One of the toughest challenges that a small business can face is compliance with all the regulatory requirements in their specific industry. For example, businesses that focus on the sale/production of food or medical related products are typically compelled by regulation to track specific inventory by “lot” number. This is often referred to as a “traceability” requirement with the need to track a product from its origin to the end consumer.

A lot number is an identification number assigned to a specific quantity, batch, or “lot” of an item. Lot numbers are typically found on the outside labelling of a product and usually are accompanied by an expiry date. For example, a case of a product may contain a quantity of 12 for item number/ SKU (stock keeping unit) “WIDGET-123”. 8 of the items contained in the case have Lot # “123” with expiry 12/31/20 and 4 of the items have Lot # 456 with expiry 12/31/21 but all 12 are WIDGET-123’s. Each of the different lot numbers could also have a different cost.

The Food and Drug Administration (FDA) and Canadian Food Inspection Agency have strict guidelines for virtually all type of products to include lot numbers and expiry dates on all packaging for traceability.

When a small business is required to trace all or some inventory by lot number, it can often be a daunting task. Often a series of spreadsheets, logbooks, and/or custom databases are used to track lot numbers. These types of systems are cumbersome, often inaccurate, and have no connection to the accounting/inventory system that is driving the transactions.