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Batch and serial number inventory management explained

Inventory Management
By Ankit | Apr 05, 2022 | 6 Min read
serial number tracker app

Batches and serial numbers are all around us. Most of the products we use are manufactured somewhere. Manufacturing products is often a complex process. Where mistakes can happen and can lead to serious trouble for the end consumer.

Pharmaceutical and food production is very sensitive. All raw materials are quality checked and each process is monitored. The final finished goods undergo quality check and are approved as safe for consumption.

Even though there are so many checks and processes in place, mistakes still happen. Some of these mistakes go unnoticed and the final goods are shipped to the market. Now in such a scenario these products need to be recalled from the market back to the manufacturer.

To do this each item needs to be identified which has this mistake. The manufacturer gives a unique number or ID to the items. In case of medicines, food, toys, fabric and many other products a batch or lot number is given.

For each production cycle the same batch number is used. This way the manufacturer can know which batch is spoiled if any one item of a batch is spoiled.

For example you buy a packet of cheese. When you open the packet it is smelly and rotten even before the expiry date. You inform the supermarket about this. The supermarket calls the manufacturer to return all the stock. The manufacturer apologises for the mistake and assures that only the batch number B0128 is the spoiled one. They have already identified the issue and are recalling all the stock with this batch number

What are batch numbers?

Batch numbers are given to a group of items. For example juice bottles produced together. A batch number is associated with information about the items. Most common information is production facility name, expiry date and manufacturing date. Thus items with the same batch number have the same expiry date. Batch numbers can be found on all packaged food items and medicines.

Batch numbers are used to trace raw materials too. For example a fabric manufacturer can trace back which dye was used to dye the fabric by noting down batch number of the dye in the batch information of the fabric.

What are serial numbers?

Serial numbers are given to an individual item. A serial number is a unique number given to identify a single item. For example the IMEI number of a mobile phone. Or the serial number of a laptop.

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The IMEI number is a globally unique number for each mobile phone. There cannot be 2 mobile phones in the world with the same IMEI number. IMEI numbers are used by law enforcement agencies to track mobile phones.

Serial numbers are usually used in case of special items like cars, weapons, mobile phones and laptops where government demands traceability of the item to individuals.

Serial numbers are also in case of expensive items like diamonds, luxury watches, art pieces.

The objective of giving a unique serial number to an item is to track who is the current owner and unique information specific to that item. For example in case of art pieces information about artist, price, date of sale, previous owner, seller etc. is associated with the serial number.

Who issues batch numbers and serial numbers?

In most cases the manufacturer issues the batch number and serial number to items. Since they are responsible for the quality of the products. And the manufacturer can print the numbers on the product and its packaging.

But for inventory management purposes anyone can issue batch or serial numbers to products. These self generated numbers can be used by retailers or distributors to track inventory between their warehouses and stores. They can track sold items using these numbers.

For example a retailer issues a unique serial number to track which customer bought the item. If the customer complaints about the product they can cross check records to find out which sales man sold the item and when.

Almost all businesses use an inventory software to generate and use batch and serial numbers. Managing batch numbers using excel sheets is highly difficult and error prone. Businesses with small operations can manage inventory using excel sheets but as they grow a specialised software can make a huge difference in operational efficiency.

Common examples of serial and batch numbers

  • Packaged food: batches numbers are given based on production cycle and expiry date
  • Pharmaceuticals: very strict regulations on raw materials traceability. So batch numbers have to used for all raw materials as well as finished goods
  • Mobile phones: IMEI number is mandatory to be tracked during sales.
  • Cars: Each car has a unique engine number and chassis number for serviceability.
  • Fabrics: Fabric have colour variations based on the dye used. So a batch number is given to fabrics which maps the fabric to the dye number used.

How to track inventory using batch and serial numbers

An inventory management software is needed to effectively manage inventory with batch and serial numbers.

A manufacturing software makes it very easy to use batches and serial numbers. For each product you can control if inventory has to be tracked using batches or not.

Apple iPhone is tracked using serial numbers so stock for each serial number is 1.

Batch numbers can be assigned at 2 levels:

  • after production of finished goods
  • when receiving goods from vendor

You can also choose to assign batch number only when dispatching products out. In this case stock is tracked without batch numbers. But when stock is sold to the customer you have to enter the batch number. This method is common for electronic items where serial numbers like IMEI numbers are mandatory to track during sales.

ISO compliance traceability explained

ISO compliance is mandatory for companies to ensure best product quality and processes. A lot of governments, organisations and companies require ISO compliance from vendors.

ISO definition of traceability requires 2 major points:

  • Trace the flow of materials
  • Identify necessary documentation and tracking for each stage of production

For any item you should be able to track the raw materials used, work in progress (WIP) materials and each production stage.

For example; you are producing a teddy bear toy for kids below the age of 9 years. The basic raw materials required are: fabric, foam, glass eyes. You should be able to track the vendor, purchase date and item specifications for each of the raw materials.

To be able to do this the only method is to assign a batch number to the raw material when they are received from the vendor.

When a material is used in production you will have to create a production entry which mentions the batch numbers of raw materials used. The WIP produced from this production task will also have to be assigned a batch number. This process of production entry with batch or serial numbers will continue till we produce the final finished good.

The finished good will also be assigned a batch or serial number.

Each document will have to stored starting from purchase of raw materials to production entries to final sales of the the finished good.

A great manufacturing software has the features to trace materials from start till finish.

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