Lot Tracking 101: How to Reduce Recalls & Boost Traceability
Track It or Lose It: Lot tracking is crucial to manage inventory effectively and avoid regulatory mishaps, especially in highly regulated industries like pharma and food sectors.
Why Lot Tracking is a Lot of Help: Even unregulated industries benefit from lot tracking with improved traceability, quicker problem resolution, and fewer costly errors.
Stop the Recall Madness: Reducing product recalls and fines becomes easier with solid lot tracking, safeguarding your business reputation and financial health.
A Traceability Triumph: Strong lot tracking ensures better traceability, helping businesses manage stock efficiently and stay compliant with industry standards.
Expired goods. Regulatory fines. Product recalls.
If constant inventory management challenges keep dragging you into messes like these, you might need to rethink how you oversee your stock.
Lot tracking can help you take back control and stay compliant.
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It’s standard in highly regulated industries—think pharma, medical devices, and food sectors like dairy—where a single mistake could sink your business reputation.
If you’re in one of these industries, tightening your lot tracking is a must.
Not in one of them? I wouldn't recommend scrolling past just yet.
Even if your industry isn’t regulated, strong lot tracking still leads to better traceability, faster problem resolution, and fewer costly mistakes.
For businesses with large inventories, it means shifting from being reactive to proactive.
Let’s find out whether this small operational tweak can solve your biggest problems.
What is Lot Tracking?
Lot tracking enables you to monitor a group of products—called a lot or batch—as they move through production, receiving, storage, and point of sale.
Items from the same batch carry the same lot number to improve their traceability.
A cosmetics brand might assign a single lot number to 500 lip sunscreens made in one production run. A dairy company could do the same for 100 oat milk cartons delivered on the same day from a supplier.
So if a product goes bad or expires, they can quickly pull only the affected lot without overhauling their shelves.
Lot tracking, by contrast, groups identical SKUs under one identifier.
If you sell high-value, return-sensitive products like luxury watches and tech devices, go with serial tracking. But lot tracking is faster and simpler for retail inventory management at scale.
5 Benefits of Lot Tracking for Retailers
In retail, what you can’t see can cost you. A lot tracking process offers you a higher level of control and visibility that most manual inventory systems lack—here’s how.
1. Identifying and isolating defective products fast
Lot tracking, particularly when paired with tech like 2D barcodes, lets you scan batch numbers and expiry dates in seconds.
Supermarket chain Woolworths increased their food safety and reduced food waste by up to 40% with this tech-enabled lot traceability.
2. Speeding up recall management
With lot numbers linked to real-time inventory data, you can instantly locate and isolate faulty batches during product recalls.
Broad recalls cost manufacturers around $3 million to $72.7 million per firm, distributors $100,000 to $2.3 million, and restaurants $40,000 to $1.1 million.
Faster recalls improve inventory management and can lead to massive savings and less damage to your bottom line.
3. Optimizing FIFO execution to reduce waste
Lot tracking tags your products with batch and expiry info, so you always know what to sell first.
Some lot tracking software even features shelf-life calculators and automated FIFO alerts. These features can shrink food waste by as much as 30% in small restaurants, according to PW Consulting.
4. Strengthening compliance with FDA/USDA regulations
Your lot information is a built-in audit trail of what you made or procured, when you did it, and where it went.
You don’t require extra paperwork to prove you meet the quality standards.
“Companies that have invested in digital lot traceability systems will be best prepared for compliance on Jan. 20, 2026,” said Jim Bresler, Plex Systems Director of Product Management, Food & Beverage.
5. Boosting customer trust through transparency
With so much information—and misinformation—out there, shoppers expect transparency. Lot tracking has all the data to back you up.
Arrae, a supplement brand run by a 2-person supply chain team, used ShipBob’s lot tracking to tag and track finished products throughout fulfillment. This helped them ship 78% of orders the same day, boosting customer satisfaction.
Real-time lot tracking at your fingertips can help you run a smarter and more efficient operation.
Up next, I’ll show you how this all works.
How Lot Tracking Works
To illustrate how lot tracking takes place, we’ll follow Pure & Fresh Creamery, a made-up dairy product company, as they track their yogurt products over their 14-day shelf life.
I'll give you a real-world perspective on managing perishables, then explain how this strategy fits into your bigger inventory management system.
1. Start by grouping products into lots
To avoid selling sour, spoiled tubs, Pure & Fresh Creamery groups their yogurt products by production date.
2. Assign a unique lot number to each group
Each day’s batch of Pure & Fresh Creamery yogurt gets its distinct lot number.
They follow a simple format: yogurt variety (GYP for greek yogurt plain, GYF for fruit, YOP for plain yogurt...) + production date (YYMMDD) + batch number (B##) + a plant code (MA for Madrid). The first Greek yogurt batch made on May 16, 2025, regardless of tub size, would have a batch number of GYP-250516-B01-MA.
3. Label each item in the lot for traceability
To enhance lot traceability, the retailer prints QR code stickers for each yogurt tub. These stickers include the lot number, flavor, production date, and a “consume or on before” date.
Pure & Fresh Creamery’s warehouse staff and store clerks scan this code to check freshness and ensure the older tubs get sold first.
4. Track each lot as it moves through your operations
As soon as a fresh batch rolls off the production line, warehouse staff scan the QR code.
It automatically logs the lot number, quantity, and arrival time into the inventory management software (IMS) and warehouse management software (WMS).
From there, every move—between storage zones, retail branches, or delivery trucks—is tracked in real time using handheld scanners.
5. Monitor lot conditions and status in real time
Pure & Fresh Creamery’s system alerts staff when tubs are nearing their expiry dates or if stock runs low.
If a flavor shows spoilage signs during quality checks, they can also pull only that specific lot from its designated fridge.
6. Link lot data to other retail systems for full visibility
Pure & Fresh Creamery’s lot tracking doesn’t end in the warehouse. When a yogurt tub scans at checkout, the lot number links automatically to their system.
The team doesn’t scramble to dig through spreadsheets or paper logs when there’s a routine inspection or surprise visit from regulators.
That’s the big picture.
Now, read on to learn how to prep your resources and retail ops for lot tracking.
How to Implement a Lot Tracking System
Follow these six, simple steps to get your lot tracking system up-and-running in no time:
Step 1: Pick the right tech stack for your operation
Retailers and manufacturers use several tools to track lot numbers across the supply chain.
Here are your main options:
Inventory management systems (IMS)
IMS platforms let you assign, record, and trace lot numbers throughout the product lifecycle. Along with the lot number, they can store more information about the entire batch, like its source, quantity, and expiration date.
Some, like MRPEasy, also generate labels and barcodes for physical inventory, making it easier to identify lots on the move.
Here are other tools we recommend:
Enterprise resource planning (ERP) software
For companies that need more horsepower, ERPs offer a full-stack solution. These platforms loop all lot touchpoints: procurement, manufacturing, inventory, finance, and compliance.
Katana, for instance, is an ERP tailored for batch production manufacturers scaling into DTC or B2B.
It tracks lot numbers from raw materials to finished products, supports warehouse management, and integrates seamlessly with your broader tech stack for real-time lot visibility.
Aside from Katana, we also like:
Lot tracking software
If you’re looking for a specialized solution, lot tracking solutions are readily available.
Their functionality includes compliance monitoring, batch processing, inventory tracking, and providing additional insights to streamline your inventory management process.
Blue Link, for example, supports FDA/ISO/CFIA compliance, prints lot numbers on packing slips and invoices, and enables FIFO inventory flow out of the box.
Below are some others that we highly approve of:
What these tools have in common:
- Automation of manual tasks
- Centralized lot data across SKUs, batches, and facilities
- Real-time visibility, even across multiple locations
Choose the platform that fits your goals, workflows, and budget. Don’t just chase features, pick what will move the needle for your business.
Step 2: Assign and format lot numbers consistently
Retailers deal with dozens, if not hundreds, of lot numbers across ingredients, batches, and finished goods.
A clear, consistent naming convention makes tracking more feasible and reliable.
There’s no universal format for lot numbers. You’ll need to consider the types of information and regulatory requirements you want to include.
Common details include batch number, facility or site code, and production date.
Let’s flesh out a concrete example for our Greek yogurt product to see how these codes can be both traceable and user-friendly.
Here’s our sample lot code from earlier:
GYP-250516-B01-MA
Each segment tells you something at a glance:
- GYP: Product code for plain Greek yogurt
- 0523: Production date in YYMMDD format (May 15, 2025)
- B01: Batch number—tracks quantity produced in one run
- MA: Plant location code (e.g., Madrid)
Stick to fixed segment lengths and consistent separators (e.g., hyphens or slashes) to keep your codes readable, scannable, and system-friendly.
Step 3: Choose the appropriate inventory method to maximize lot tracking benefits
Two inventory valuation methods can be used with lot tracking of perishable goods and regulated goods to ensure minimal waste, compliance, and product integrity:
- FIFO (first in, first out). The oldest goods are the first to leave the door. Lot numbers might include a timestamped code to show the receipt date.
- FEFO (first expired, first out). The soonest‐to‐expire items are sent out or sold first. Lot numbers might feature an expiry date segment.
What is the best option for your products?
Use FIFO for products with more predictable shelf lives or broad expiry windows (ex: canned goods, baked goods, and fresh produce).
Choose FEFO when shelf life varies or when regulation requires precise expiry control. Think pharmaceuticals and dairy.
With an advanced solution, be it ERP, IMS, or lot tracking software, in place, you can automate either strategy. Make sure you get older or soon-to-expire stock out of the door before it becomes dead inventory.
Step 4: Prepare a recall and return response plan
Product recalls are a painful reality in the business.
A recall involves tracing, locating, and returning goods from your customers (either stores or individuals).
With lot tracking, this complex distribution system becomes simpler to untangle. It’s easier to account for where these faulty products have ended up.
Here’s how it played out IRL:
In 2023, Ellenos Real Greek recalled its Vanilla Bean Yogurt 4-packs due to undeclared egg allergen content. The affected batch was identified by Lot #073, with a best-before date of April 23, 2023.
Here’s why that lot number mattered:
- Location identification: The company could isolate affected products at specific Costco locations, only those in Alaska, Oregon, and Washington.
- Avoiding unnecessary recalls: Other products with the same expiry date, like the Marionberry 4oz cups, remained on shelves. The lot number clarified that they came from a different production run, so they weren't affected.
Using inventory management tools with lot tracking capabilities can help you carry out your due diligence.
For example, Cin7, offers an extensive batch/lot recall feature, which includes detailed reporting (e.g., stock on hand, fulfilled and unfulfilled orders/customers, affected suppliers) and lets you send a recall letter to affected consumers.
Step 5: Train your staff across all locations
Your lot tracking system is only as good as the people using it. Train your staff on how to properly record, track, and retrieve lot numbers.
Start with the fundamentals: what lot number tracking is and its value to the operations and the business as a whole
Once you’ve laid the groundwork, move into practical training, which includes:
- Proper labeling techniques. Explain where and how labels should be applied for visibility and durability.
- Storage protocols. Describe how different inventory methods (ex: FIFO, FEFO) tie to lot numbers.
- Digital system usage. Train staff on how to use lot tracking software, whether it's an IMS, ERP, WMS, or a dedicated platform.
- Other technology tools. Show them how to scan and input lot numbers with barcode scanning technology, QR codes, or RFID, and explain how to resolve common issues.
- Issue detection and resolution. Teach them how to identify and address incorrect labels, missing lot numbers, and mismatched records.
Standardize training across your organization, regardless of location, so everyone is always on the same page.
Step 6: Conduct regular audits and process updates
Automated lot tracking is powerful, but still requires regular oversight.
Audits and spot checks are necessary to ensure your lot data integrity and accuracy, as well as your process’ compliance.
So, how often do you conduct these routine inspections? Depends on the industry, product type, and organizational needs.
As an example, let’s say Pure & Fresh Creamery also sells fresh cheeses, which fall under FDA’s Food Traceability List (FTL).
That means compared to yogurt, fresh cheeses require stricter record keeping and more frequent audit cycles, especially under the Food Safety Modernization Act (FSMA).
To conduct routine inspections well, here are some boxes to regularly tick off.
☐ Consistent lot number assignment across records
☐ Physical stock vs digital logs reconciliation
☐ Compliance checks (e.g., FDA Traceability Rule for FTL items)
☐ System performance review
☐ Documentation of audit results and action steps
Make it a habit, so your lot tracking system can support operational efficiency and product safety.
Lot Tracking Retail Use Cases
Lot tracking offers numerous ways to keep your inventory and fulfillment in check.
Here’s how different industries use lot tracking to inspire smarter traceability strategies for your business.
Grocery and perishables
Fresh produce, dairy, frozen goods, and anything with a ticking expiration date can’t afford to sit in storage too long.
Otherwise, your margins would rot along with the produce.
Lot tracking helps retailers stay ahead of expiration dates, optimize product shelf life, handle recalls, and more. FDA pushes for these practices through stricter traceability rules under its New Era of Smarter Food Safety initiative.
Health and beauty
Over 77 million cosmetic products were recalled in the US from 2011 to 2023—startling, right?
Without batch tracking, these brands would be scrambling to figure out which products to yank, from which warehouse, to which store.
Pharmaceutical and cosmetic companies rely on this end-to-end traceability to catalog ingredients and manage product rotation for consistent quality.
Consumer electronics
Returns, warranties, and defects are part of the game when you’re selling tech. But the real headache is finding the faulty units and deciding if it’s an isolated issue or a full-blown recall.
By tagging products with batch-level data, you can trace defects to specific production runs (e.g., a batch of laptops with overheating batteries).
It cuts the back-and-forth on warranty claims and return logistics.
Multichannel ecommerce
The more online channels you sell through, the harder it gets to monitor real-time product movement.
That’s why 87% of banned or recalled products remain listed on ecommerce sites, exposing brands to legal risks and consumer backlash.
Lot tracking connects the dots across your fulfillment network. You get a centralized, up-to-the-minute view of your inventory and avoid shipping bad batches.
Perishable goods, regulated products, or anything prone to defects all benefit from lot tracking. If you find yourself stressing over product quality control or recall, here’s why it’s worth considering.
It’s a LOT Easier Than You Think
Lot tracking provides an opportunity for tighter inventory control. And while it’s most suitable for giant enterprises or highly regulated industries, growing retailers can also give it a go.
All you need to get started is the right tracking software and a clearly defined process.
Other articles and software reviews worth checking out:
- Just-in-Time Inventory (JIT): The Complete Guide to Responsive Operations
- Cloud-Based Inventory Management: How to Streamline for Smarter Stock & Less Stress
- The 22 Best Inventory Replenishment Software, Reviewed & Compared
- The 21 Best Order Entry Software, Ranked & Compared
- The 23 Best Parts Inventory Management Software, Ranked & Reviewed
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Lot Tracking FAQs
Lot tracking can sound technical and xx, but it’s here to make your day-to-day operations easier. Below are the most common questions retailers ask before getting started.
Do I need lot tracking if I don’t manufacture my products?
Technically, no—you’re not required to if you’re a distributor, wholesaler, or direct-to-consumer (DTC) retailer.
But it can be a huge time-saver if you sell regulated goods (e.g., pharmaceuticals, cosmetics), deal with expiry dates, or move high-volume SKUs.
What’s the risk of not using lot tracking in retail?
If you don’t track lots, recalls get messy. You risk dragging out recalls and discarding perfectly good stock merely because you can’t isolate the problematic batch. In some cases, this could also delay your insurance claims in case of product defects.
Is lot tracking required for regulatory compliance in my industry?
The FDA and similar agencies expect retailers to employ lot tracking for the safety and traceability of regulated products. You might not have to if you sell non-regulated items, but it’s handy to have anyway.
