What Is Lot Tracking and How to Use It?

Lot tracking, also known as batch tracking, is an important process for ensuring quality, most commonly for traceability and recall purposes.


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What is Lot Tracking?

A lot is one batch of some Stock Keeping Unit.  Lot tracking means keeping a tab on the movement of specific lots or batches to know where each part of the lot ends up.

  • For example, when some item is purchased, then a new, unique, stock lot number (aka “a batch number”) is given to identify this line on the purchase order, which was received at once.
  • Later, when looking up the items by the lot number, it is possible to find out when the items were purchased.
  • Once you manufacture a product, then the whole batch of products will be given a new, unique lot. And all lots and quantities of materials used when making the batch of products are recorded.
  • Lastly, when shipping out products to customers, the lot number, from where the items are sent to the customer, is recorded.

All in all, this process is called lot tracking.

Read more about Traceability in Manufacturing and How to Achieve It.

Manufacturing ERP and Lot Tracking

Having a manufacturing ERP system for lot tracking is critical to companies that need to follow strong regulations and strict quality standards – generally in the food, pharmaceutical, electronics, avionics, defense, automotive and similar industries.

There may be many different people involved with the handling of products and materials. Usually, at each point of handling, lot codes must also be recorded.

Using paper and pen, or Excel, is very time-consuming and a sure recipe for disaster, since a small mistake in tracking can cascade into massive problems for the whole company.

A manufacturing software that ties the various operations together into a single platform makes the whole lot tracking process mostly automated, usually thanks to the following abilities:

  1. Automated lot management, which is a core part of inventory and warehouse management.
  2. A single source of truth – the ability to follow lots through all of the different processes, from purchase receipt, use in production, warehouse movements and sales to shipping.
  3. Automatically managing the usage of items according to FIFO or FEFO principles, which saves time, prevents confusion, and minimizes data entry errors.

The Lifecycle of a Lot

What does lot tracking look like with a Manufacturing ERP?

  1. For example, when receiving goods, the stock worker can simply print out an automatically generated, unique label to stick on the box of received items, which identifies the specific lot.
  2. Then, when the next handling operation takes place, e.g. moving items to the shop floor, the next worker only has to look at the ERP system to see what his/her task is, what materials he/she must pick, which lot and the storage location.
  3. When production is finished, the new, unique labels are stuck on the products and stored in the warehouse.
  4. Once products should be picked from the warehouse and shipped to the customer, again, the warehouse worker can pick the products from stock according to the instructions from the manufacturing ERP.
  5. For double-checking, workers may even use barcode scanners to ensure they are handling the right items and get instant feedback from the system.
  6. And if necessary, it is always possible to manually intervene and tell the software which lots were actually used, if for some reason the originally planned lots are not available for use.

Making a Product Recall

When you find out that there was a problem with some lot of materials, you can easily pull a report that tells you:

  1. Which lots of products were manufactured using these specific materials
  2. Which customers received the affected products

Or, if you later find out that there were issues in the production process, or you have found that there’s an issue with a specific lot of products, you can pull another report that tells you exactly which customers received those products.

Based on those reports, you can pinpoint which customers to contact.

Also read about Return Merchandise Authorization – Managing Product Returns.

Investigating the Root Cause of a Defect

When a customer returned a defective product, you pull up the lot tracking report to see exactly when the production operations were performed, on which machines, who did it, which lots of materials were used, and all other relevant information.

This information can direct you to the root cause and possibly even identify other products that could be affected by the same issues.

Furthermore, if while inspecting the defective product you find a specific part that failed, it is easy to track down when and from which vendor it was purchased. Then, you can ask for a replacement and, at the same time, help your vendor identify issues in their production processes so they can improve their product quality and consistency.

Read more about Supplier Performance Management Best Practices.


Small to medium-sized manufacturers must push to remain competitive with larger players in the market – those who have many resources to implement complex and expensive ERP systems. The decisions they make must focus on production, quality, and efficiency. Cloud-based, agile, flexible, and accurate manufacturing ERP software exists that can help navigate these difficulties and place SMBs on par with larger competitors by automating critical functions.

If you would like to know more about MRP/ERP systems available on the market and get tips for choosing one, go over our comprehensive list of the Top Six Manufacturing ERP Systems for Small Manufacturers.