Understanding How Lot and Serial Numbers are Used for Inventory Management

Abby Jenkins, Product Marketing Manager

August 16, 2021

Tracing inventory accurately can require more than just stock counts. Many manufacturers need to trace their products by lot or serial numbers for quality control and customer service.

Imagine you’re a bicycle manufacturer and your crank supplier alerts you that the order they shipped three months ago is faulty. You’ve already used these cranks, and some of them have already been sold to customers. Without lot and serial tracing, you now have to recall all the bikes you’ve made since you received the faulty cranks. But with lot and serial tracing you have the visibility to see which bikes were produced with the faulty cranks and only recall those specific bikes. You also have the ability to see who the faulty bikes have been sold to, so you can reach out to those customers directly to fix the issue.

In order to effectively manage inventory, manufacturers need the ability to trace products through the entire lifecycle. Lot and serial numbers provide an additional layer of visibility into where your inventory came from and how it is being used. Without that visibility, you’ll suffer delays and errors, and that ultimately impacts product quality and customer service.

Using lot and serial tracing software, businesses are able to:

Backward trace — linking finished goods to the raw materials that were used to make them and to the suppliers who provided them.

Forward trace — linking finished goods to specific purchase orders and customer records.

Lot and serial tracing gives manufacturers the ability to link the entire product lifecycle — from supplier to end customer.

Defining lot and serial numbers

With lot numbers, businesses can track the quantity of items and the specific cost for each group of products based on when they were produced and fluctuations in the price of components. On the lot number record, you can identify an expiration date and enter notes or irregularities in the production batch that might be needed later.

Serial numbers provide a unique number for each individual item. Serial tracking lets you choose a specific serial numbered item to fulfill or receive an order. And it allows you to track warranty or repair issues down the road.

Together, lot and serial numbers allow you to implement fulfillment strategies (such as FEFO - first expiring, first out) to minimize waste and ensure inventory is used in the most efficient way.

Lot and Serial Number Tracing with NetSuite Inventory Management

Buyers should look for lot and serial tracing as a key feature in inventory management software(opens in new tab).

With NetSuite you can easily track inventory by having lot and serial numbers automatically assigned.

Lot numbers can be automatically generated in NetSuite. Once the lot number record is created in NetSuite, you can identify an expiration date, record actual cost of goods for that production lot and enter notes or irregularities in the production batch that might be necessary later on.

Likewise, using NetSuite you can auto-assign serial numbers, which allow you to track individual products so that you can service warranty or repair issues down the road.

Lot and serial tracking is essential for quality control and customer service. NetSuite allows you to quickly and easily track inventory at this level of detail.

And because NetSuite inventory management is natively part of the suite, the inventory record is automatically linked to raw materials, production and customer orders. This provides visibility from supplier to customer and gives you greater control so you can use your inventory more efficiently.

Lot and serial tracing enables a deeper understanding of the financial impact of your inventory by recording cost of goods for each production lot. This lets you better understand fluctuations in the manufacturing process and their impact to the bottom line.

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there's continuity from sales to services to support.