Lot Tracking Features and Limits of QuickBooks Enterprise

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on December 30, 2015

Let’s say you’re a manufacturer who needs to use software to track lot numbers, and you’re currently using or thinking about buying QuickBooks. What are your options?

Lot tracking isn’t offered in the Simple Start, Essentials, Plus, Pro or Premier editions of QuickBooks. This leaves you with three choices:

    • Integrate a third-party application to enable QuickBooks lot tracking.
    • Buy QuickBooks Enterprise with the Advanced Inventory add-on module (which comes at an extra cost).1
    • Buy one of the many other inventory management, warehouse management or ERP systems on the market that offer lot tracking capabilities.

But how do you know which of these three approaches is right for your business?

Start here, as we’ve scoured available online resources on the topic—including video demos, video tutorials, help sites, forums, reviews and more—so you don’t have to.

Here’s what we’ll cover:

What Is Advanced QuickBooks Lot Tracking?
Third-Party Lot Tracking Solutions
Lot Tracking Capabilities Offered in Advanced Inventory
Limits of Lot Tracking Capabilities in Advanced Inventory
Will QuickBooks Advanced Inventory Work for You?
Next Steps
Sources

What Is Advanced QuickBooks Lot Tracking?

The Advanced Inventory module for QuickBooks Enterprise is a scaled-down inventory management system that runs within QuickBooks.

It offers many (if not all) of the inventory management capabilities you’d find in an inventory management system, warehouse management system (WMS) or ERP system.

Purchasing this additional module is the only way to enable lot tracking capabilities within QuickBooks itself.

So what can you do with QuickBooks Enterprise’s tracking features? It turns out you can do quite a lot:

Major Lot Tracking Capabilities of QuickBooks Enterprise With Advanced Inventory

 

lot tracking capabilities of quickbooks
While it may seem from the above chart that QuickBooks Enterprise’s Advanced Inventory module can cover all of your lot tracking needs, the devil is in the details, which we’ll examine later in depth.

 

Third-Party Lot Tracking Solutions

A number of inventory management vendors that focus on QuickBooks integrations offer robust lot tracking capabilities: Fishbowl Inventory is a good example. Such vendors allow you to keep your existing QuickBooks system in place while beefing up tracking abilities.

 

Dashboard of Fishbowl Inventory
 

 

If you’re not wedded to QuickBooks, you can take a look at some of the inventory management, warehouse management and ERP solutions that handle lot tracking.

In particular, vendors that serve the complex manufacturing and wholesale distribution industries offer strong lot tracking solutions.

Now, we’ll look at the many useful features of the Advanced Inventory module in QuickBooks Enterprise, and point out where it falls short for certain business models and industries. In these cases, a third-party solution might be your best bet.

Lot Tracking Capabilities Offered in Advanced Inventory

QuickBooks Enterprise may not be the most advanced lot tracking system out there, but it does cover a number of bases:

  • Lot tracking for sales and purchase order processing1
  • Inventory reporting by lot number2
  • Recall reporting3
  • Lot tracking in assemblies5
  • Inventory adjustments within lots5
  • FIFO costing using lot numbers4

For distributors, the most essential lot tracking capability of QuickBooks Enterprise with Advanced Inventory is sales and purchase order processing.

Lot numbers can be entered in the system when receiving items into inventory for purchase order processing.1 And when filling sales orders, you can easily allocate particular lots to orders: Just choose from a drop-down menu of lot numbers with quantities in stock for each.2

By controlling and tracking lot numbers in sales and purchase order processing, you can help maintain traceability throughout the supply chain in case of a recall.

In this way, the system provides the basic one-up, one-down traceability required by many distributors.

Additionally, the system can track the lot numbers of components used in building assemblies, which is a crucial feature for manufacturers.

QuickBooks Enterprise with Advanced Inventory also offers useful reporting capabilities. You can use lot numbers to run reports that list:

  • Transaction history by lot number
  • Inventory on hand by lot number
  • Lot numbers on hand by site
  • First-in, first-out (FIFO) costing of lot history by item2

The Advanced Inventory module even includes an Inventory Center that allows you to run recall reports by lot number.3 These reporting tools help you handle simpler recall scenarios—that is, ones that don’t involve complex manufacturing or distribution processes.

Read our report on lot tracking solutions for food distributors to get tips on handling more complex recall scenarios.

FIFO costing functionality is also quite useful, especially for distributors.

With FIFO costing enabled, the costs for items sold will be calculated using the prices of the first lots you purchased, until the quantities of those lots are used up. The system will then factor in the prices you paid for the next-oldest lots in inventory when calculating costs.4

It’s important to note that FIFO costing is distinct from lot tracking in Advanced Inventory: The system will cost items on the assumption that the oldest lots in inventory were the ones used to fill orders, even if these lots weren’t physically picked from the warehouse and shipped to customers.4

To integrate FIFO costing with actual warehouse picking using the FIFO method, you’ll need to find a more robust solution for warehouse management that supports both FIFO picking logic and lot control. A basic inventory management system will not offer this.

Finally, inventory adjustments in the Advanced Inventory module are straightforward: You can adjust quantities on hand for particular lot numbers.5 This is a necessary feature for correcting quantities if you’re using cycle counts to manage your inventory.

Limits of Lot Tracking Capabilities in Advanced Inventory

Now that we’ve looked at the many things you can do with lot numbers in QuickBooks Enterprise with Advanced Inventory, let’s turn to the limits of the product’s lot tracking capabilities:

    • You must choose lot or serial tracking—you can’t use both.2
    • The total quantity on hand for all lots isn’t connected to the total quantity on hand of the item in inventory (that is, you can have a lot with a greater quantity on hand than the quantity on hand of the item itself).5
    • QuickBooks Enterprise with Advanced Inventory doesn’t force users to enter lot numbers, which creates the potential for human error.6
    • It doesn’t support entering lot numbers into the system via barcode scanners.6 However, third-party vendors sell applications capable of adding this functionality to QuickBooks Enterprise.
    • You can’t print lot or serial numbers using QuickBooks Enterprise with Advanced Inventory.7
    • Even when using custom fields, you can’t associate expiration dates with lot numbers, as expiration dates are assigned at the item level.8 This means QuickBooks Enterprise won’t work for many businesses in the pharmaceutical and food and beverage industries.
    • You can’t track lot numbers within sub-assemblies. This means that the system is only appropriate for simpler kinds of manufacturing.6

Will QuickBooks Advanced Inventory Work for You?

The following table shows the industries and business models for which QuickBooks Enterprise with Advanced Inventory is appropriate, and those for which it isn’t. These recommendations are based on the capabilities and limitations of the module that we’ve explored.

QuickBooks should work for…
QuickBooks may not work for…
Simple manufacturers with single-level assemblies Complex manufacturers and distributors of multi-level assemblies with lot tracking requirements
Distributors of non-perishable goods Food and beverage distributors
Distributors that don’t perform value-added services affecting lot numbers (e.g,. kitting, culling and repackaging, which can present tracking issues) Pharmaceutical and chemical distributors
Retailers with lot tracking requirements Distributors that perform value-added services affecting lot numbers

Next Steps

To begin narrowing down your options for lot tracking software, you can:

    • Call (888) 234-5187 to speak with an Inventory Management Software Advisor (at no cost to you). Our experts can provide pricing information and help you find a solution that fits your needs.
    • Try out an inventory management system with a video demo.

Sources

Any facts borrowed from third-party sources are cited in the copy with endnotes. We’ve listed all sources below:

  1. https://www.youtube.com/watch?v=qBpH0oS9OnU
  2. https://www.youtube.com/watch?v=o0lX5JxExO4
  3. http://www.evarsys.com/2011/09/29/new-features-in-quickbooks-v12-enterprise-and-premier/
  4. http://www.sleeter.com/blog/2015/02/understand-quickbooks-fifo-costing-making-switch/
  5. http://www.sleeter.com/blog/2011/09/quickbooks-2012-inventory-lot-tracking/
  6. http://www.numbercruncher.com/t-quickbooks-lot-serial-number-tracking.aspx
  7. https://www.youtube.com/watch?v=8WteJK9kzg4
  8. https://community.intuit.com/questions/800117-how-can-i-add-expiration-dates-to-my-inventory

 

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