Spoil-er: Lot tracking software can slash product recall time.
For 3PLs handling pharmaceuticals, beauty, or food, batch and lot tracking isn’t optional ... it’s essential for success. (That’s why we put together this guide.)
Read on to learn everything you need to know about lot tracking, from understanding the fundamentals to how to pick the best software solution for your warehouse.
So, what are we waiting for? Let’s get right to it …
Lot tracking only works when every batch can be traced back to its source. So, understanding who generates the lot number (and when) can help make sure you always achieve traceability from production to fulfillment.
In most cases, lot numbers are created by the manufacturer or supplier before the goods even reach the 3PL.
Here’s how a 3PL typically uses those lot numbers:
This is the most common approach since the lot number ties directly to manufacturing conditions – details only the producer can define.
In some cases, the manufacturer or supplier doesn’t provide lot numbers (this can be the case when it comes to smaller brands or private-labeled products). In these situations, the 3PL takes the lead.
Here’s how a 3PL typically handles it:
This approach keeps inventory organized and compliant, even when upstream partners don’t supply standardized lot data.
Even in today’s complex supply chain landscape, many 3PL warehouses still rely on spreadsheets or paper-based systems for lot traceability.
And for those who use this approach, a word of caution: No matter the size of your business, it is not only a time sink for valuable staff time but also increases the risk of costly errors that could damage your client relationships.
In fact, studies and industry guidance show that manual recall tracing can take hours or even days, while software with traceability functionality can cut that down to minutes.
Luckily, implementing an effective lot tracking system in your 3PL operation doesn’t have to turn into your own version of fright night. With the right solution and strategy, you can enhance your supply chain visibility and create a robust safety net that protects both your business and your clients’ interests.
One reason some 3PLs move to more robust software for their inventory is lot tracking, which provides warehouses with essential visibility across their clients’ supply chains.
Lot tracking creates a digital paper trail for every item in a 3PL’s care. It automatically records important information like manufacturing dates, expiration dates, storage locations, and supplier data.
Lot tracking software also streamlines operations by keeping tabs on all products from the same batch. That way, as these items move through the 3PL warehouse, the system automatically updates their status and location in real-time.
While often mistaken for the other, lot numbers and serial numbers serve distinct tracking purposes in a 3PL operation ...
Lot numbers identify entire batches (or groups) of products manufactured together under identical conditions. What kind of identical conditions? Well, to name a few, the products share the same production run, materials, equipment, and environmental factors (temperature, humidity, etc.) Tracking these uniform conditions helps isolate the issues if a defect or product recall arises.
On the other hand, while lot numbers group items made under the same production conditions, serial numbers are used to identify each individual unit within that group. In other words, each serial number is unique to a single product. This helps trace an item’s full history – from manufacturing to store to sale to shipment.
To break it down further: Lot tracking gives visibility at the batch level, while serial numbers provide item-level traceability.
The key distinction between the two can also be seen in how they are used. When quality issues arise, lot numbers help 3PLs quickly identify all products from an affected batch, enabling efficient recall management for clients. While serial numbers provide more valuable when addressing individual unit concerns rather than batch-wide issues.
Recent industry research from Bain’s Global State of Traceability survey reveals that 68% of executives consider traceability “very or extremely important.”
What this tells us: 3PLs with robust traceability systems are beginning to outperform competitors who lack comprehensive visibility.
Supply chain traceability offers numerous operational advantages for 3PLs:
For 3PLs managing multiple client accounts, lot tracking software delivers value far beyond basic inventory control. Here’s a look at the key advantages that make lot tracking software essential for modern 3PL operations ...
Lot tracking software provides 3PLs with complete/real-time visibility into client inventory location, quantities, and values across multiple warehouse facilities. This enhanced transparency eliminates guesswork and helps prevent costly stockouts or overstock situations that can strain client relationships.
Through automated data capture and barcode scanning, lot tracking reduces human error in inventory records by up to 95% compared to manual systems. This precision makes sure 3PLs can maintain accurate stock levels for each client and quickly locate specific product batches when needed.
Additionally, robust lot tracking enhances inventory control by enabling FIFO and FEFO rotation. For 3PLs handling temperature-sensitive or perishable products, this level of traceability ensures older or soon-to-expire stock is prioritized first, reducing product waste and improving overall fulfillment efficiency.
One of the most compelling benefits for 3PLs is the impact on product recalls. And the financial implications are substantial: Industry estimates put the average cost of a product recall around $10 million.
By implementing lot tracking, 3PLs help protect their clients from these devastating costs.
Also, beyond recalls, lot tracking provides some great insight into client returns. By generating batch-specific reports, 3PLs can uncover trends and identify which product groups are driving customer dissatisfaction. This visibility helps pinpoint potential quality issues linked to specific production runs or suppliers.
Expanding on the above a bit more, quality management becomes substantially more effective with lot tracking in place. By linking defects to specific batches, 3PLs can quickly help clients identify and resolve production issues. Data shows that defect clustering by lot number identifies 89% of production issues within just two manufacturing cycles.
For 3Pls, the financial impact of poor-quality products on their clients’ businesses can be substantial, with global costs estimated at $400 billion annually. Therefore, implementing lot tracking helps warehouses protect their clients by quickly tracing quality issues to their source.
Many 3PL clients support industries with strict regulatory requirements around product traceability. Some examples include: Pharmaceutical clients must comply with FDA 21 CFR Part 11, and food and beverage clients must comply with the Food Safety Modernization Act. (To name a few. Various other sectors have their own compliance standards that 3PLs must help them meet.)
Modern digital lot tracking systems are the real MVPs here because they ensure accurate data collection and storage throughout the entire fulfillment process, protecting both the warehouse and its clients.
Warehouses that utilize these systems also report being consistently "audit-ready" with immediate access to required documentation for any client.
For 3PLs, selecting the ideal lot tracking software requires careful evaluation of factors beyond basic WMS functionality. The right system can dramatically improve warehouse efficiency, while the wrong one may create costly implementation challenges and frustrations.
When evaluating lot tracking software for your 3PL operation, prioritize systems that offer comprehensive multi-client management capabilities.
And at a minimum, look for these core functionalities:
Additionally, select software that prevents users from filling orders with unrecorded inventory. This makes sure operations happen in the right order and creates traceable electronic lot histories for all customers.
As your 3PL operation expands and takes on new clients, your lot tracking solution must also evolve and grow with you. Therefore, it is essential to choose a system that handles increased data volumes and multiple client requirements without performance degradation while supporting new processes as both your company and your clients grow.
Lot tracking software provides the crucial foundation: Transforming chaotic multi-client inventory management into a streamlined, data-driven operation. Your 3PL business deserves nothing less than complete product traceability, and now you have the knowledge to make it happen.
Zenventory, an all-in-one warehouse management system, offers robust and reliable lot traceability and batch tracking for end-to-end inventory management.
From the moment goods are received to their storage and final delivery to customers, Zenventory tracks lot numbers with precision, ensuring complete traceability and enabling swift and efficient product recalls as needed.
See how Zenventory’s robust and reliable lot tracking features can help your business. Book a free consultation with one of our product experts today!