Investing in a Traceability System: Start with Software or Standardize Lot Data First?

What weakness does a lot-related incident reveal?

Suppose a customer reports a defect in a product bearing lot code TP-260915-A. The warehouse team finds the dispatch note, the production team has shift logs, and the purchasing team holds raw material records. However, the production log records only the material names, without the lot codes used. During that shift, one material was also topped up from a second lot. The business therefore cannot determine exactly which raw material lots were used in TP-260915-A, or in what quantities.

This situation highlights a weakness: incomplete records linking raw material lots, the production process, and the finished product lot. Without this information, the business may need to broaden its investigation and apply controls to more finished product lots. Software cannot, on its own, fill in data links that were never recorded in documents or systems.

Traceability must work in both directions: backward from a finished product lot to raw materials, suppliers, and the production process; and forward from a raw material or finished product lot to related lots, customers, and delivery locations. Depending on product characteristics, risks, and applicable requirements, businesses may track individual items, cases, pallets, or lots; not every situation requires a unique identifier for each item.

What does standardizing lot data involve?

First, define the unit to be traced (individual item, case, pallet, or lot), the coding rules, the points at which data must be recorded, and the departments responsible. A lot code on a label is not enough if it is recorded inconsistently, if raw material lots cannot be linked to finished product lots, or if it is unclear how a lot was split or merged, or where it was delivered.

This is a reference framework; the specific data must suit the product, process, and applicable requirements. When materials are mixed, split, or used across multiple batches, record the relationships between lots and the corresponding quantities so that inputs and outputs can be reconciled, including process loss. For products with a shelf life or storage requirements, production dates, expiry dates, and storage and transport conditions may also be important data.

Why is a QR code alone not enough for traceability?

A QR code provides access to information; it does not itself prove that a product is traceable. If all products share a code leading to a general information page, the person scanning it may struggle to identify which information applies to the lot in hand. A QR code linked to a lot code can support more specific lookups, but effective traceability still depends on accurate, connected records covering raw materials, production, and delivery.

Traceability should also be distinguished from product authentication. Traceability identifies the history and movement of a product or lot; authentication checks whether the product was actually manufactured or issued by the business. Ordinary QR codes can be copied, so attaching a code does not in itself provide protection against counterfeiting. To authenticate individual items, businesses need additional mechanisms for issuing and checking codes and detecting unusual code usage.

When data needs to be exchanged between businesses, consistent identification and the ability to share supply chain event data are also essential. GS1 standards, including EPCIS, provide ways to describe and exchange information such as what was recorded, when, where, and in what activity. Businesses should consider this interoperability when selecting a solution, based on the requirements of their industry and specific partners.^[3]

When does software deliver practical benefits?

Software adds value when the number of lots, data capture points, and participants makes manual entry, reconciliation, and retrieval slow or error-prone. A suitable system can reduce duplicate data entry, prevent the dispatch of quarantined lots, reconcile receipts, dispatches, and stock balances, shorten traceability response times, and connect data with warehouse operations, production, or partners. Investment should be based on the operational problems to be solved, rather than the number of features advertised.

There is no universal lot-count threshold for deciding when to buy software. Businesses should measure at least three indicators before and after a trial: the time needed to complete a traceability request; the percentage of lots with complete links from inputs to recipients; and the rate of unexplained quantity discrepancies. Results should be checked against actual lots, including returns, lot splits, and incidents.

An implementation roadmap for choosing the right traceability system

1. Choose a product and a test scenario. Start with one product line and a specific scenario, such as nonconforming raw materials, a customer complaint, or an incorrect label. Define the time allowed to complete the trace and the completeness of the information required.
2. Map the flow of goods and data. Follow goods through receipt, production, storage, and delivery; identify the department responsible for recording data at each step. Mark any points where lot codes or quantities are missing, or where records cannot be linked between two process steps.
3. Set rules for lot data. Standardize code creation and the recording of use, splitting, merging, repacking, and returns. Define who enters, checks, approves, and corrects data, and retain a history of changes.
4. Run traceability tests on actual lots. Select lots that have been produced and delivered, trace backward to raw materials and forward to recipients, and reconcile quantities. Include situations outside the normal workflow.
5. Define software requirements from the test results. Identify the functions needed to address the bottlenecks found. Before committing to a wider rollout, ask providers to demonstrate how they handle your business data, export data, and connect with existing systems.
6. Measure performance and improve. Monitor traceability response times, the percentage of lots with complete links, and unexplained quantity discrepancies. Run traceability tests periodically and update the rules when products, suppliers, processes, or distribution channels change.

Legal requirements and traceability claims

Businesses need to identify the traceability requirements relevant to their product type, regulatory authority, destination market, and implementation timeline. Circular 02/2024/TT-BKHCN^[1] sets out regulations on the management of product and goods traceability. For products and goods under the jurisdiction of the Ministry of Industry and Trade, Circular 31/2026/TT-BCT^[4] took effect on 1 July 2026, making traceability mandatory for high-risk categories and encouraging its adoption for other categories. The roadmap requires product identification from 1 July 2026 and, from 1 January 2027, full traceability implementation before goods subject to the requirements are placed on the market.

Circular 11/2026/TT-BCT^[2], which governs food traceability under the jurisdiction of the Ministry of Industry and Trade, is temporarily suspended through 30 September 2026 under Decision 1611/QĐ-BCT^[5]. Food businesses should check its legal status and any replacement, amending, or supplementary documents before determining their specific obligations.

Requirements for identifiers, software, and data connectivity must be determined according to the regulations applicable to each product category. Before investing and claiming the ability to “trace all the way to the source,” businesses should clarify how far their evidence extends: to the supplier, raw material lot, production facility, or original raw material source. Every claim must be supported by verifiable data and records.

Before investing, try answering one question

If a problem were found in a raw material lot today, could your business identify which finished product lots used it, how much stock remains, and who received the goods?

If the answer depends on staff memory or manually combining spreadsheets without linking identifiers, the priority should be to standardize lot identification and record data at each process step. Testing traceability on actual lots will reveal which bottlenecks software needs to address to speed up retrieval, reduce errors, and maintain consistent data as operations grow.