There are 3 types of inventory management strategies used in warehouse management. They are commonly known as FIFO, FEFO, and LIFO. In this blog going to identify the FIFO concept. Inventory management is more critical and more complex in the logistics industry. With inventory management strategies you can avoid issues of inventory handling.
What is FIFO in inventory management?
FIFO stands for First in, First Out
First, come, first left
in simple explanation we can say the batch came first into a warehouse and moved to sell or use first.
Using the FIFO strategy in a warehouse company can avoid the risk of obsolescence and reduce waste.
Need to do regular stock rotation and frequent inspections for the success of this strategy.
Advantages of FIFO
Reduce the cost of inventory
If keeping goods in a log time means incurring costs. So less inventory time means cost reduction.
Reduce the risk of obsolete and waste
If the product is obsoleted or expired it is not suitable for use. So that is not useful to consumers it means you can’t get revenue back. It will be a waste. In the FIFO concept always move the oldest items in first. So there is less chance of waste or expiration.
The concept of FIFO is easy to understand
Bookkeeping is easy and less chance of mistakes happening.
Because FIFO means the oldest purchased or received items are sold or used first it is a natural flow of receiving and sending goods from a warehouse so the accounting process is easy.
Excellent stock turnover
Tax advantages in some countries
Enhance financial reporting and accounting process
What products can be used for FIFO?
warehouse strategy depends on the product types which is used to store.FIFO warehouse management strategy can be followed for storing the below items,
Items that have a specific shelf life with an expiry date
perishable items such as food, medicines, cosmetics, supplements, toiletries, etc
Products that become obsolete or quickly “out of style”
Mobile phones, Laptops, technological equipment, textiles, home appliances, footwear
FiFO concept is not only for warehouse management but also can be used for supermarket tracks and outlets.
What are the best practices for the FIFO concept?
use software for inventory management
A better understanding of inventory flow
Storage systems for FIFO inventory management concept
- Live Pallet Racking
- Drive Through – Compact Pallet Racking System
- AR Shuttle racking systems for pallets
- Carton Flow picking system
Reference from: ar-racking.com
For more details on storage systems for FIFO, you can read the post of ar-racking.com
Related posts you may like to read,
Warehouse Management & Warehouse Management System: Everything you need to know
What is Logistics? Types of logistics,7 R’s, and more in a simple way of explanation
Main 3 Types of Logistics – Inbound, Outbound, Reverse
Reverse Logistics: Everything you need to know
What is Third party Logistics(3PL)?:Everything you need to know
