Managing Inventory with Lot Number Tracking
Tracking inventory by lot number is easier than you think with Connected. In this post we examine what is lot control traceability, why companies need to track inventory by lot number, and how Connected can do the work for you.
One of the toughest challenges that a small business can face is compliance with all the regulatory requirements in their specific industry. For example, businesses that focus on the sale/production of food or medical related products are typically compelled by regulation to track specific inventory by “lot” number. This is often referred to as a “traceability” requirement with the need to track a product from its origin to the end consumer.
A lot number is an identification number assigned to a specific quantity, batch, or “lot” of an item. Lot numbers are typically found on the outside labelling of a product and usually are accompanied by an expiry date. For example, a case of a product may contain a quantity of 12 for item number/ SKU (stock keeping unit) “WIDGET-123”. 8 of the items contained in the case have Lot # “123” with expiry 12/31/20 and 4 of the items have Lot # 456 with expiry 12/31/21 but all 12 are WIDGET-123’s. Each of the different lot numbers could also have a different cost.
The Food and Drug Administration (FDA) and Canadian Food Inspection Agency have strict guidelines for virtually all type of products to include lot numbers and expiry dates on all packaging for traceability.
When a small business is required to trace all or some inventory by lot number, it can often be a daunting task. Often a series of spreadsheets, logbooks, and/or custom databases are used to track lot numbers. These types of systems are cumbersome, often inaccurate, and have no connection to the accounting/inventory system that is driving the transactions.
The Connected Accounting and ERP Software can help meet the lot number traceability requirements of most industries. The following sections are specific examples of how can help streamline lot control:
Incoming Inventory (Purchasing):
Connected will track the lot number and expiry of all incoming inventory. Lot controlled items are forced to be identified by lot/qty/expiry when recording a receipt of inventory. The same item number can be received with different lots, expiry dates, and quantities. When entering a PO receiving, Connected will also allow the easy printing of item labels that include the lot numbers for the received inventory. Labels can be configured to print bar codes.
Inventory and Costing:
Connected allows each inventory item to be marked as “Uncontrolled”, “Control by Lot Number”, or “Control by Serial Number”. With these options, vendor purchase orders and customer invoices can have different combination of goods that are controlled by lot and/or serial number and goods that are not. Connected will also track a separate cost for each lot number, as required. For example, if Lot 1 of Item A has a cost of $1.75 and Lot 2 of Item A has a cost of $3.25, when the product is sold and quantities of both lots are selected, Connected will calculate specific costing per lot to give you the most accurate costing information and margin calculation possible.
When lot controlled items are Manufactured in Connected, the finished good product will be assigned a single lot number for the batch that was manufactured. If the manufactured product contains components that are lot controlled, these will also be specifically tracked and each product used will have the lot numbers and quantities designated. This allows traceability of all finished good items that contain a specific lot number of a component to be quickly found. Inventory Labels for finished goods can be printed with lot numbers and/or bar codes from within the Manufacturing window.
Customer Orders/Invoices/Credit Memos
When products are shipped to customers the lot number and quantity must be specified as inventory is committed for shipping. A single order line item can be drawn from more than one lot number. If products are returned from customers, lot controlled items must have the quantities and specific lot numbers recorded when entering a Credit Memo to return inventory.
Lot Number Tracking
Everything is all tied together with the Lot Number ledger which will show a complete history of a lot number listing each individual transaction. The lot ledger will show the initial receiving and/or manufacture, all customer invoices, and credit memo returns. This screen is the basis to quickly list and notify customers of a product recall and/or demonstrate traceability compliance for mock recalls and inspections.
Using Connected to track or “trace” inventory by lot number is one of the most accurate time saving ways to meet regulatory requirements and can be an essential part of your business.
- lot control
- lot numbers
- accounting system with lot control
- inventory tracking
- serial numbers
- food industry
- medical industry
- product recall