inventory management

Lot Numbers: The Complete Guide

We'll cover what lot numbers are, how they're used, and why they're so important for small manufacturers.

Lot numbers are an important part of any manufacturing process, but they can be especially critical for small manufacturers.

In this complete guide, we’ll cover what lot numbers are, how they’re used, and why they’re so important.

We’ll also provide some handy tips on how to effectively use lot numbers to keep your manufacturing process running smoothly.

What are Lot Numbers?

Let’s start with some definitions. A lot number is simply a unique identification number assigned to a batch of products. This can be anything from a single item to an entire shipment of goods.

The lot number allows manufacturers to keep track of where products come from and when they were made. It is an essential inventory management technique as it creates full traceability of your stock. For makers that create products that expire (such as food or beverage manufacturers), lot numbers can also help track this information too.

Let’s firstly take a look at the difference between similar tracking codes that are commonly used in inventory management so that we are all on the same page:

Lot numbers and batch numbers are essentially the same thing. They are also commonly known as lot codes, control numbers, or production codes.

Stock Keeping Units (SKUs) are a little bit different as they are unique identifiers for products, while lot numbers identify batches of products. SKUs track individual items, while lot numbers can be used to track an entire shipment of items.

Serial numbers are similar to lot numbers, but like a Stock Keeping Unit (SKU) they are typically assigned to individual items rather than batches of products.

Why are Lot Numbers Important?

Alright, now that we know exactly what a lot number is, let’s take a look at why we should care about these little codes.

Lot numbers are important because they allow manufacturers to track their products through the entire supply chain from start to finish.

By knowing the lot number of a product, manufacturers can easily find out when it was made and where it came from. This information can be critical for a number of reasons:

Quality Control / Quality Assurance

Lot numbers can provide valuable information during an investigation of a product complaint or failure. The lot number can help identify when the product was made, who made it, and what materials were used.

This information can be used to determine if there are any common factors that may have contributed to the problem and to check other products in the same batch to see if they have a similar issue.

Lot tracking can also be used to ensure that quality standards are maintained for raw materials. As an example, one particular supplier may be consistently providing materials that do not meet your quality standards. By tracking lot numbers, you can quickly identify when these materials were used and take appropriate action to find a new supplier.

Inventory Management

Lot numbers can also be used to track inventory levels and keep your manufacturing process running smoothly. By knowing how much product you have in stock, and when it was made, you can ensure that you are using and selling the right materials and products at the optimum time.

Fast Material Recalls

If a raw material is recalled by a supplier, lot tracking can be used to identify which products are affected and need to be removed from inventory. This information can be used to quickly locate and remove the affected products from your premises, and also to contact customers who may have purchased these products.

Improved Customer Service

Lot tracking can also be important for customer service. If a customer has an issue with a product, lot numbers can be used to quickly track the product back to its point of manufacture. This information can then be used to correct the issue, prevent it from happening again and keep the customer fully informed.

How are Lot Numbers Used?

There are many ways lot numbers can be used, but the most common use is to track products throughout the manufacturing process. By creating a lot tracking process for both materials and products, it is possible to see:

  • When raw materials were received
  • Which products were made with those materials
  • When products were shipped and who they were shipped to

Lot numbers can also be used in conjunction with inventory management systems, utilizing barcodes, QR codes or RFID tags to automate the tracking process (we’ll discuss a little more about inventory management later in this article).

How to create a lot number

Now that you have the background details on lot numbers, let’s start getting into the nitty gritty on how they are created and used.

For a lot number to be effective, it should be:

  1. Unique
  2. Easy to read and to interpret
  3. Be consistent in terms of numbering and formatting

The actual information included in lot numbers will vary from company to company based on specific workflows and requirements, but there are a few common pieces of information that are often included:

  • The date the product was made

  • The batch or lot number of the raw materials used

  • The sequence number of the product within the lot

As a simple example, your lot numbers might look like this:

  • 2022-01-01-001
  • 2022-01-02-002

In this example, the lot numbers include the date the product was made (2022-01-01 and 2022-01-02) and the sequence number of the product within the lot (001 and 002). The sequence number would increase with each new product made so that the code is always unique.

How to handle expiration dates

If your products have expiration dates, you can optionally include this information in the lot number as well. This can be done in a few different ways, but the most common is to include the expiration date as part of the lot number. For example:

  • 220101-001-EXP230530
  • 220101-002-EXP230531

In this example, the lot number would include the product’s date of manufacture, the sequence number of the product within the lot, and the expiration date. The expiration date would be included in all lot numbers so that it is easy to identify when a product expires.

Another common way to include expiration dates is to use a separate field for the lot number and the expiration date. This can be done with a barcode, QR code, or RFID tag. For example:

  • lot number: 220101-001
  • expiration date: 230531

With this method, the lot number and expiration date are stored in separate fields. This can be helpful if you need to track the lot number and expiration date separately.

Using inventory software to track your lot numbers

For companies that have a lot of products and raw materials, it can quickly become unwieldy to keep track of lot numbers manually. In these cases, it can be helpful to use either a spreadsheet or specialized software for your lot tracking.

Manufacturing Resource Planning (MRP) software is a type of inventory management software that can be used to generate lot numbers and track lot inventory levels. MRP software is often used by large companies, but there are also many affordable MRP systems available for small businesses.

When lot numbers are generated by MRP software, they are often automatically assigned to products based on the raw materials used and the production date. This can be a helpful way to keep track of lot numbers, but it is important to make sure that the lot numbers are still unique.

Some MRP systems also have the ability to track lot numbers throughout the manufacturing process. This information can be critical for quality control and troubleshooting issues that may arise.

Craftybase is an MRP software that features lot tracking functionality while also tracking your inventory levels in real-time. Craftybase lot numbers are automatically assigned to products based on the raw materials used and the production date so that you can see the full traceability of your raw materials through to sale. Sign up for a 14 day free trial today

The bottom line

Lot tracking is a critical part of traceable record-keeping for any manufacturing business: large or small.

By incorporating lot numbers into your workflow, companies can quickly and easily track items throughout the production process and give you greater visibility of your inventory and stock movements which can be invaluable for quality control and customer service.

Nicole Pascoe Nicole Pascoe - Profile

Written by Nicole Pascoe

Nicole is the co-founder of Craftybase, inventory and manufacturing software designed for small manufacturers. She has been working with, and writing articles for, small manufacturing businesses for the last 12 years. Her passion is to help makers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.