Imagine you are a handmade seller that produces a range of jams and preserves. You receive a phone call from one of your customers to let you know that they got sick after eating some of your raspberry jam, and soon after get an email from another of your customers indicating the same thing.
What do you do from here?
If you have a inventory system in place with lot tracking capabilities, you ask both customers to read the batch code from the back of your jam label, look this up in your system and locate the orders that have contained this faulty batch. You destroy all remaining jars of the problem batch, then quickly contact the customers to let them know that you have begun a recall and why. Your customers are now safe, the problem is now contained with mimimal financial, time and emotional impact and your business has survived this crisis.
If you don't have a lot tracking system in place for your manufacturing, the outcome is a little different. You can't know when the faulty batch was made, or who currently has the jars. The only thing you can do to try and contain the problem is to destroy all of your remaining jars of raspberry jam (even if they were made at different times) - this comes to many hundreds of dollars worth. You don't know who has yet to consume the rest of the faulty batch and you cannot warn them - you wait in fear of the phone to ring with more complaining customers. Your business gets hit financially and reputation wise and you suffer from much unnecessary anxiety and stress.
How to begin with Lot Tracking
Some small manufacturers start tracking lot numbers using written logs and excel spreadsheets, however as the exact relationship between purchases, manufactures and orders can be quite complex, the use of a spreadsheet can lead to errors and inconsistencies as your business grows.
It is best to use a database as then the relationships can be mapped together correctly - you can either attempt to design this in Access or similar, or purchase specialised lot tracking software like Craftybase.
Whatever system for lot tracking you choose, your written records need to be good enough to be able to quickly generate:
a) Who you purchased a specific batch of materials from and when AND
b) Which products were manufactured using this specific batch AND
c) Who you eventually sold the products to
This means you'll want to ensure that you enter in lot numbers for each material purchase that you make, then link this lot number with the manufacture batch you create. Finally, you'll need to be able to link the manufacture with the customer that purchased the product.