. The unique labels attached to each item tell warehouse employees where the products should be stored, which items should be picked from stock to fulfill customer orders and which products to pick first for optimized inventory management and quality control. This final point is especially important for items with a limited shelf-life, like groceries and medicines.

Properties of a Lot Number

Manufacturers assign lot numbers to their finished goods to track individual products by the batch in which they were made as the products move from warehouse inventory through shipment and delivery. Lot numbers allow businesses to track inventory volumes and costs for different product batches in minute detail.

They also specify crucial characteristics about each lot that help manufacturers manage their inventory effectively and address production issues or recalls. These details may include information such as expirations dates, manufacturing defects and special storage instructions (for example, required temperature controls). Lot numbers can also include essential accounting details, such as manufacturing costs, purchase and sales orders related to each lot.

The rise of inventory management technologies has led to the influence of barcodes and radio frequency identification (RFID) tags on the formatting of lot numbers. The advantage of digital lot numbers is that they allow manufacturers to automatically track every lot across their organization in real time with greater accuracy than is possible with manual processes, helping them fine-tune inventory management while reducing the risks of human error.

While there is no standardized format for assigning lot numbers across all industries and manufacturers, the numbers often contain similar types of information, such as production dates and batch numbers. They are usually tailored to meet a particular industry’s specific operational and regulatory requirements, such as the pharmaceutical and food industries’ regulatory requirements for supply chain traceability.

Why Is Lot Tracking Important to Inventory Management?

Running an efficient, accurate and profitable manufacturing operation relies on effective inventory management. Lot tracking allows businesses to trace their products throughout the manufacturing life cycle with an additional layer of visibility into where each item came from and how it is being used. This helps manufacturers identify and resolve inefficiencies or human error, which, in turn, minimizes delays and costly recalls.

In addition to these tactical advantages, lot tracking also helps manufacturers maximize the efficiency of their inventory management and lower their operating costs over time. By integrating their lot tracking data with their general accounting systems, manufacturers can see how different approaches to inventory management affect their operating costs, revenue and bottom line.

8 Benefits of Lot Tracking

Lot tracking delivers a variety of benefits to manufacturing businesses when properly implemented, ranging from more efficient inventory management and improved product quality to enhanced safety and more stringent regulatory compliance. The practice has grown even more important in recent years as businesses face mounting pressure to act swiftly and precisely when issuing product recalls. Here are eight key benefits derived from lot tracking.

1. Optimize inventory management: Manufacturers that track every lot know exactly when their raw materials were received, when batches of finished goods were produced and how long each batch has been in their warehouse. This information drives better inventory management by giving manufacturers visibility into how to store, move and ship their inventory in the most efficient and cost-effective way, allowing them to minimize idle stock and waste. For instance, a pharmaceutical manufacturer whose flagship weight-loss drug has a shelf life of six months must ensure that it ships lots of the medication in the order in which they were produced to avoid losses and maximize revenue.
2. Enhance product quality: Consistent product quality is key to customer satisfaction. It is also an indicator of well-thought-out manufacturing processes. Though it is inevitable that some products will be defective, the goal for manufacturers is to establish workflows that minimize defects and ensure that only goods meeting strict quality guidelines are shipped to customers. Lot tracking is an important part of a sound quality management program because it allows manufacturers to trace every step of a product’s existence to identify the source of a defect and resolve it, be it due to supplier error or a faulty shop-floor process. By integrating their lot tracking data with a quality management framework, manufacturers can also customize the way they handle defective products, such as by using triggers. For instance, a smartwatch manufacturer that gets alerts from its quality management system revealing that every product in its latest batch of watches failed the waterproofness test can identify which component of that lot is faulty and trace the fault back to the relevant supplier.
3. Identify manufacturing defects: When customers initiate a return due to a defective product, manufacturers need to understand if the problem is isolated or if it affected an entire batch of their finished goods. By identifying the faulty item’s production batch, lot tracking simplifies the process of testing the quality of other products in the same batch. This means manufacturers can identify and address quality issues before shipping out other defective products.
4. Boost customer satisfaction: Customers gravitate toward manufacturers that consistently deliver quality products that meet their expectations. If a product performance or quality issue arises, they expect manufacturers to quickly identify and address the problem. Because lot tracking provides detailed traceability, it enables manufacturers to respond promptly to customer complaints or recalls, minimizing inconvenience and demonstrating a commitment to product quality and safety. It also helps manufacturers maintain high product quality by quickly identifying and resolving any performance or quality issues that may arise. By ensuring that only the highest quality products reach customers, lot tracking builds trust and helps businesses maintain positive, long-term customer relationships. And finally, the ability to provide precise information about product origins enhances transparency, which further boosts customer confidence and satisfaction.
5. Manage recalls and returns: Lot tracking helps manufacturers manage returns and recalls swiftly and accurately, while minimizing related costs. A recall can sometimes mean tracing, locating and facilitating the return of goods from hundreds, thousands or even millions of customers. The ability to track shipped goods by lot number makes it easier to locate and recall faulty items across a complex distribution network and dispersed customer base. This process would be virtually impossible to execute without lot tracking software and would be far more labor- and cost-intensive.
   Lot tracking also allows manufacturers to locate any unshipped items remaining in a faulty batch in their inventory. With that information, they can then remove the defective items from stock and repair them, if possible, or simply discard them, if they are unsalvageable. In either case, the manufacturer avoids the cost, headache and reputational repercussions of selling an entire batch of faulty products.
6. Eliminate human error: Manual data entry is time-intensive and prone to human error. Lot tracking software eliminates the need for it in a manufacturer’s product tracing and inventory management processes. In the worst case, such errors can lead to inaccurate orders and picking mistakes, like the shipment of expired or faulty goods. Automated lot tracking processes also improve the speed and accuracy of inventory and warehouse audits, while taking the administrative burden and pressure off a company’s inventory and warehouse employees.
7. Reduce theft and losses: Businesses worldwide collectively lose billions of dollars’ worth of inventory due to theft, fraud, inventory obsolescence and employee errors. Preventing inventory losses is a top priority for manufacturers. Accurate, up-to-date lot tracking and inventory management allows manufacturers to detect potential theft and fraud in real time so they can act quickly to address concerns before they become significant losses. For example, a retailer might notice discrepancies between the inventory figures in its lot-tracking system and the number of items sitting on the shelves of its stores, indicating the need to better monitor and manage theft in its bricks-and-mortar locations.
8. Ensure safety and compliance: Manufacturers in regulated industries, such as the food and beverage, electronics and pharmaceutical sectors, are legally required to maintain accurate lot-tracking records as part of their compliance processes. Both state and federal regulatory bodies require these companies to demonstrate the safety and traceability of their products, in addition to meeting strict quality standards. Many use enterprise resource planning (ERP) systems to support and enhance their compliance efforts. In the case of food and beverage companies and pharmaceutical manufacturers, lot tracking also improves product safety by reducing the likelihood of shipping expired or contaminated goods.

10 Lot Tracking Best Practices

Lot tracking can be difficult to implement, especially for manufacturers that have traditionally relied on manual processes to track and manage their inventory and financial operations. While every company must consider its own needs when developing a lot-tracking strategy, depending on its goals and industry-specific requirements, the following best practices can help manufacturers across every sector maximize their chances of success.

1. Assign Unique Lot Numbers or Barcodes

Using lot numbers or barcodes combined with inventory scanners is considered the most efficient way to track the movement of goods across a manufacturing operation. Not only does automating lot tracking with digital labels cut the time and labor cost of manual data entry by orders of magnitude, it also reduces the risk of human errors and accelerates manufacturing processes. Faster processes lead to more rapid and reliable shipments, which is essential for businesses that must frequently restock their shelves, like food and beverage retailers or fast-fashion chains.

2. Maintain Detailed Records

Leading manufacturers make a point of developing and maintaining up-to-date records for every lot in their operation. These records should include essential details, like each lot’s production and expiry date, plus supplier information and associated financial data, such as the lot’s cost to manufacture.

These detailed records are instrumental in helping manufacturers monitor their operations, make data-driven decisions about how best to manage their inventory, and tackle logistical challenges like customer returns and product recalls. What’s more, detailed records play a role in ensuring regulatory compliance and simplifying audits, both crucial for businesses in regulated industries like chemical manufacturing.

3. Implement a Reliable Tracking System

Reliable inventory tracking helps businesses make sure they always have enough stock available to meet customer demand. To achieve this, manufacturers must be able to monitor the movement of raw materials and finished goods through every step of their supply chain in real time. That includes internal supply chain processes, such as receiving, warehouse storage and fulfillment, as well as logistics processes, such as product returns and exchanges.

Take the case of a toy manufacturer that must suddenly deal with a flurry of returns after multiple customers discover a defect in its new line of puzzles for toddlers. Detailed lot-number records will streamline the process of locating the defective products, simplify the return process for customers and allow the manufacturer to see where other products from the same lot are stored in its warehouse. Then, it can proactively repair or remove them from inventory.

4. Integrate Lot Tracking With Inventory Management

The benefits of lot tracking are augmented when the process is handled digitally and integrated with a manufacturer’s broader inventory management and accounting systems. This allows manufacturers to automate many aspects of lot tracking and subsequent related processes that would be time and labor-intensive if done manually, like inventory management analyses and detailed recordkeeping for accounting purposes. Integrating these systems and automated processes can drive down a manufacturer’s operating costs further than lot tracking alone can achieve.

5. Follow FIFO Principles

Accurate inventory tracking is a practical process that helps manufacturers produce a steady flow of materials and finished products through their organizational processes and to their customers. Accountants use roughly a half-dozen different inventory costing methods to evaluate their company’s inventory for reporting purposes, but most companies prefer the “first in, first out” (FIFO) method.

FIFO assumes that products sell in the order in which they are produced or received. In other words, the first items added to a company’s inventory are the first to be sold. Although it is technically OK, from an accounting perspective, for the actual inventory processing system to be disconnected from the accountants’ chosen inventory costing method, following FIFO principles is particularly relevant for many companies. For example, it’s a must for companies that manufacture perishable goods, like food, for safety reasons and to minimize waste. FIFO is equally relevant for businesses whose sales follow seasonal trends, like fashion retailers, as it helps these companies move stock before it becomes obsolete and must be sold at a discount or discarded at a loss.

6. Conduct Routine Inspections

Though automated lot tracking minimizes the need for manual recordkeeping across the manufacturing supply chain, it is nevertheless wise for manufacturers to conduct routine inspections of their lot-tracking operations and product batches to verify the accuracy of their records. This includes checking the accuracy of lot tracking numbers and barcodes. In addition to confirming that their lot-tracking approach is effective and reliable, routine inspections also tell manufacturers when their lot-tracking methods are becoming obsolete and need updating.

7. Provide Comprehensive Training

The effectiveness of a lot-tracking solution ultimately comes down to how it is interpreted and implemented by employees. By providing staff with comprehensive training on lot-tracking best practices, such as proper handling, labeling and recordkeeping, as well as how to work with lot and serial numbers, manufacturers will build a competent workforce that is both ready and willing to execute the inventory management strategy.

8. Adhere to Regulations

In some cases, lot-tracking best practice is defined by industry-specific regulations and standards related to inventory management and quality assurance. For example, American pharmaceutical companies must adhere to the FDA’s Current Good Manufacturing Process (CGMP) requirements, which include minimum controls for the way drugs are manufactured, processed and packaged. Similar laws in other regulated industries include stipulations surrounding product labeling, serialization, recordkeeping and quality control, among other factors. Achieving regulatory compliance is about more than meeting legal obligations: It also helps manufacturers build trust with their business partners and customers, who place the utmost importance on safety and risk mitigation.

9. Back Up Data

As companies in every sector face the rising threat of cyberattacks, in general, and ransomware attacks, in particular, data protection and recovery strategies have become a primary concern for business leaders. That goes double for manufacturers, who cannot afford the instability that data loss, system failures or unauthorized access to sensitive lot information can wreak for their organization.

To that end, leading manufacturers complement their software-based supply chain and accounting solutions with an equally robust data management solution. Modern data management software allows manufacturers to set customized backup frequencies, minimize their recovery time following an outage or attack and ensure that backups can be accessed by approved stakeholders from any location at any time.

10. Regularly Evaluate and Refine Processes

Continuous improvement is a golden principle when it comes to lot tracking. As a manufacturing organization grows and becomes more complex, it should regularly evaluate and refine its lot-tracking processes to keep them aligned with its business needs. By combining regular lot-tracking data analyses with employee feedback, manufacturers can uncover opportunities to improve the traceability of their inventory, make their operations more efficient and reduce errors.

Key Features of Lot Tracking Software

Lot-tracking software takes the complexity and risk of human error out of lot-tracking processes. This is especially true of centralized lot-tracking solutions that combine data from every stage of the manufacturing process on a unified software platform. Many manufacturers still use siloed solutions for lot tracking, but the advantages of a centralized approach have seen future-focused organizations replace these legacy environments with a single platform that combines all the functionality they need to manage their suppliers, inventory, warehouse and distribution needs.

Key features to look for in lot-tracking software include:

• Lot creation: As its name implies, this feature allows manufacturers to define new product lots. The value of the definition lies in how well it can be used to systematically organize information, such as batch numbers, tracking data, supplier data, production and expiry dates. A high-end camera manufacturer, for example, might automatically generate lot numbers for its latest shipment of lenses and cross-reference those numbers with the vendor that supplied the lenses’ glass, so that if future quality-control tests reveal problems, the component supplier will be easily identified.
• Lot tracking: Lot tracking is the mechanism by which manufacturers can know the location and status of different product batches at every stage of the manufacturing supply chain. This is done using lot numbers that employees can scan for information on a batch’s history, as well as specific production, storage and handling instructions. Companies can use this location and status information, in real time, to enhance their operational processes and inventory management. Lot tracking is especially relevant for manufacturers that follow FIFO inventory management principles and want to always sell their oldest stock first.
• Lot traceability: Manufacturers rely on lot traceability to track every batch of products in their organization, from production to inventory to distribution. Traceability is crucial to managing product returns and recalls, as it allows manufacturers to track individual products on their way to and from customers, as well as internally.
• Lot reporting: Lot reporting records every step of a lot’s life cycle in detail, for future reference. That includes supplier delivery information, purchase orders, specific manufacturing and inventory details (for example, how much time a lot has spent in the warehouse) and customer order data. This information is often displayed graphically, providing manufacturing employees with a complete picture of each lot’s life cycle, along with detailed information on product quality, testing and customer returns. All this information informs companies’ decision-making and their continuous improvement efforts.
• Integration: The ability to integrate with other systems, such as ERP and customer relationship management (CRM), enables seamless data flow across the organization. That supports better-informed decision-making and the automation of various processes beyond plain-vanilla inventory management.
• Compliance management: Managing products’ compliance with industry regulations and standards is vital, particularly in sectors like pharmaceuticals and food. Lot-tracking software can help maintain compliance by providing necessary documentation and audit trails.
• Scalability and flexibility: As businesses grow, the software should be able to scale and adapt to changing needs, including handling increased data volumes and supporting new processes.

Industry-Specific Applications

From food and beverage companies to cosmetics brands, lot tracking helps businesses trace and bring consistency to the quality of their products. Additional benefits include streamlined product return and recall procedures, as well as improved regulatory compliance. The latter is particularly relevant for manufacturers operating in regulated industries that require detailed lot-tracking records.

• Food and Beverage

  Optimized inventory management is essential for food and beverage manufacturers, who operate in a tightly regulated environment and whose products often have a limited shelf life. Tracking batches of goods with lot numbers helps these organizations follow FIFO principles, ensuring that they move and sell stock in the order in which they produce or receive it, maximizing their revenue and reducing waste. For companies like Crumbl Cookies, replacing manual inventory management practices with a software-based solution has fueled rapid, sustainable growth.

• Pharmaceuticals

  Traceability and recall management are top priorities for pharmaceutical companies. Defective pharmaceutical products pose dangers for their customers and must be taken off the market as soon as they are discovered. Lot tracking assists in managing those recalls and also helps pharmaceutical companies trace the source of product defects and address the issue, be it a manufacturing flaw or incorrect storage conditions. By using lot tracking to manage returns and recalls, pharmaceutical companies can minimize customer chargebacks and industry fines, either of which can eat into their bottom line and negatively affect their reputation.

• Electronics

  Customer expectations of electronics companies have skyrocketed in recent years. For manufacturers, this raises the stakes against producing defective goods or products being damaged in transit, which can force them to replace an entire shipment and absorb significant losses.

  Lot tracking helps electronics companies mitigate these risks by giving them the visibility to audit, analyze and continuously improve their supply chain operations. It aids in maintaining quality control and compliance by tracking components and finished products, ensuring that they meet industry standards. It is crucial for efficient recall management, allowing manufacturers to quickly identify and isolate defective batches. It also supports component traceability, helping manage supplier relationships and ensuring the quality of sourced materials. Furthermore, lot tracking enhances inventory management by verifying that components and products are used in the correct order, reducing waste and obsolescence. Integration with advanced technologies, like Internet of Things and blockchain, further enhances traceability and data security in the electronics supply chain.

• Cosmetics

  Online and direct-to-consumer cosmetics sales have grown fast in recent years. According to one report, online cosmetics purchases jumped nearly 9% year-over-year during the first five months of 2024, reaching $16.3 billion. To meet this demand, health and beauty businesses use lot tracking numbers to manage inventory and shipment across an enormous breadth and volume of products.

  Take LovelySkin, which replaced its homegrown inventory management systems with a centralized cloud-based ERP solution. Instead of having to carry two to three months’ worth of inventory just to avoid stockouts, the company now monitors its inventory levels by brand and SKU, allowing it to stay nimble while responding to major spikes in demand. That included a 300% increase in orders during the COVID-19 pandemic.

• General Manufacturing

  The benefits of lot tracking are not restricted to specific industries. Manufacturers of all types, from industrial machinery producers to paper and stationery companies, use lot tracking to understand and manage the many moving pieces of their supply chains. With a comprehensive view of their supplier orders, raw materials, inventory costs, product quality and shipping, businesses can continually refine their operations to achieve the highest standards of product quality and meet or exceed their customers’ expectations, all while optimizing their inventory and warehouse management practices.

What Products Need Lot-Tracking Numbers?

Lot-tracking numbers are relevant for any manufacturer that produces and distributes its products at scale, which exposes them to quality-control risks. Whether they sell breakfast cereal or medical supplies, manufacturers must be able to identify defective or expired products, trace the lots in question back to their source and initiate recalls that ensure that affected goods are all returned and accounted for as quickly as possible.

In addition to customer satisfaction and safety, lot tracking is often mandated by law for manufacturers operating in regulated industries. On that front, the practice is essential for businesses that produce the following products:

• Cosmetics: Beauty and cosmetics products are regulated by the FDA, which means that they must meet specific standards for ingredients, shelf life and customer safety. Lot tracking allows cosmetics companies to trace the provenance of their products, ensure that they are formulated using the right ingredients and store them correctly until they are ready for shipment to customers. In the case of a recall, lot tracking also allows cosmetics manufacturers to trace which batches of products are defective and locate these faulty products for rapid returns.
• Food and beverage: Lot tracking is a must for food and beverage manufacturers, which are regulated in the U.S. by the FDA or USDA, depending on the types of foods they produce and distribute. Besides being required by law, though, lot tracking is also the key to confirming that food and beverage products are sourced, stored and shipped safely. In the event of a contaminated product batch, lot tracking also helps food and beverage companies manage recalls more effectively, reducing a recall’s effect on customer safety and the company’s reputation.
• Medical supplies: People rely on medical supplies to improve their health and quality of life. For their part, medical supply manufacturers must have complete visibility and control over their supply chain and inventory to deliver quality products that meet customers’ needs, including reliable fulfillment and distribution operations that can validate that products were shipped in a timely manner. Medical suppliers are also regulated by the FDA, which legally requires them to maintain accurate lot-tracking records.
• Pharmaceuticals: Also regulated by the FDA, pharmaceutical companies rely on lot tracking to monitor how their products are manufactured, stored and shipped. FIFO inventory management principles help pharmaceutical manufacturers ship stock in the order in which it was received and avoid having to discard expired inventory at a loss.

Optimize Your Lot Tracking With NetSuite Inventory Management

Faced with growing volumes of incoming and outgoing inventory, fast-changing customer demand and an ever-evolving regulatory landscape, manufacturers need complete control over their production data to maintain — or improve — profitability while avoiding costly delays or recalls. For most, manual lot tracking is no longer up to the task, which is why many manufacturing companies have turned to digital lot-tracking solutions that are integrated within a broader solution.

The lot-tracking capabilities of NetSuite Inventory Management gives manufacturers the level of control they need to thrive in today’s marketplace. NetSuite’s cloud-based software allows manufacturers to track goods from their suppliers to the shop floor, and then to their warehouse and customers, all using traceable lot numbers. With the ability to accurately trace their incoming and outgoing stock, manufacturers can avoid the high costs of overstock or the missed opportunities incurred by stockouts. In addition to lot tracking, NetSuite Inventory Management provides manufacturers with an integrated all-in-one solution that combines product traceability with other crucial control features, such as multilocation inventory management, warehouse and fulfillment management, automated stock replenishment and cycle counting. And because NetSuite is an ERP capable of running the functions of an entire business, its lot-tracking data can be shared seamlessly with accounting, finance, CRM and other modules, enabling automation of many cross-departmental processes.

Growth and success bring new complexities and challenges for manufacturers to manage. New product lines and manufacturing techniques might require them to source raw materials from new suppliers, build new production facilities and warehouses, or broaden their distribution networks. In these conditions, digital lot-tracking software is no longer a nice-to-have option. It has become indispensable for manufacturing businesses that want to meet customer demand and drive profits, while ensuring the speed, reliability and compliance of their operations.

Lot Tracking FAQs

What is the difference between lot and batch tracking?

The terms “lot tracking” and “batch tracking” are often used interchangeably, as both involve monitoring and tracing the activity of specific groups of products with the same manufacturing history. However, some businesses differentiate lot tracking as a form of batch tracking that is specific to perishable goods, such as food and beverage products.

What is lot-level traceability?

Lot-level traceability refers to a manufacturer’s ability to track individual batches of products from production to inventory to distribution. When a business achieves lot-level traceability, employees across the manufacturing supply chain can see a complete history of each lot that passes through their operations, including supplier data, quality checks, inventory information and more.

How to keep track of lot numbers?

Manufacturers can either track lot numbers manually in spreadsheets or automatically in lot-tracking software. The former is generally inadequate for large manufacturing operations as people are prone to error, which can lead to production problems and difficulty managing recalls in the event of defective product shipments.

Which manufacturing industries use lot tracking?

Lot tracking is used by numerous manufacturing industries from ecommerce and retail businesses to medical supply companies. Any business that must manage a complex network of suppliers, SKUs, warehouses and distribution networks stands to benefit from lot tracking, especially when using software that integrates with its broader inventory management and supply chain management systems.