Every ecommerce business knows that the bigger your brand gets the harder it is to strategically manage and track inventory. Adding more products, SKUs, retail channels, and distributing inventory across multiple warehouses, can all add extra layers of challenge to your inventory planning and tracking.
One inventory management method that all ecommerce brands can benefit from is lot control, also known as lot tracking.
What is Lot Control?
Lot control is a simple system of tracking inventory that groups products by their date of origin. Depending on the types of products, or the way they need to be stored, each lot may be determined by an expiration date, or date when they arrived at the warehouse.
This method of inventory storage is useful for tracking—lot control ensures every piece of inventory is accounted for and can be traced back to its origin.
While the concept of batching products into lots is simple, when operating a large warehouse of many products, SKUs and lots, tracking can prove difficult.
How is Lot Control Used to Manage Inventory?
The most common use case for using lot control is when there is a product recall. This can happen for a multitude of reasons—manufacturing issues, damage while in transit, or otherwise contaminated products. Product recalls are most known in the food industry and the automotive industry, but they can happen for any product.
Let’s take water bottles as an example. Selling water bottles may seem pretty straightforward. However, if the manufacturer who produces your water bottles says that there was a manufacturing defect during the first two weeks of Q1, that could prove hazardous to those who use the bottles affected, you’ll need to issue a recall for that specific lot of bottles. Without lot control, it would be impossible to know which bottles were the ones with the defect and which ones were not.
How do you know which bottles may have been affected? Lot control makes it easy to track backwards to the exact lot number issued for the water bottles that were affected. By tracing which lot numbers were made during those weeks, you can also see which customers purchased that lot of your product. You can target that specific segment of your customer population to issue a recall.
Lot numbers can be issued at various points in the supply chain. For example, for the raw materials that go into making those water bottles you may assign a lot number as they leave the manufacturing facility. A different lot number might be assigned to a fully assembled bottle upon arrival at a distribution center.
Types of Products That Need Lot Control
While lot control is used primarily for food and beverage fulfilment, there are use cases far beyond the food and beverage vertical. It’s beneficial for all types of products to track them back to the origin, making lot control a great inventory tactic for any ecommerce brand.
Here are four scenarios where lot tracking can be beneficial.
- Expiration dates. There are many types of expiration dates because there is no standardized system in the US. But most food, beverage, supplement, and medicine products will have an expiration date, whether it’s a “sell by” date or “use by” date.
- Anything that may be recalled. This encapsulates almost every product. Anything that is manufactured has the possibility of being recalled.
- Iterative products. Many electronics come with software that needs to be updated. Tracking which software version was installed is important to send out the most updated iteration to customers.
- Differentiation. If your products have slight variation that can be designated by the customer, it’s important to keep similar products together. This happens more often if products are crafted from natural materials—different wood grain, dye colors, or patterns, for example.
Inventory Management Best Practices
There are many ways to set up your inventory management, and using lot control can be combined with other methods. Ultimately you want to choose the management best practices that help you forecast and order inventory as accurately as possible. Here are a few benefits of using lot control in tandem with other systems.
Increase efficiency—Don’t waste time tracking down SKUs, lot control helps you to understand where each product is at all times. It also helps make inventory counts more accurate.
Reduce waste—Lot control goes hand in hand with the inventory method FIFO (first in, first out). By making sure older products move out first, you’ll reduce wasted products that may expire or be otherwise unsellable.
Meet quality standards—When you can track expiration dates accurately, you’ll be meeting all health and safety regulations and ensuring your products arrive to customers with the best quality possible.
Track other functions—If your products require testing, or other quality assurances, lot control can help ensure that every single product goes through the proper processes.
Better forecasting—Lot control gives you an added layer of data to help understand products movement and inventory velocity. By implementing inventory management techniques like lot control, you’ll be streamlining your operations to make better business decisions for your future and growth.
Does Your 3PL Provide Lot Control Management?
When partnering with a third-party logistics provider for fulfillment support, it’s imperative to ask if they can help with lot control management. This is commonly known as a value-added service because it goes above and beyond basic pick, pack, and ship services.
A 3PL who uses lot control in their warehouse will be better able to provide you with real-time analytics to track every single unit they store, pick, pack, and ship. In turn this will allow you to better communicate with your customers if there are any issues with their products.
If you are looking for fulfillment support from a 3PL with experience using lot control, DCL Logistics has many value added services that help you optimize your inventory management. Reach out for a quote or hear more about how we can support your growing brand.