Mastering Inventory Lot Tracking: A Game-Changer for Food and Beverage Brands

The Rise of Online Food Shopping and Its Challenges

In recent years, we've witnessed a significant shift in consumer behavior, particularly in the food and beverage industry. The COVID-19 pandemic has accelerated the adoption of online shopping for groceries and food items. From 1-hour grocery delivery services to direct-to-consumer (DTC) snack websites, the digital transformation of food retail is in full swing.

However, this digital revolution brings unique challenges, especially for food and beverage brands. The perishable nature of these products, coupled with strict expiration dates, demands a level of delivery trackability that is unprecedented in other industries. The complexity of the supply chain, often involving multiple distribution centers, can make it easy for products to go untraced in warehouses without a robust tracking system in place.

The consequences of poor tracking can be severe. Recalled or expired items might inadvertently make their way to fulfillment, potentially damaging a brand's reputation or necessitating costly recalls of entire shipments. This not only results in wasted products but also significant financial losses.

The Solution: Implementing a Robust Tracking System

To mitigate these risks and streamline operations, food and beverage brands need to implement a comprehensive tracking system. Such a system can significantly simplify the process of tracing products from their origin to their current storage location. This is particularly crucial for food and beverage products, which often have specialized storage requirements and tracking needs.

One of the most effective ways to organize and track inventory in this industry is through lot tracking. Let's delve deeper into what lot tracking entails and why it's a game-changer for food and beverage brands.

Understanding Lot Tracking and Lot Control

Lot tracking and lot control are best practices in warehouse management that help organize and store products to ensure quality control, traceability, and proper fulfillment. These methods are particularly useful for tracing specific ingredients back to a supplier, ensuring that every piece of inventory can be tracked to its origin.

The inventory management process typically organizes products by:

• Expiration date
• Manufacturer
• Production date

For instance, if you're storing products by expiration date, you can ensure that products with the earliest expiration dates are used first, minimizing waste and optimizing inventory turnover.

The Mechanics of Lot Tracking

In lot tracking, each lot requires its own storage space and cannot be stored with other batches of the same products. While this can increase storage costs, the benefits far outweigh the drawbacks, especially when it comes to managing recalls.

To make lot tracking more manageable, warehouses can track based on:

• License plates
• Bins
• Individual boxes

The level of specificity you choose depends on your specific needs and resources. However, the license plate level is typically the most efficient and easiest to implement. License plates usually include shelf data, expiration date, and production date. With this system, warehouse workers simply need to scan the license plate to access all the necessary data for recall reports.

The Power of License Plating

License plating is an electronic method of keeping track of your batches. By knowing which batches your products came from (down to the specific batch), you can limit recalls to only the affected products. This approach is significantly more cost-effective than implementing nationwide recalls.

Key Benefits of Lot Tracking and Lot Control

Implementing lot tracking and lot control in your warehouse operations can yield numerous benefits:

• Easy identification of product issues and failures
• Reduction in human error
• Identification of inventory trends
• Better understanding of landing costs
• Minimization of waste, spillage, and contamination
• Achievement of regulatory compliance

The Critical Importance of Lot Tracking for Food and Beverage Brands

While lot tracking and lot control are beneficial for various industries, they are absolutely critical for food and beverage brands. The primary reason for this is regulatory compliance. When shipping food and beverage products, compliance with the US Food and Drug Administration (FDA) is not just best practice - it's required by law due to regulatory ingredients and expiration dates.

FDA Certification: A Necessity for Food and Beverage Brands

Brands that sell food or beverages directly to consumers must use an FDA-certified warehouse. This certification helps you avoid FDA recalls, which can result in substantial fines and significant damage to your brand reputation. Here's a brief overview of how to become an FDA-certified warehouse:

1. Register your facilities with the FDA
2. Agree to inspections every 3 years
3. Pass your inspections
4. Receive FDA approval

All products requiring FDA approval must use a lot tracking and lot control system. Without such a system, it's virtually impossible to trace produce to its origin or keep track of expiration dates and recalls effectively.

The Role of International Standards

Beyond the FDA, another regulatory body that creates and enforces standards for delivering food and beverages is the International Organization of Standardization (ISO). The ISO 22000 standard provides a layer of reassurance within the global food supply chain, helping products cross borders and bringing consumers food they can trust.

Lot tracking and lot control can help you achieve both FDA and ISO regulatory compliance, making it an indispensable tool for food and beverage eCommerce retailers. These systems ensure that your food and beverage products are safe and healthy for consumers to consume.

The Advantages of Partnering with a 3PL Provider

While lot tracking is crucial, implementing and managing such a system can be complex and resource-intensive. This is where third-party logistics (3PL) providers come into play. Outsourcing logistics work to a 3PL can offer solutions to your lot tracking challenges while allowing you to focus on growing your business.

A competent 3PL partner can provide several advantages:

• Expertise in implementing and managing lot tracking systems
• Access to advanced technology and software for inventory management
• Strategic warehouse locations to meet customer demands for fast shipping
• Ability to scale operations as your business grows
• Compliance with FDA and other regulatory requirements

By strategically placing inventory closer to demand, a 3PL can ensure that your items arrive quickly and without spoiling, which is crucial for food and beverage products.

Implementing Lot Tracking: Best Practices

If you're considering implementing lot tracking in your operations, here are some best practices to keep in mind:

1. Choose the right level of granularity: Decide whether you want to track at the license plate, bin, or individual box level based on your specific needs and resources.
2. Invest in the right technology: Implement a robust warehouse management system (WMS) that supports lot tracking and integrates with your other systems.
3. Train your staff: Ensure that all warehouse staff are properly trained on the lot tracking system and understand its importance.
4. Regularly audit your system: Conduct regular audits to ensure that your lot tracking system is functioning correctly and that all products are properly tracked.
5. Use data for insights: Leverage the data from your lot tracking system to gain insights into inventory trends, optimize your supply chain, and improve your overall operations.
6. Stay compliant: Keep up-to-date with FDA and ISO regulations and ensure that your lot tracking system helps you maintain compliance.

The Future of Lot Tracking in the Food and Beverage Industry

As we look to the future, lot tracking is set to become even more sophisticated and integral to the food and beverage industry. Here are some trends to watch:

• Blockchain technology: Blockchain could revolutionize lot tracking by providing an immutable, transparent record of a product's journey from farm to table.
• Internet of Things (IoT): IoT sensors could provide real-time data on product conditions (like temperature and humidity) throughout the supply chain, enhancing lot tracking capabilities.
• Artificial Intelligence (AI) and Machine Learning (ML): These technologies could help predict potential issues before they occur, optimizing inventory management and reducing waste.
• Increased consumer demand for transparency: As consumers become more conscious about the origin and journey of their food, lot tracking will become a powerful tool for brands to build trust and loyalty.

Conclusion: Embracing Lot Tracking for Success

In the rapidly evolving world of eCommerce, particularly in the food and beverage sector, lot tracking is no longer just a nice-to-have - it's a must-have. By implementing robust lot tracking and lot control systems, food and beverage brands can ensure regulatory compliance, minimize waste, optimize operations, and build consumer trust.

While the implementation of such systems may seem daunting, the benefits far outweigh the initial investment. And with the help of experienced 3PL partners, brands can leverage advanced lot tracking capabilities without having to build the infrastructure from scratch.

As we move forward, those brands that embrace lot tracking will be better positioned to navigate the complexities of the modern supply chain, meet evolving consumer expectations, and thrive in the competitive food and beverage eCommerce landscape.

At FreightAmigo, we understand the unique challenges faced by food and beverage brands in the digital age. Our Digital Logistics Platform is designed to support businesses in implementing effective lot tracking systems, ensuring regulatory compliance, and optimizing their supply chain operations. Whether you're just starting out or looking to enhance your existing processes, our team of experts is here to help you navigate the complexities of inventory management and lot tracking in the food and beverage industry.