Operations Management

Lot Coding and Lot Tracking

Written by Andrew Goldman for Gaebler Ventures

If you manufacture a product, it's crucial that you lot code your batches. By using lot codes you can better track your products.

Lot coding and lot tracking is an essential part of good manufacturing practices.

Lot Coding and Lot Tracking

It enables your business to track your production batches if a problem occurs. Many small businesses feel lot coding and lot tracking is just for larger businesses, but this couldn't be further from the truth.

Many small companies have more variety in their processes and as a result should practice lot coding. I have worked with many small businesses that were hesitant to adapt lot coding techniques because of the perceived cost. The reality is that lot coding is inexpensive and a necessary part of running a good business.

Lot coding is a very simple concept. Each batch that you produce is part of a single lot. Each product within that batch gets marked with a code that indicates which batch it came from. We have all seen lot codes on our food products and on the bottom of our electronics. No large business operates without lot coding and in many instances it is illegal to sell products without lot codes.

If you have an automated assembly line, there are machines that can print the lot code on your product without stopping the line. These machines can be expensive, but there are usually leasing options available.

A less expensive, but more labor intensive option, is to physically stamp the lot code onto the product. Stickers or labels can also be used. When using stickers or labels, there is a cost of printing the labels plus the labor to apply the sticker onto the product.

With a stamp, the cost is simply the ink plus the labor to stamp the product. When using stamps it's important to make sure that the lot code does not smudge. It is also of the utmost importance that the lot code is set up properly on the stamp. This has a degree of human error to it, so you should have checks and balances in place to make sure that the employee has set the stamp number correctly.

Once you have started implementing lot coding, you can begin to track your lots. If a customer calls in with a complaint, you can ask them for the lot code on the product. This can then be verified and cross-checked with the date it was produced. This can aid the process of identifying the cause of the defect by singling out the date of the individual batch.

By lot coding, you can also track which batches went to which customers. This is extremely helpful if you ever find yourself in the unfortunate situation of having a recall. You can track where the defective lot went and contact those customers quickly and efficiently.

By having a proper recall procedure in place, you can save yourself money, bad public relations and maybe even your company. Something as simple as a stamp can go a long way!

Andrew Goldman is an Isenberg School of Management MBA student at the University of Massachusetts Amherst. He has extensive experience working with small businesses on a consulting basis.

Share this article

Additional Resources for Entrepreneurs

Lists of Venture Capital and Private Equity Firms

Franchise Opportunities


Business Glossary


Conversation Board

What's your take on lot coding and lot tracking?

  • DONALD J GUTJAHR posted on 9/1/2010
    Do you have any advice on how to manage a lot code protocol for a continuous batch operation?
  • RLB posted on 9/2/2010
    Hello, I know that some companies will change their lot codes with a julian date change, is this a "standard" practice amongst larger companies? What are the benefits and what are the down sides to doing this? If a company has three production shifts, would it be beneficial to change lot codes between shifts to maximize productivity?

Leave a Reply

Questions, Comments, Tips, and Advice

Email will not be posted or shared
Code Image - Please contact webmaster if you have problems seeing this image code

Problem Viewing Image? Load New Code