Material and inventory flow management methods (FIFO, LIFO and FEFO)

FIFO is an acronym for First In, First Out, and refers to a strategy of inventory management where the oldest goods (= in stock for the longest time) always leave first. This method is often used by warehouses storing fresh groceries or other perishable goods, as they need to keep rotating their stock as well as getting rid of the oldest items.

LIFO is an acronym for Last In, First Out, and is the exact opposite of FIFO – according to this strategy, the newest goods (= in stock for the shortest time) leave first. This strategy is suitable in particular for bulky and heavy goods, or for dry bulk material. For example, in the case of firewood, it would be inefficient to keep reaching for the oldest wood at the bottom of the pile and then rearranging the rest.

Still, the fact remains that when using the LIFO method, the oldest material is ageing, so it is a good idea to organize your warehouse in such a manner that the oldest inventory can be used from time to time.

FEFO is an acronym for First Expired, First Out, and refers to a strategy where goods leave based on their expiry dates. The warehouse worker always picks up the goods which are closest to their expiry dates, regardless of when they arrived in stock or where they are positioned. The FEFO method is suitable in particular for food or pharmaceutical warehouses, where ignoring expiry dates could lead to significant financial loss.