How to use serialized inventory tracking

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Inventory management is one of the key elements required for running a successful warehouse. If you don’t know what’s on-hand, what’s sold, and what’s shipped, you could lose inventory, customers, and profit.

Poor inventory management can bring your business to its knees. Today we’re going to talk about serialized inventory tracking and how it can take your inventory management to the next level.

What is serialized inventory tracking?

There are a wide variety of inventory tracking methods you can use in your business. Serialized inventory tracking is one that we recommend often.

In many instances, knowing the total amount of inventory on hand is all the information you need for tracking your inventory. What happens in situations where you need to track individual units separately? This is where serialized inventory tracking becomes a game-changer.

Serialized inventory tracking is tracking items in your inventory by assigning each a unique serial number.

This is a step beyond using a traditional SKU for a product. While a SKU can convey a lot of useful information (for example, you can break down clothing by size, style, color, and a multitude of other factors), serialized inventory tracking allows you to track each product as an individual item.

If you’re selling high-value products where you will need to track warranty information and things of that nature (cellphones are a great example of this), then assigning unique serial numbers to each item in your inventory can make the process of tracking and managing those products easier.

Why is serialized inventory tracking important?

Serialized inventory tracking gives you greater control over your inventory management. This simplifies things for both you and your customers.

Yet, this comes at a price. Implementing serialized inventory tracking requires extra work and added cost. In the right situations, the pros far outweigh the cons. The key, as we’ll discuss later, is determining when you should be using this type of inventory management.

Serialized inventory management provides a number of benefits (which we’ll discuss in detail in the next section), but the key takeaway here is that it allows you greater insight into the product’s life and lifecycle after it leaves your warehouse.

Being able to track specific products individually provides an extra level of depth you don’t get with generalized SKUs. This can benefit your business in the right circumstances.

Advantages of serialization

There are a number of different reasons to use serialized inventory tracking. Let’s breakdown some of the scenarios where using this approach provides the greatest return.


1. Guarantees and warranties

If you’re selling products that come with guarantees and warranties, serialized inventory tracking is essential.

The unique serial number assigned to each product allows you to know exactly when a product is sold. This makes warranty repairs and issues easier to track because you’ll know the purchase date of the product. Since warranties and guarantees are time-sensitive, a serialized inventory approach allows you to quickly determine if the product is still in the warranty period.

2. Proof of ownership

Specific serial numbers are a great way to prove ownership in case of theft, loss, or other issues.

Cars have VINs. Firearms are tracked with serial numbers, and so on. The serial numbers make it easy to identify a specific item if it’s used in a crime or found in a pawnshop after a theft.

Serialized inventory tracking provides one more layer of security for the owner in case there’s a loss or problem.

3. Quality control

Serialized inventory tracking can also make life easier when it comes to issues like quality control.

No matter how diligent you are, mistakes will happen. You may wind up with a batch of products that all have a common flaw in them. Maybe a material was defective. Perhaps there was a machining issue. Whatever the reason, you will need to be able to easily gather those items so they’re not shipped out to customers.

Serial numbers make this process easier. You can track the individual items, and you can track batches and so on. It will be easier to locate the products with quality control problems.

4. Product recalls

If defective items do make it out into the world, these same serial numbers will make handling a product recall simpler. You can focus specifically on products that fall in the defective parameter rather than issuing a blanket recall.

We see this in action with cars.

An automaker will issue a recall, and knowing the VINs of affected vehicles makes it easier to contact owners, schedule repairs, and handle all the important aspects of the recall.

5. When required for oversight or to comply with governmental requirements

In some instances, you’ll be required to create unique serial numbers for tracking products in order to comply with governmental or other regulatory requirements.

This is particularly true for things like firearms or medicine. Each firearm must have a serial number so the weapon can be traced back to its original owner if used in a crime, stolen, or lost.

Medical products will need serial numbers in case there’s a recall or an issue with the item once it’s been purchased.

In both of these scenarios, serialized inventory numbers make it easier to track the product once it’s left your warehouse and moved on to the owner.

These are just a few of the reasons why serialized inventory tracking is important. Using this system allows you to better track products in case of issues and allows owners to provide proof of ownership should a problem ever arise.

When to use serial numbers

By this point, you’re probably wondering when you should use serialized inventory tracking.

The best approach is to take things on a case-by-case basis. Serialized inventory tracking does add some additional steps to your inventory management program and adds additional costs. Beyond that, it’s unnecessary for many types of products.

In the broadest terms, companies benefit from using serial numbers for tracking when dealing with high-value products. Cellphones, laptops and tablets, gaming consoles, firearms, and things of this nature all benefit from having unique serial numbers.

If you sell these types of products, or products that you may need to track for warranty and recall purposes, or that have governmental or regulatory oversight, then serialized inventory management techniques will make your life easier.

There is no one-size-fits-all list of times when using serial numbers will benefit your business. The best approach is to examine each of the items you sell, considering their value and other factors we’ve highlighted here, and make the decision for each individual product.

When shouldn’t you use serialized inventory management?

We mentioned earlier that serializing your inventory management comes with benefits, but those benefits also add additional steps to your process and cost money. Because of this, there are times where you will not want to use serialized inventory management.

Fortunately, it’s a lot easier to determine when you can safely not use this technique than it is to decide what should get a serial number.

The simplest rule of thumb here is if you’re selling a low-value item that is the same in all key aspects and doesn’t need to be tracked to an individual owner with a high level of detail, then it’s not something that should get a serial number.

These kinds of items don’t warrant extra time and financial investment. Traditional SKU tracking is enough in these situations.

Final thoughts

Deciding whether or not you should utilize serial inventory tracking can be a tough decision.

In certain circumstances, you’re required to track this information (e.g., if you sell computers, cellphones, cars, or firearms), but for everything else, it comes down to a weighing of the pros and cons.

On the plus side of the ledger, serialized inventory management adds another layer of depth to your inventory management program. You’ll have deeper insights into the products you sell this way, and it can help your customers well after the initial sale if there’s a recall, warranty, or theft issue.

On the con side, adding serialized inventory management requires additional work and will cost you more money upfront when compared to traditional SKU tracking.

For low-value products that don’t require any sort of individualized differentiation, this added work and expense doesn’t justify the return.

As such, you will basically have to make your decision about whether or not using unique serial number tracking is right for you on a product-by-product basis. If you sell high-end wares like jewelry and electronics, serial numbers make sense.

No matter what you decide, being aware that serialized inventory management is an option is a good thing. While this approach may not be for you now, there could come a time in the future where you take on a product line where this methodology helps you better manage your inventory.

Being aware that it’s an option will help you make a better, more informed decision.

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