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QuickBox Fulfillment Apr 25, 2022 4 min read

Choosing the Right Inventory Management Strategy for Your Business: FIFO vs. FEFO vs. LIFO

When it comes to inventory management, moving stock efficiently is a top priority. The right strategy will help to reduce the risk of inventory loss (and reduced profitability!) caused by product expiration or obsolescence.

There are three main strategies for warehouse management, each with its own benefits. Which management strategy works for you and your business? Let’s take a look at each of them:

FIFO

FIFO is the acronym for “First In, First Out,” and just as it sounds, it means that the first inventory in is the first inventory that’s shipped out. This is the most common method for managing inventory as it helps to ensure that products are rotated efficiently, and businesses aren’t stuck with outdated products.

In the retail world, older products are often moved to the front of the shelf with newer products being placed behind. This allows customers to clear out older products from shelves before moving on to the newest, which helps decrease dead stock.

This method is effective for most products, and particularly for those with shorter demand cycles, such as trendy clothing and seasonal items.

FEFO

FEFO stands for “First Expire, First Out.” It is similar to FIFO, but applies specifically to products with expiry dates, including perishable goods like foods, beverages, supplements, and pharmaceuticals. It allows for the products with the nearest expiration date to be shipped out first, ensuring products are sold before they get too close to the sell-by date. This helps businesses reduce inventory loss and ensure their customers have time to use their purchased products before expiration.

Expiration dates for all products should be tracked in the inventory management system to ensure product is moved most efficiently. QuickBox has supported a wide array of clients in the nutrition, supplement, and cosmetics markets and has extensive expertise in FEFO inventory management.

Benefits of FIFO and FEFO inventory management include:

  • Reducing spoiled, past-date, or expired products by ensuring the oldest stock/shortest expiry date products are shipped out first.
  • Decreasing obsolete inventory by helping inventory move in and out of the warehouse efficiently.
  • Enhanced quality control with advanced tracking and inventory management.

Both FIFO and FEFO require advanced inventory tracking to ensure you’re fully compliant and understand what has come in and what has left the warehouse. In addition, the warehouse requires methodical organization as new stock is delivered to ensure the oldest product is pulled first.

LIFO

Finally, the last acronym, LIFO is very different from the first two. It stands for “Last In, First Out,” and it’s typically used when the priority is to optimize unloading time and space in the warehouse. It is best suited to fast-moving inventory, products that don't lose value over time, and don’t have an expiration date. It is risky for slower-moving products and those with expiration dates.

Choosing the right inventory management practices for your business can decrease the risk of stock loss, dead stock, and unhappy customers who get dated or expired product.

At QuickBox, we can help you determine the right strategy for your inventory, and get you up and running efficiently. Ready to get started?  Contact us today!

 
 

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