Traceability of Inventory is important for Accountability purposes. Traceability allows you to trace back the source of Stock when required. For example, if you are a manufacturer of Smartphones when you receive a Customer Complaint regarding its battery, on investigation you find out that the complaint is genuine and the Supplier needs to be contacted for a replacement. You can find out the Supplier if you assign a unique Serial No to the battery received, or the Supplier may provide their own Serial No. Based on the Serial No of your Smartphone, you can backtrace the serial No of the Battery and who supplied it.

Serial No is a Unique Identification No assigned to an individual Unit. While, Batch No is a Unique Identification Number assigned to a Batch of Items. A Batch No is usually used for identifying items that are usually consumed in batch as well or the items are too small to be tracked individually. For example, Oil cannot be tracked with a Serial No because the usage is usually in Litres and one Litre cannot be differentiated and given a Serial No. Moreover, Batch No is often used for Perishable Items or items that have an expiry.

ERPNext lets you configure items to be identified and tracked based on Serial No or Batch No or both.