Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

8.2.3 Lot Control in Inventory Management

Intended learning outcomes: Describe the steps of lot control in inventory management. Identify the batch ID.

As mentioned in Section 8.1.3, many process industries require a lot traceability for the ingredients used in a product to satisfy the governing regulations. This requirement is most frequently met by assigning an identification number to every lot, batch, or charge that is produced or procured. The batch thus becomes an object in the company. In the production of by-products, products that are produced at the same time using the same resources may be given the same identification.

Lot control establishes production batch identification for each resource taking the following steps:

  1. Each batch is given a lot number or batch identification, or batch ID, at the time that it is produced. The batch ID is also recorded as a “completed resource transaction” and entered as a receipt into stock. Apart from the batch ID, the attributes of this object include resource identification, quantity moved, order ID, position of the process in the order structure, and transaction date.
  2. The physical inventory of a particular resource consists of the batches described in step 1 minus any quantities already issued from these batches in accordance with step 3.
  3. The batch identification for an issue from stock is determined by allocating the issue to a physical inventory as per step 2. The batch ID (determined originally in step 1) assigned to this stock also becomes the batch ID for the issue from stock. The issue from stock is also a “completed resource transaction.” The attributes are then the same as those described under step 1. If the quantity issued originates from different receipts into stock, then the same number of issues from stock must be recorded, each with the associated batch ID and the corresponding quantity issued from stock. However, in many cases, the rule “same batch” is required. This prevents an issue being made up from different batches.

See Section 17.4.2 for the objects used for administering batches.

Course section 8.2: Subsections and their intended learning outcomes