How to Track Your Products with Lot and Serial Numbers

If you’ve ever wondered whether you should use lot numbers or serial numbers to track your inventory, this episode breaks it down in a clear, practical way.

We cover what each system is, what information it stores, which industries rely on it, and when to use one over the other. You’ll also learn best practices and how inventory software can make tracking more scalable and accurate.

Whether you’re improving your current process or building one from scratch, this episode will help you make better decisions about how you track your products!

0:00 - Teaser
0:15 - Intro
1:27 - What is a lot number?
2:14 - What information is stored inside a lot number?
3:13 - What does a lot number look like?
3:42 - Which industries rely the most on lot number tracking?
4:15 - What are the benefits of tracking by lot numbers?
8:05 - What are the best practices for lot number tracking?
10:30 - How do you track products by lot number with inventory software?
11:56 - What are serial numbers? How are they different?
13:05 - What other information is stored inside a serial number?
13:25 - What are the benefits of serial number tracking?
16:13 - What are the best practices for serial number tracking?
18:08 - When to use lot numbers versus serial numbers?
19:28 - Outro

Podcast Produced by: inFlow Inventory
Hosted by: Jared Plumb & Melinda Tse

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Transcript

0:00

Say if you have, like, a laptop and your laptop battery is heating up and one day your laptop catches fire. You know? That that's very bad. Yeah. They're gonna be able to then track down all of the batteries that shares that lot number. You don't have to be a detective. You just know. You just know. Right? You just go into your system like, oh god. Who else has these batteries? Right? Hello, everybody. I'm Jared. Hi. I'm Melinda. And welcome back to the secret life of inventory. This is a show where we dive deep into the unseen world of inventory management and reveal the hidden mysteries that help businesses like you optimize your workflow and succeed. Today, we're getting into something a little technical, but it's actually really important. Lot tracking and serial numbers. So have you ever wondered how businesses track, like, batches of products or, you know, track warranty claims or recalls, things like that? It all comes down to these two ident identifiers. You might have seen lot numbers in food packaging or serial numbers in electronics, but do you actually know what happens behind the scenes? Well, in this episode, we'll be unpacking all the little details including what lot tracking and serial numbers are, how they're different, and when to use each one for your business. Yeah. And we're also gonna help you kinda walk through some of the maybe the workflow best practices so that you can track lot and serial numbers in your business if you if you need to. And we're also gonna show you how inventory management software can make the whole process a breeze. Stay tuned because this episode might just change the way you look at product tracking. Okay. So before we get into all the little details, let's take it from the top. Jared, could you explain what is a lot number? Right. So, a lot lot numbers are oftentimes actually are called batch numbers. Essentially, they are a a way of identifying a group of products. They're kind of all produced or manufactured in, like, an identical circumstances or using the same, like, raw ingredients, essentially. Right? So for example, think of, like, a bakery if you baked, like, you know, thirty, fifty loaves of bread in the morning and you're using all the same flour, all the same sugar, eggs. I don't know what goes into that clearly. You stop looking at that. We're not bakers. Not bakers here. Right? Or maybe say you're a pharmaceutical company and you're making, like, ibuprofen and you're using all the same chemicals for, like, those ten thousand bottles. Right? Those all of those things will share the same the same lot number essentially. Right? What information can be stored inside a lot number? Yeah. So, I mean, they do vary depending on, like, the industry and also even, you know, the certain manufacturers might wanna, you know, track different things. But oftentimes, there's gonna be kind of you'll you know, there's batch number, obviously. So which, you know, production run did these particular things came from? lot A of times, it'll be the production date will be included in that as well. It's location. So if you have, like, multiple facilities where you manufacture the same thing, you can, you know, pinpoint which location you actually manufactured in, supplier codes. So if you're using products from a certain supplier, maybe you're you're getting, you know, two different suppliers giving you the same thing, you wanna track, you know, which supplier gave you the raw ingredients, so you can track that. There's also expiration dates, obviously. Those are big. If you're tracking lot lot and batch numbers, oftentimes, you're dealing, with expiration dates. So that's generally I'd say those are usually the ones that would be included in in the A lot of different variables. Yeah. A lot of different variables for sure. And you don't have to use them all Mhmm. Of course. But, yeah, you can use whichever ones are relevant to your business. Yeah. That makes sense. Could you give an example of what a lot number would look like? Yeah. Sure. So, again, it goes back to, like, what your like, what you wanna specifically track. But say, for example, maybe you wanna track, your batch first. You put your batch number at the beginning, maybe production date in the middle, and then end it maybe with location. Or maybe you wanna do all of the things. Yeah. Batch number, location, supplier code. Maybe you want all of that. Right? So subjective? It's very subjective, and it all depends on, you know, what information you want. But there's no right or wrong, way of doing lot numbers. It really all depends on what works for you. Which industries rely most on lot tracking? So they're really, really important for industries where compliance regulations, shelf life, things like that are really, really important. Right? So think things like, food and beverage, cosmetics, pharmaceuticals. Those are really the industries that are gonna really oftentimes, it's, like, required by law. Yeah. So not just like don't. Exactly. You generally, any industry that's dealing with, like, consumption or you're putting your something on your skin or your body or something like that, often those often will break out. Exactly. Right? Those are important for for those industries. Can you elaborate more on the benefits? Why would a business need to track their products by lot numbers? Yeah. So, I guess going back to, like, the whole compliance and regulations, I I mean, that's the biggest one. Right? So, again, it's not often like a a choice. It's something that you have to do. Right? You don't wanna get sued, and you wanna be able to protect your customers too at the same time. Right? So another one would be, customer satisfaction. Right? So then kinda what I mean by that is it gives you the flexibility to kind of react to certain things swiftly. Right? So for example, say you have a recall on something, you can act fast if you're if you're using lot numbers. So, like, say if you have, like, a laptop and your laptop battery is heating up a lot, and then one day your laptop catches fire. You know? That that's very bad. Yeah. Manufacturers don't want that. Right? So you contact the manufacturer and you say, hey. My laptop caught fire. They're gonna be like, oh, no. Yeah. They're gonna check the the lot number I'm gonna on the battery. gonna They're be able to track the manufacturer down to that lot number, say, hey. Look. This battery with this lot specific lot number heated up. It made our unit catch fire. They're gonna be able to then track down all of the batteries that they sold that shares that lot number and pull those recall those to prevent it from happening again. So it's a way for you to act fast on situations like that. So they're really, really important. Don't have to be a detective. You just know. You just know. Right? You just go into your system like, oh god. Who else has these batteries? Right? Because chances are if the one battery is bad, if other batteries were produced in the same circumstances Yeah. Chances are that they're they also could be, defective as well. Right? So you can really, nail those things down. Another one actually is reducing your financial loss and waste. Right? So in a situation like that, or actually, here's a better situation. Say that, you're a pharmaceutical company and you have, god forbid, but maybe you have a customer who contacts you and said, you know, I was taking this medication and it made me really sick, for example. Bad. Very bad. So, I mean, what you can do then is that that person or manufacturer can then look at the lot number of that specific, batch. They can track down all of the other, medications that share that. They can hyperfocus and target all of those, pull those, make sure that no one else is gonna get sick from that. Right? So it's gonna prevent, this from getting worse. But you when you have that lot number, you don't have to just throw out all of the medication. Right? So maybe say, for example, it's ibuprofen or something. Right? Rather than taking every single ibuprofen that you have on the shelf and throwing in the garbage Mhmm. You can just hyperfocus on the ones that were potentially contaminated. Right? So that's gonna save you a ton of money from and it's gonna reduce the waste, which is also good for the environment. So it's like it's like a multipronged thing that's gonna A of benefits. There's a lot of ton of benefits. Right? In fact, there's actually a benefit that a of people don't don't think about would be, demand forecasting. Right? So a lot when you're tracking lot numbers, it's gonna give you a really clear, like like, vision into your, production timelines, which ultimately is going to help with your with your demand forecasting. Right? So that's that's a big one. But I think probably one of the biggest, I would say, would be expiration date, management. And, when you're tracking on batch numbers, oftentimes, you're dealing with food, pharmaceuticals, things that expire. Right? So, you're you should be using the FIFO valuation method in that, circumstances, which is think of milk. Yeah. Milk is a perfect example. Googles them back. I'm I mean, we should as consumers be taking from the That's true. I'm also guilty of it as well. Right? But as long as they're stocking the shelves with the FIFO, that's fine. Right? It'll all work out in the end. But, yeah, essentially, what FIFO is is first in, first out, and that's just basically as you produce things, they should be, you know, taken out last. Right? So for example, if you, you know, have something fresh off the presses, you don't wanna sell that first when you have something that you produced a week ago sitting on the shelf, and it's slowly inching closer and closer to that expiration date. Right? So as you produce things, it kinda goes to the back of the line, and then the next the first thing comes out. Right? So that's what it's all about. How about best practices for tracking lot numbers in your inventory? Can you share your expertise on this? Yeah. Sure. So I think the first thing to kind of cover would be, it involves fulfillment. Right? And that would be to try and when you're fulfilling your orders, make sure that you're trying to fulfill, your specific orders all with the same lot number and batch number. And the reason for that is just makes things like recalls way more manageable. Let's give an example for this. So say you you are supplying ten different, customers with and they're all ordering, the same product. Right? Yeah. And now say that you have that product, but you have it in ten different lot numbers. Right? Now if you're just fulfilling orders randomly, there's a chance maybe that each one of those customers gets one from each lot number. Right? So you've spread it all out. So now each customer has ten different lot numbers, and ten different customers, ten different lot numbers. Now say you get a recall, but just for one of those lot numbers. Now you have to do a recall for all ten customers. Right? Whereas if you're fulfilling each customer with each lot number, say this customer gets lot number number one, this number number two, number three, and so on, when you get a recall for, say, number one, you can just do a recall to that one customer rather than the ten. So it just makes the whole recall process way more manageable. So, I mean, that's a big one is I think fulfillment and really trying to to manage how you fulfill your orders. And kinda something that kinda rolls into that would be, using a barcode system. We talk about this a lot. But barcodes are especially good for tracking lot and serial numbers and and batch numbers because it just makes the whole process easier. Essentially, what barcodes are doing, is they're adding less friction for the rest of your team. Right? If you're doing things manually, when you're when you're selling something, you're fulfilling an order, and and you're relying on your team to write things down manually at every step of the process, chances are that, you know, along the way, maybe someone writes something down, a little bit of chicken scratch. Yeah. I can't read it. Yeah. I can't read it. Or maybe if you're using a computer spreadsheet or whatever, they put the wrong number in, or they put a Mhmm. Three instead of a two or whatever. Right? Yeah. It can just mess up the whole process. It's gonna be a lot more error prone if you're not using barcodes. So, like, barcodes just, like, make it a lot easier for everyone just to follow the the workflow and whatnot. So that's a big one. And, of course, tying into that would be using inventory management software. You know, you should be using ones that support lot and serial numbers and batch numbers, because it just makes the whole process way, way more simple. And, of course, if you have the barcodes attached to that, it just makes everything everything's just as easy as a scan. Don't have think. Exactly. No. We we love that. We love that with our workflows, at least. Could you expand more on how inventory software helps you track products with lot numbers? Yeah. Of course. So essentially, the the whole process is fairly straightforward and fairly streamlined. It's really simple. I mean, essentially, when you get your products in, you just wanna make sure that you're recording that lot number. And that being said, you wanna make sure that you're recording it with inventory management software that has a field for it. For example, inFlow users, we have lot expiration dates, you can easily track them in their own dedicated field. So the ones you have that, you wanna kind of be storing all of those products, with similar lot numbers together. And that goes back to our fulfillment example that we had about trying to fulfill all of your orders with the same lot and batch number. So if you're storing them products together, your pickers or your fulfillment team, pardon me, they're gonna be able to kind of track those, like, lot numbers together, like, very easily. Right? They're not gonna have to go and scan one product here, and I'll wear my other lot number and track all those things down. Right? So they'll they'll be able to just kinda find everything in the same spot. So that's that's really, really important. And then, of course, when your your team is actually picking the orders, make sure that you're they're tracking the the lot numbers on their pick list. Right? And this is gonna help, just with, like, recalls, warranty claim, anything like that. Anytime you need to figure out where a lot number came from, so say, you know, you have a recall on an item, you can figure out exactly which shipment they went out with using back back testing on that, on that pick list. Right? So it's really important that you track those, and then you use those for Yeah. Any recalls or claims or anything. All the information you need, like, right there? Exactly. Right right at your fingertips. Yeah. Now that we covered lot tracking, what about serial numbers? How are they different? Yeah. So, I mean, I've actually mentioned kind of serial numbers and lot numbers in this conversation even because they are very much related, in a lot of ways. So they're kind of, like, often talked about together, and it's because they're both about traceability essentially. Right? But there is a key distinction between these two. So essentially, serial numbers are linked to individual units. Right? So even if something is the same model number, you know, size, shape, color, all that, it will have a specific serial number. Like, laptops are a perfect example this, for and I'll probably be using them as an example a lot because they're something that everyone has or Yeah. Generally has and is familiar with that, that have serial numbers. Yeah. So, essentially, their their individual units are are tracked by individual serial numbers. Whereas lot numbers and batch numbers, you can have a a ton of different you can have up to thousands and thousands potentially that all share as the same batch or Mhmm. Or lot number, where serial numbers are tied to individual products. Right? So it's kind of like giving each item its own fingerprint. Exactly. That's exactly what it is. It's just making sure that you can trace that individual product to an individual customer once you've sold it for so it's great for things like, you know, warranty claims and repairs and things like that. What other information can be stored inside a serial number? Yeah. So, I mean, again, it it's the same, it's like lot numbers in the sense that, manufacturers kinda chew pick and choose what they store, but oftentimes, it's gonna be like model number will be on there, the production date, manufacturer location. A lot of times, you know, manufacturers have different, facilities that they're manufacturing the same models in. So those are kind of the common ones that would be included. So if you were to summarize all the benefits of serial tracking, what would they be? Yeah. So I would say, like, number one would be, like, a clear line of ownership. So with the serial number, it's gonna it's gonna follow that product through its entire life cycle, right, from the point that it's made all the way to the point that it ends up in a landfill or whatever. Right? So if you for example, if you have something you buy, maybe you bought a washing machine and it has warranty a of ten years or something, and then maybe you need to move and you need to sell that washing machine. If you have your original receipt with proof proof of purchase, that warranty will follow the washing machine even if you sell it secondhand. Right? So it's a great way to kind of, like, follow that ownership, line of ownership, through its entire life cycle. So that that's definitely a big one. And I kind of with that, kind of tied to that, of course, is tracking warranty claims. Right? So the reason you would wanna track, an item through its its ownership is for warranty. Right? So in that example, if you sell a washing machine, you're gonna be able to sell a lot easier if it has a warranty attached to it. Right? So a a used washing machine, obviously, but new ones will always have one. Yeah. But if you're selling a used washing machine, if you have a warranty attached to it, it's gonna make it easier to sell and everything. And if that person needs to claim the warranty, they can easily do that using the serial number, which is really great. And then kind of, again, kind of attached to the warranty claim Yeah. Is being able to track the servicing of it. So, right, maybe, the warranty claim is, you know, it doesn't get you whole a new unit. Maybe it's to get the unit repaired or fixed or whatever. There's obviously but you need to track that unit as it gets repaired and fixed and then all the way back to the customer. Right? And the the best way of doing that is with using serial numbers. Right? So that's a that's a big one as well for sure. I guess that would be good for authenticity tracking too. Right? Like, people made fake products and they just like Exactly. That's a great example. Yeah. That's a great example. So if you have like a knockoff product and, you try and sell it to someone or, you try and get a warranty on it or something, they're gonna be like, this is not a real serial number. Yeah. Yeah. So that's a that's a big one too. I mean, it's actually good for even preventing theft, things like that. So think of, like, bicycles or cars. I I mean, cars have VIN numbers, are not exactly the same as serial numbers, but they essentially are the same just by a different name. But it really helps in situations like that. If you have, your bike is your your serial number is registered, you have the proof of purchase. If it gets stolen Yeah. And you track it down, you can prove that that bike is yours with those that the serial number and the the proof of purchase. So it is a great way of, like, preventing things like that. Again, I'll say laptops is another big one. But if you, again, you have proof of purchase and you find that laptop somewhere maybe at a pawn shop or something, hopefully, you find it before it gets to the pawn shop. But if you do find it, you can prove that it's yours. So it's it is great for situations like that. That's awesome. It really reduces guesswork. Yeah. Really. It's all it's all about being able to, like, figure things out quickly. Right? Instead of being like, oh, where did that one item come from? You can be like, it came from lot number a one two three four, and it went to this customer on this date. It's just all about that context and that traceability. Yeah. What are the best practices for serial number tracking? So I'd say the top of the list would definitely be staying consistent. Consistency is key when it comes to serial numbers. You need to make sure that you're recording that serial number right when you get the product in and you're recording it, you know, if it gets sold to a customer, you're you're it's following it to to be to that customer. If that customer claims a warranty, it's following it there. It's following it to the servicing. It's following it back to the customer. It's all about keeping consistent. Right? So, I mean, that's huge. And with that, obviously, barcodes are really great because in a situation like that, that's a lot of different hands. Right? Yeah. Even in a normal situation, if there wasn't a warranty claim, there's still you know, it's coming into receiving, then it's going into storage, then it's going into fulfillment, then it's going into shipping. It's changing a lot of different, hands. Right? So if you're using barcodes, you're just gonna make that process way more simple, and you're not gonna, you know, run too many messy Yeah. It's like broken telephone wouldn't it? Exactly. That's a perfect example. Yeah. It's like broken telephone if you're not tracking Yeah. Using a barcode. Yeah. Person. Yeah. So that's a big one. Staying away from manual like things spreadsheets. I just had to bring it up. I had to bring it up. Yeah. But they're especially bad for, tracking things like lot and serial numbers because it's it's just another field to have to worry about. It makes using barcodes less efficient. I mean, it's still possible. Talked about it in the past that you can use them. They're just it's just really clunky, and it's not really like there's kinda almost it's almost pointless to a certain degree, for using barcodes with spreadsheets. So it just adds another layer of friction when you're using spreadsheets. So you wanna kinda automate as much of the process as you can, and that's where inventory management software comes in. It kinda automates everything and makes things super simple. You can hook up barcodes with it, easily. Right? So it's all about that automation. And less room for error. Exactly. Make it harder on yourself to make mistakes. Yeah. So we're almost at the end of the episode now. If you were to break it down, how does the business know when to use lot tracking versus zero tracking? So it it really comes down to the level of control that looking you're for. But, essentially, you can kinda think of it like this. If you're producing or manufacturing, things in batches, like lot numbers are obviously key batch numbers. That's why they're called that. So, yeah, that would be really great, if compliance regulations are really important. So, you know, pharmaceuticals, food and beverage, oftentimes lot numbers are required. So you would definitely wanna use lot numbers in those situations. If you're dealing with expiration dates, that would definitely be one where you would wanna be using lot numbers. And if you're you don't really need to track individual units if that's not important, then lot numbers, batch numbers are where it's at for you. What about serial numbers? And then serial numbers are more for, like, high value items, which is why I've used I've been using, you know, laptops Cars. Cars, appliances, bikes. Oftentimes, it's because of these things have warranties attached to them. Right? So if warranty claims are important and servicing and all that stuff and tracking that is important through the warranty claims, obviously, you're gonna want serial numbers. So, yeah, generally, they're attached to really a lot more high ticket items. So I think for the most part, that's kind of where you would separate the two. That's a really good clear distinction. Yeah. And and you know what? And some businesses actually use both together. Right? So you if you're using one, and you can use both if you really need to. So yeah. Alright. That's a wrap for this episode. Thank you so much for joining us. I hope you guys learned a lot about, you know, lot numbers, serial numbers, the difference between the two, when to use each, and how you can use inventory management software to the make whole process super smooth. To recap, lot numbers track products in batches made by the same manufacturer and serial numbers track each individual unit. Both help to improve traceability, reduce risk, and give you better control of your inventory. That's right. So whether you're tracking perishable goods or high ticket items, you know, serial and lot numbers are gonna be great to help you with compliance visibility. And if you're using inventory management software, it's gonna make tracking these things way easier. It's gonna just improve your workflow tremendously. Thanks again everyone for tuning in. And if you like this episode, make sure to give us five stars on Spotify and Apple and subscribe wherever you listen to your podcast. And if you have any questions, drop them down below. We'll see you in the next episode. Bye.