Visibility Example #4: Lot vs. Serial Number Tracking

Although visibility technology is well beyond “track and trace” of imports, there are still emerging demands for this type of service. In this article we’re going to look at the mechanics behind a good track & trace functionality and then two special situations of increasing prominence: tracking lot numbers and tracking serial numbers.

What is “track & trace” visibility?

The term “track & trace” is a generalization for technology and processes which allow decision makers to know the current location and lifecycle milestones of an item of interest while it is being shipped. Track & trace processes are about items on the move, rather than covering at-rest or total inventory. In my experience, track & trace visibility is more valuable for international shipments (such as imports of ocean containers) than domestic shipments. This is simply because an ocean-bound container may take 35 or more days to transport, which leaves more time for a decision maker to ask “where is my item?”. There is variation, but any good track & trace service does the following:

  1. Enables the user to track based on indirect attributes (order #, shipment #, item #, etc)
  2. Logs the actual, planned, and re-forecasted milestones for the item. The list of these events should not be split up when the item moves from one physical shipment to another (such as via consolidation or deconsolidation).
  3. Enables the item to be tracked by external parties over the web if they are granted permission. In other words, no one has to be in a specific building, in a specific room, in order to track & trace.
  4. Enables some kind of alerting based on the item’s status, such as email alert when the item arrives. Even better would be alerting for when the status deviates from expectations.

Most third party logistics service providers (I’ll now just call them 3PLs) offer track & trace visibility as a free or very cheap addition to their other services. Many of the 3PLs use Log-Net based systems, GT Nexus, Manhattan Associates, or other pre-packaged software that has been white-labeled to their own needs. Other companies build their own systems. UPS, for example, inherited an in-house system called “Flex Global View” from their acquisition of Fitz, and it’s a workable track & trace solution.

What Gets Tracked?

As a principle, tracking software will usually follow these guidelines:

  1. Define the contents of a MATERIAL UNIT, which could include other MATERIAL UNITS
  2. Record the location or status of the highest MATERIAL UNIT
  3. Propagate the MATERIAL UNIT status or location to its content items

What I mean by MATERIAL UNIT is any container, package, crate, truck, etc. which contains other things. For example, we could have 100 units of a DVD player in a box, and the box is considered a MATERIAL UNIT. By tracking the location and status of the box, we simplify the tracking of its contents. Then, the box may be consolidated on to a pallet with 30 other boxes. The pallet is now a new MATERIAL UNIT, and we track the pallet’s location and status. If the pallet gets shipped to Shanghai, China, then we say all the contents of the pallet are also in Shanghai.

To give a more generic example, think about your own body. It’s a safe assumption that you can track your body’s physical location and then apply it to all your limbs. Your hands and feet’s location doesn’t need to be defined separately from your head, neck, or torso. By grouping your limbs into a MATERIAL UNIT of “body”, you simplify the process of tracking yourself. This mechanism is the basic building block behind tracking & tracing, and also can be a headache when a MATERIAL UNIT gets split up. For example, if an ocean bill of lading (BOL) is considered the MATERIAL UNIT, but in fact it has several ocean containers and one is received into a warehouse on a Friday while the others wait until Monday. For several days the BOL’s status will be “delivered”, and it will propagate down to all items it contains, even the ones which are not yet actually delivered. This example shows why the MATERIAL UNIT has to be selected with care.

Special Requirement: Lot Number Tracking

Lot number tracking is focused on groups of items produced, inspected, packaged, or otherwise processed together. Lot number control is common in pharmaceuticals, agriculture products, foods, or engineering-intensive devices. A lot number may be assigned to a group of jump-drives every time the machinery is re-calibrated. Or, a lot number may be assigned to a quantity of milk which is pasteurized in the same vat. In either situation, the assumption is that a defect, risk, or problem with one item from the lot raises the probability of the other items in the same lot having some similar issue.

Lot numbers are critical to safely recalling or stopping the flow of drugs or foods while not destroying every piece of that item’s inventory. This may be a matter of life and death for some drugs, where discarding all stocks would mean critical shortages. For a visibility process, tracking lot numbers is fairly straight forward. Every item is given an extra attribute category, called “Lot Number”, and the lowest-level MATERIAL UNIT is usually forced to hold one and only one lot number. For example, a box which contains bottles of milk would be the lowest MATERIAL UNIT, and a business rule is established where the box can contain one, and only one, lot number. Of course, the box itself isn’t part of the lot number. But, it speeds up the ability to isolate and destroy defective lots. An alternative is to have the lot number printed on the physical item (such as what happens with pharmaceuticals), and the MATERIAL UNIT has a data table with the lot number and related quantity information.

Special Requirement: Serial Number Tracking

Unique serial number tracking is different from lot number tracking. Serial numbers are usually applied to EVERY item, in an effort to control expensive items which need to be registered or serviced at a later date. For example, cars have serial numbers that enable people to ensure the identify of a car among thousands of other identical units. Serial number tracking is also used for gift cards or SIM cards, so that theft of the card can be mostly nullified via de-activating one, and only one, serial number without impacting the service of real customers.

As a former colleague Mark Johnson pointed out in 2010, lot numbers are unique references which identify sets of items, often is discrete MATERIAL UNITS. Serial numbers are an inversion of this: a unique number which represents one, and only one, item as it co-mingles with potentially hundreds of thousands of other items. Because of this, and because of the way most track & trace applications are propagating data from higher MATERIAL UNITS down to the items they hold, serial number tracking is a challenging process.

So, how to do it successfully? The trick to serial number tracking is perfecting the data capture at both the first supplier and the point of consumption. When a small box or bundle is first filled with 500 SIM cards and a barcode label is applied, that is the instant when the serial numbers must be recorded against the barcode number. The barcode can then be treated similar to a MATERIAL UNIT, where it can be aggregated with other boxes or bundles. If this crucial first data is not captured, it is very expensive and error-prone to gather the data later. Even situations where a box or bundle breaks apart, and has to be re-boxed, the company may lose a significant profit margin due to the labor required to re-establish serial numbers to the new barcode.

If data is well captured at the initial point, the flowing of serial numbers through the supply chain channels can be tracked. It may require database changes to some of the track & trace software out there, but it isn’t impossible. But, serial number tracking almost always has a requirement that final consumption is also identified. This is a complex process as well. For example, I might require visibility on every serial number, starting at production but ending with the contact details of the individual who bought the item and the employee ID of the sales staff who made the transaction. This could be used for fraud detection, warranty validation, or just for after-sales support. The visibility application has to be ready to explode one box or bundle, which may have had five hundred SIM cards and only required about one thousand data points, into a miniature point of sales database. Even more challenging may be the last few days of a serial number’s lifecycle. Once a box of SIM cards (same example again) arrives at a retailer, and the retail staff open the box, the serial numbers go into a kind of informational vacuum. The visibility application knows the serial numbers where delivered, and also knows they were not sold yet. But, the visibility application usually doesn’t have a positive-proof of location. Cycle counting or serial number sortation can be used, but they increase the in-store inventory management complexity and introduce more chance for errors.

Obviously, successful examples of end-to-end serial number tracking are usually reliant on a robust Point of Sales (POS) system to feed back the data on serial number consumption. Just as the visibility application needs near-perfect data about serial number packing from the manufacturer, it will need near-perfect serial number consumption data from the point of sale.

Monday-Morning Wrap Up

As most of my articles, I’m closing with a summary of how this example of visibility can be applied immediately in our working lives.

  1. Mechanically, track & trace visibility is about propagating shipment status or location from the top-most MATERIAL UNIT down to all the shipment contents
  2. Track & trace visibility is simple, widely available, and is a kind of “commodity” visibility which doesn’t need to be expensive. Many 3PLs offer it for free as a perk of transporting with them.
  3. Track & trace visibility works well with lot number tracking. Lot number tracking has plenty of long-term success stories in our field.
  4. Serial number tracking is usually an end-to-end requirement, and is not immediately manageable with the most common visibility software. It is a special situation, albeit one that dominates several large industry verticals.
  5. In order for serial number tracking to really work, two additional applications are needed outside of the visibility application itself: a manufacturing system and a Point of Sale system.
  6. Successful serial number tracking relies on near-perfect data about serial number packing, and near-perfect data on serial number consumption from the point of sale. If either of these is not available, it is a high-risk endeavor to expect visibility applications to solve the business need of end to end serial number tracking.

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