FIFO vs FEFO: which to choose
FIFO and FEFO are two rules that decide which goods leave the warehouse first. They sound similar, but they protect against different risks, and choosing the wrong one can cost you money.
FIFO: first in, first out
With FIFO, the goods that arrived first are shipped first. Older stock is used before newer stock. It is simple, easy to teach and works well for goods that do not expire or change quickly, such as many spare parts, packaging and ordinary consumer goods.
FIFO also reduces the risk of old stock becoming obsolete or damaged on the shelf.
FEFO: first expired, first out
With FEFO, the goods with the nearest expiry date leave first, regardless of when they arrived. A batch received later can be shipped before an earlier one if its expiry date is sooner.
FEFO is the right choice for food, medicine, cosmetics, chemicals and any product with a shelf life. It prevents goods from expiring while newer stock is sold.
How to decide
- No expiry date and no quick obsolescence: FIFO is usually enough.
- Expiry dates or limited shelf life: use FEFO.
- Mixed range: apply FEFO to the items with a shelf life and FIFO to the rest.
What you need to make it work
Both rules need discipline in the warehouse. Batches and expiry dates must be recorded when goods are received, and the system or the shelf layout must make the right batch easy to find. Place older goods at the front, or use flow racks that feed older stock forward.
Tie it to your counts
An example with expiry dates
Two batches of the same product are in the warehouse: batch A received in January with an expiry date in November, and batch B received in March with an expiry date in September. With FIFO, batch A would be shipped first and batch B might expire. With FEFO, batch B is shipped first, even though it arrived later.
Check it in the system
Run a report of batches ordered by expiry date and compare it with what is on the shelf. If the oldest batches are not at the front, the rule exists only on paper. Fix the picking instructions and the labelling.
Counting is the moment to check that the rule is followed. Look for old batches at the back and new ones at the front, and for expired goods that were never written off. Every case you find is a sign that the picking process needs attention.