The Importance of Item Lot Management and Traceability

Lot traceability
What is lot control, and what is lot tracking? If you are not already aware, item lot management and lot tracking refer to a system that helps companies better manage and control their products before, during, and after they are in a storage facility (typically a warehouse).

Today, every last item in a warehouse should be traceable so managers can keep a close eye on all of the inventory moving in and out. It is especially important to have the right software that can help you maintain the most up to date knowledge on all items.

In this post, we’ll cover why lot management and traceability are important for your food supply chain business. You will also learn how the right software can help you streamline your food supply chain and create better relationships with your distributors and your customers. Continue reading to discover how your business can start implementing better lot management and tracking.

What is Lot Control/Management?

A “lot” refers to a specific batch of an item that was received, stored and shipped from your warehouse along with the coordinating dates and times at each of those steps.

Lot control is the general idea that every item that flows in and out of a warehouse can be traced back to its origins, and it is absolutely crucial in maintaining overall quality control and meeting safety standards. For example, if your company produces tomato sauce, with proper lot control, the idea is you should be able to trace each jar all the way back to the farm that produced the tomatoes for a specific batch of sauce.

Every lot should have its own unique tracking number, and while this may seem like a simple concept, it can quickly get complex for a food industry company involved in a huge supply chain, especially if strict lot control is not implemented. In the food industry, without lot control, consumer health is at risk as well as a company’s finances and reputation in the event of a recall.

If you aren’t already implementing lot control within your organization, you could be losing money, or worse, risking the health and safety of customers.

What is Lot Tracking?

Also referred to as “batch tracking”, lot tracking is when your organization can track every single batch of product from end-to-end. One lot is a specific group of goods that were produced together using the same materials, so the products in that “batch” will all have the same ingredients from the same sources and the same expiration date as they were produced together at the same time.

With lot tracking, you can track a batch of a product across the entire food supply chain, starting with the manufacturer then to the supplier and all the way to the end customer. With lot tracking, you can:

  • Monitor the items that are being moved in real time
  • Find any missing items
  • Track production
  • Match replacement parts where they need to be replaced.
  • See if there are surplus/extra items and where they came from.
  • Identify accounting errors and fix them right away.

Why are Lot Management & Tracking Important?

If the items listed in the previous two sections weren’t enough to convince you, lot management and traceability are the best way to stay on top of the products in warehouses—saving your organization a lot of money, time, and likely stress, too. Lot management and traceability are absolutely vital in ensuring you are keeping customers safe, particularly in the food industry. Not having the proper lot management and tracking in place could potentially kill your business if standards are not consistently met, or in the event of a recall.

When there is a recall, having strict lot management and traceability processes already in place allow you to pinpoint right away which items might have gone bad and control any further shipments from going out. Without a good lot management system, your business would be completely lost in being able to find the origin of the problem and would take more time in being able to stop the “bad” product from being distributed—potentially endangering lives in the process.

Let’s examine further the role lot control plays in specific crises:

Recalls:

Recalls are the last thing any food business wishes to have happen, but they are unfortunately a harsh reality those in the food supply chain business may face. According to a study by the Food Marketing Institute and the Grocery Manufacturers Association (GMA), recalls can cost businesses up to $10 million, and that’s just in direct costs. The same study also found that 58% of businesses were impacted by food recalls.

Having a reliable warehouse management system in place will report information right away, helping you quickly identify if a recall needs to be made, or even preventing the recall from happening in the first place. In another study by The Relational Capital Group, 87% of those surveyed reported they were “more likely to purchase and remain loyal to a company or brand that handles a product recall honorably and responsibly, even though they clearly made mistakes that led to a safety or quality problem.” Lot management and tracking is the way to handle recalls efficiently and maintain customer trust.

Expiration Dates:

Food supply chain management and tracking systems help companies know the expiration date of every single lot to help ensure that distribution happens within a reasonable time frame. Tracking expiration dates also prevents products from going out that may turn bad soon or that are already expired. While it might be hard to eliminate that product, the cost is far less than having to implement a recall.

Product differentiation:

Let’s go back to our example of your company being a tomato sauce seller. Since your organization is likely to use more than one distributor for tomatoes, your lot management and tracking system helps you know which products do not mix with others to ensure product consistency for each batch, such as the batch color.

There are important legalities surrounding lot management and traceability. If your company does not have any of these processes in place, it could face large fines or worse if there is a health outbreak due to lack of control within the product creation and distribution cycle.

With the right software, managers should be able to:

  • See auto-generated reports from their lot tracking system, allowing them to track the movement of products
  • Create specific lot reports
  • Facilitate recalls when necessary
  • Follow how existing processes are affecting the company’s bottom line

If we go back to the “horse meat” scandal in 2013, it became known that as much as 100% of the beef products in parts of Europe being purchased by customers from certain distributors actually contained horse meat. Food manufacturers and the supermarkets were largely held responsible, and many with an efficient lot management and tracking software were able to identify which products contained the horse meat and recall everything very quickly.

bcFood ERP

Your warehouse management system should have robust functionality. Our ERP software can provide an end-to-end system of traceability and centralize your food supply lifecycle into one coherent system. At bcFood, our ERP offers:

  • Automation: you can have lot numbers automatically assigned that go with every purchase and/or distribution of products.
  • Multiple lot values: keep track of your numbering system by assigning separate vendor, customer, or other externally-assigned identification numbers to lot records.
  • Lot inheritance: change over information from an old lot to a new lot record such as identification information, country of origin assignments, and quality testing data so lots are followed through the entire supply chain.

Our inventory management system lets you:

  • Assign batch numbers, expiration dates, and serial numbers
  • Track purchase orders and sales of all lots
  • Minimize accounting errors and enter information quickly and easily, which is applicable to products across the organization
  • Administer fast and efficient product recalls

To implement better, more efficient item lot management and lot tracking into your organization, contact us today to talk about the best solution for you. We hope this article has been helpful in explaining the importance of effective lot management and traceability.