What Is a Lot Number and How Does It Compare to a Serial Number?
Stitch Labs is an operations management platform that provides accurate retail reporting and visibility into your inventory.
In retail, we’ve got a lot of numbers to keep track. Demand forecasting metrics, various marketing KPIs, pricing, SKU numbers — it’s enough to make anyone lose track.
And we’re about to add another one to the mix: lot numbers. What is a lot number? Is it the same as a serial number? Why does it matter? We’ll take you through the lot number meaning, how it’s different from a serial number, and when it becomes essential for your multi-channel business.
What is a lot number?
A lot number is a combination of numerical digits that are given to a group of products that have commonalities. Maybe they were manufactured in the same batch or contain a common material. Lot numbers are often assigned to groups of products from a manufacturer.
Did you know? A lot number is also called a batch number, code number or lot code.
Here’s how a couple of other great resources spell out the lot number meaning:
- An identification number or code assigned to a batch of products, an item for sale at an auction, etc. (Oxford Dictionary)
- A lot number is an identification number assigned to a particular quantity or lot of material from a single manufacturer. Lot numbers can typically be found on the outside of packaging. For cars, a lot number is combined with a serial number to form the Vehicle Identification Number. (Wikipedia)
Every company has a different way of assigning lot numbers to a product. It could be based on the manufacture date, location, expiration date or a combination of multiple numbers. Regardless, the lot number in inventory is a unique identifying string of digits that is only applicable to that group of products. The same lot number cannot be applied to another batch of products. However, many individual products from the same batch will have the same lot number as one another.
(Lot numbers are also defined as identifying numbers for property or homes. In this case, we’re talking about lot numbers in inventory, not in real estate.)
Where is the lot number on products?
The lot number on products is often found in a few places:
- On the outside of packaging
- Within your inventory management software
- Within your manufacturer’s/supplier’s records
Lot number vs. serial number: What’s the difference?
Wondering about a lot number vs. serial number and how they compare? Note how we just mentioned that the lot number on products from the same batch may have the same lot number. A serial number is different in that there is only ONE product per serial number — no two products can have the same serial number.
While lot numbers apply to groups of products, serial numbers are individual identifying numbers for a specific product. It’s sort of like a social security number — no two U.S. citizens will have the same SSN.
Serial numbers are much more exact than lot numbers and can help you distinguish different products from one another, even if they’re the same model. They especially come in handy for tech products (cell phones, laptops, headphones, etc.), which consumers often need support with. This helps the support team easily track down their specific purchase and product to be able to provide high-quality support.
When to use a lot number
Speaking of putting serial numbers to use, how do you use a lot number? Food and beverage and drug companies use lot numbers the most. But other verticals make use of them as well. In fashion, for example, dyed fabric may come out a different color in different lots.
With that, there are a few key scenarios when any retailer may want to reference lot numbers:
- Product recalls: The FDA has ten pages that list recalls for 2018, a list that continues to grow. Unfortunately, product recalls are a reality that can’t always be avoided. If it does happen, you can easily apply the recall to the products with the corresponding lot number, rather than recalling ALL of the products from the manufacturer.
- Quality assurance: Along the lines of being able to quickly address product recalls, you can also use lot numbers as part of your QA process. As you randomly test products from different batches, you can locate the lot number of a defective item. If the other items in that batch are defective, you know to pull all of the merchandise with that lot number — rather than having to take the product off the shelves/offline completely.
- Legal compliance: The FDA and various other governmental organizations may require lot numbers and lot tracking for food and drug companies, as well as retailers that sell firearms and fireworks. It’s best to do your research based on what and where you operate and sell to make sure you’re complying.
- Official certifications: While you must abide by laws, you may also want to consider acquiring additional certifications to accredit your business. The ISO has a general one, and there are also many industry-specific certifications that may require lot tracking.
When to use a serial number
Remember our answer to lot number vs. serial number: A lot number is assigned to a group of products, whereas a serial number is assigned to a single product. And we mentioned how it’s easier for customers to get support for products when they have a serial number. There are other uses for serial numbers, though:
- Product compatibility: If you have a specific serial number, you can look up whether other products are compatible with that item. There may be different, updated versions of products that don’t have added compatibilities than older versions. This is helpful both for shoppers and sellers.
- Tracking warranties: For products that come with or have an optional warranty and have serial numbers, it’s easier to look up that customer’s specific warranty stipulations and address any issues.
Lot inventory tracking
Understanding the lot number meaning and what serial numbers are is only half the battle. Now, you’ll want to put that knowledge to work with lot tracking.
Lot tracking is the process of recording how each product moves in and out of your inventory. You’ll apply the lot number to your reporting and be able to look at trends with specific lots, and understand how some may have moved faster or slower than others, or generated a larger or lesser profit. This is especially helpful if you notice you have a lot of returns from the same lot — perhaps there’s a defect or similar issue to look into.
Manual lot tracking is nearly impossible; it’s absolutely essential to set your business up with the tech stack to support a thriving, multi-channel business with various suppliers and manufacturers.
Here are some of the basics:
- Barcode scanner: A barcode scanner eliminates the need for manual key input, increasing accuracy and helping address shrink.
- Labels with barcodes: A label-maker that can integrate with your inventory management techniques will help keep all of your products labeled appropriately.
- Inventory management software: Find the right inventory management software that will integrate with barcode scanners and other tools to help you stay on top of lot numbers and your inventory as a whole. Look for one that has a field for lot numbers to make this process easier.
- Lot tracking software: There are specific tools made just for lot traceability and serial tracking. These are often tailored for specific types of businesses and products, so look for one that’s niched in your vertical.
The tools won’t do all the work, though. Here are a few tips to keep in mind:
Where to use the lot number: Include the lot number on all received merchandise (as well as the number of units) as well as the pick list. This’ll help you easily identify lot numbers for returned products.
Store products with the same lot number together: In case of a recall or similar issue, it’ll be easier to locate the merchandise in question and address it. This’ll also help keep employees from accidentally grabbing products from a lot that’s been identified as substandard or unsellable.
Record expiration dates for lots: If you have products that expire quickly, record that in your inventory tracking tools. Set an alert so you can be prepared to amp up the marketing efforts on slow-moving or nearly expiring stock.
Start tracking your lot numbers with effective inventory management
Effective inventory management starts with the tools you use. With so many products, numbers and figures to track, integrations and automations are crucial for accurate data and efficient software operations.