Lot Segregation

This topic is part of the SG Systems Global regulatory & operations glossary.

Updated December 2025 • Inventory Controls, Traceability Integrity & Mix-Up Prevention • Warehouse, QA, Production

Lot segregation is the set of physical and system-enforced controls that keep different lots of the same material or product separate and unambiguous across receiving, storage, picking, staging, production, and shipping. The goal is simple: prevent mix-ups and preserve traceability. If lots are not segregated, a facility cannot reliably prove which supplier lot went into which batch, which finished good lot shipped to which customer, or which inventory remains on hand when a recall or investigation occurs. Lot segregation is therefore a core execution discipline tied to WMS controls, batch-to-bin traceability, and end-to-end genealogy, supported by attributable audit trails and data integrity principles.

Segregation is not just “put it on a different pallet.” In modern operations, segregation must be enforced by the system and reinforced by the facility layout. If the system allows two lots to be stored in the same bin without controls, or allows pickers to substitute lots under pressure, segregation collapses. When segregation collapses, everything downstream becomes harder: batch records become weaker, inventory accuracy drops, yields become suspicious, and recall scope expands because you can’t isolate affected product precisely. Lot segregation is how you prevent small warehouse convenience decisions from becoming large compliance failures.

“If two lots can touch without a controlled event, your traceability is already compromised.”

1) What Lot Segregation Controls

Lot segregation controls how lots are stored, moved, and consumed so the identity of each lot remains intact. It applies to raw materials, packaging, components, intermediates, and finished goods. It also applies to rework and returns, which are common sources of lot ambiguity because they often re-enter inventory outside normal receiving flows.

Segregation can be strict (one lot per bin) or managed (multiple lots per location with container-level IDs), but it must always be controlled. The facility must be able to prove what lot is where, who moved it, and how it was used. That is the core traceability requirement.

2) Why Lot Segregation Exists

Lot segregation exists because lot identity is the backbone of traceability and recall readiness. If lots are commingled, you lose the ability to isolate affected product. That increases recall scope and cost. It also increases investigation uncertainty: you cannot determine whether a defect is tied to a specific supplier lot or a specific process batch if lot identity is unreliable.

Segregation also prevents day-to-day errors: wrong lot issued to production, expired lot picked, allergen lot mixed into non-allergen material, or high-risk material substituted silently. These errors are often not caught by final inspection because the product “looks fine.” Segregation prevents those errors by making them difficult to execute.

3) Physical Segregation vs System Segregation

Physical segregation is the facility-level control: separate pallets, separate racks, separate cages, separate zones, clear labeling. System segregation is the software-level control: the WMS knows the lot ID, enforces bin rules, requires scanning, blocks commingling, and restricts substitution. Strong segregation requires both. If you have physical segregation without system enforcement, someone will move a pallet and forget to record it. If you have system segregation without physical discipline, people will “make it fit” in the warehouse and create commingling in reality.

The highest-performing facilities design warehouse flow so physical segregation is easy and system segregation is automatic. That’s the sweet spot: compliance becomes the path of least resistance.

4) Segregation Rules: One Lot Per Bin vs Container-Level Segregation

Segregation rules should match risk and operational reality:

• One lot per bin (strict): simplest and most defensible; best for high-risk items, allergens, critical ingredients, controlled substances, and high-value components.
• Container-level segregation (managed): multiple lots can share a location only if each container has a unique ID and movements/consumption are scanned at the container level, not just the bin level.
• Bulk storage segregation: silos, tanks, and gaylords require controlled transfer rules and cleaning/changeover controls; bulk commingling is high risk unless explicitly allowed and controlled.

If you allow multiple lots per bin without container IDs, you are effectively accepting commingling risk. That often results in “unknown lot” scenarios during recalls and investigations.

5) High-Risk Segregation Drivers

Some materials require stricter segregation because the consequence of mix-up is high. Common high-risk drivers include:

• Allergens:priority allergen control).
• Temperature-controlled items:temperature-controlled storage and excursion controls.
• Hazardous chemicals:incompatible chemical segregation).
• Controlled substances or regulated materials:
• Expiry-driven items:FEFO).
• Labeling components:

High-risk segregation is often where audits focus because mix-ups in these categories can create immediate safety and compliance exposure.

6) Receiving and Put-Away: Where Segregation Starts

Lot segregation must begin at goods receipt. If lot ID is not captured correctly at receiving, segregation is impossible later because you can’t segregate what you can’t identify. Good receiving controls include:

• Lot capture:
• Label verification:
• Status assignment:quarantine or release status based on rules.
• Directed put-away:directed put-away and bin/zone topology).

Receiving is the last clean point to establish identity. Every step after receiving becomes harder if lot identity is weak at the start.

7) Picking, Staging, and Kitting: Where Segregation Usually Fails

Segregation tends to fail under production pressure. Pickers substitute lots, stage multiple lots together, or return partials without clear container IDs. A defensible system controls:

• Pick rules:
• Scan enforcement:
• Staging time limits:
• Partial container management:

When these controls are weak, segregation collapses into “we think it’s that lot,” which is not defensible in audits or recall events.

8) Segregation and Rework/Returns

Rework and returns are high risk because they re-enter inventory outside normal flows. Segregation rules must explicitly cover:

• Rework lot identity:rework traceability).
• Return condition:
• Segregated storage:
• Disposition controls:

Most “mystery lot” events come from returns and rework loops. Strong segregation treats these as controlled exceptions, not normal inventory.

9) Segregation and Traceability Evidence

Lot segregation is a traceability control. It supports upstream and downstream linkage by ensuring lot IDs remain intact through movement and consumption events. In a digital system, segregation is proven by:

• Movement history:
• Consumption history:upstream traceability).
• Genealogy:genealogy).
• Status history:

If your system can’t show this evidence, segregation is likely relying on human memory and physical cues—both of which fail under pressure.

10) Common Failure Modes (How Lot Segregation Breaks)

Lot segregation breaks in predictable ways:

• Commingling in bins:
• Unscanned movements:
• Lot substitution under pressure:
• Partial container mixing:
• Label drift:
• Rework/returns unmanaged:

These failures create the same outcome: uncertainty. Uncertainty forces broader recall scope and weakens audit defensibility.

11) Practical Blueprint: Implementing Lot Segregation That Holds Up

A practical segregation blueprint includes:

• 1) Define segregation rules:
• 2) Design warehouse topology:
• 3) Enforce scan-based moves:
• 4) Control partials:
• 5) Enforce status controls:
• 6) Audit routinely:
• 7) Close gaps:

This blueprint makes segregation stable over time and resistant to “busy day” failures.

12) How This Fits with V5 by SG Systems Global

WMS enforcement and bin topology. In V5, lot segregation is enforced through WMS rules, bin/zone topology, directed put-away, and scan-required movements. Lots can be restricted by status, zone, allergen class, temperature requirement, and customer/regulatory rules so commingling is prevented by design.

Traceability and auditability. Because movements and consumption events are attributable and time-stamped, V5 supports defensible genealogy and recall readiness. When segregation breaks, the system can route issues into nonconformance and CAPA workflows in the V5 QMS.

Bottom line: V5 makes lot segregation operational and enforceable, reducing mix-ups, strengthening traceability evidence, and shrinking recall scope when issues occur.

13) FAQ

Q1. Do we need one lot per bin?
Not always. One lot per bin is simplest and most defensible, especially for high-risk items. If you allow multiple lots per location, you should require container-level IDs and scan enforcement to prevent commingling.

Q2. What is the biggest risk of poor segregation?
Unknown lot identity. That forces broader recall scope, weakens investigations, and makes batch records harder to defend because you can’t prove which lot was used.

Q3. How does segregation relate to quarantine?
Quarantined or held lots must be segregated physically and blocked systemically. If quarantine lots can be picked or mixed into available inventory, quarantine controls fail.

Q4. What about bulk tanks and silos?
Bulk storage requires controlled transfer rules and changeover controls. Commingling in bulk is high risk unless explicitly allowed and documented, with clear genealogy and cleaning/changeover evidence.

Q5. How do we handle partial containers?
Use controlled container IDs and rules for partials. Avoid pouring partials together unless you have controlled commingling procedures and traceable linkage.

Q6. How do we prove segregation worked?
By showing movement history, bin location records, pick/issue scan evidence, and genealogy linking lots to batches and shipments, all supported by audit trails.

Related Reading
• Traceability: End-to-End Genealogy | Upstream Traceability | Batch-to-Bin Traceability | Recall Readiness
• Warehouse Controls: WMS | Bin & Zone Topology | Directed Put-Away | Cycle Counting
• Status & Risk: Quarantine | Hold/Release | Allergen Control | Incompatible Segregation