?? FIFO, FEFO & LIFO – Mastering Inventory for Maximum Efficiency! ????

?? A Quick Story: The Grocery Store Nightmare

Last summer, I stopped by my local grocery store to grab a few essentials. I picked up a bottle of milk, some yogurt, and a pack of cheese.

Two days later, I opened the yogurt — it had already expired. ??

Next, I checked the cheese — also expired. The milk? Spoiled. ??

Annoyed, I went back to the store and asked, "Why are you selling expired products?"

The employee sighed and said, "We accidentally put the new stock in front of the old stock... and forgot to check expiry dates."

?? This simple mistake — failing to follow FIFO or FEFO principles — led to spoiled products, wasted money, and frustrated customers like me.

That’s when I realized that using the right inventory management strategy is crucial for businesses.

?? What are FIFO, FEFO & LIFO?

Effective inventory management is all about knowing which stock to sell first — and that’s where these three powerful methods come in:

?? 1. FIFO (First In, First Out)

? Oldest stock is used or sold first.

? Ensures fresher products and prevents expired inventory.

? Ideal for perishable goods like food, pharmaceuticals, or cosmetics.

?? Think of FIFO like eating the oldest slice of bread before opening a new loaf. ??

??? 2. FEFO (First Expire, First Out)

? Products with the earliest expiry date are sold first — regardless of arrival date.

? Ensures products are used before they spoil.

? Best for medications, dairy products, and perishable food.

?? Imagine choosing the yogurt that expires tomorrow over the one that expires next week.

?? 3. LIFO (Last In, First Out)

? Newest stock is sold or used first.

? Often used for non-perishable goods like building materials, sand, or gravel.

? Suitable when older stock has no risk of spoilage.

?? Think of unloading a truck where the newest boxes are closest to the exit — that’s LIFO. ??

?? Why FIFO, FEFO & LIFO Matter – Data-Backed Insights

?? FIFO strategies reduce expired inventory by up to 50%. (Source: Harvard Business Review)

?? Businesses using FEFO in the pharmaceutical sector reduce expired medications by 40%. (Source: McKinsey & Co.)

?? LIFO-based warehouses improve warehouse speed by 20-30% in industries like construction and mining. (Source: Deloitte Supply Chain Report)

?? Supermarkets applying FIFO and FEFO effectively cut food waste by 35-40% annually.

?? Core Insight: Choosing the right inventory method can improve product quality, reduce waste, and boost profits.

?? Key Takeaway: Choose the Right Method for the Right Products

? Use FIFO for perishable items like food, cosmetics, and medicines.

? Apply FEFO when managing products with fixed expiry dates like vaccines, dairy, or skincare products.

? Implement LIFO for non-perishables like building materials, hardware, or bulk storage.

?? How to Implement FIFO, FEFO & LIFO – Step-by-Step Guide

Here’s a clear, actionable roadmap to master these inventory techniques:

?? Step 1: Choose the Right System for Your Products

?? Identify your inventory type:

?? For perishable products → Use FIFO

?? For expiry-sensitive products → Use FEFO

?? For non-perishable goods → Use LIFO

? Example: Supermarkets like Walmart use FIFO for dairy, while Pfizer relies on FEFO for medicine safety.

?? Step 2: Organize Your Storage Space for Easy Flow

?? Designate separate sections for FIFO, FEFO, and LIFO inventory.

?? Use shelves, bins, or racks to allow proper movement.

?? For FIFO and FEFO: Place older products at the front and newer ones at the back.

?? For LIFO: Place newer stock closer to the exit to improve speed.

? Action Tip: Use color-coded labels to distinguish FIFO, FEFO, and LIFO zones.

? Example: McDonald’s kitchens are designed for FIFO, ensuring burgers, fries, and sauces are always served fresh.

?? Step 3: Track Expiry Dates and Batch Numbers

?? Use tracking systems to monitor: ?? Expiry dates ?? Batch numbers ?? Stock movement patterns

?? Recommended Tools:

?? Fishbowl Inventory – Best for small to mid-sized businesses

?? NetSuite ERP – Ideal for large-scale warehouse management

?? Zoho Inventory – Great for tracking perishable goods

? Action Tip: Set automatic alerts for products nearing expiry to prevent waste.

? Example: Pfizer uses FEFO-based systems to ensure medicines with short shelf lives are distributed first.

?? Step 4: Regularly Inspect & Rotate Stock

?? Conduct routine stock checks to:

?? Identify expiring products

?? Remove damaged or outdated items

?? Ensure FIFO, FEFO, or LIFO rules are followed

? Action Tip: Assign a dedicated Inventory Manager to oversee stock rotation.

? Example: Costco employees conduct daily checks in their fresh produce sections to ensure FIFO and FEFO are applied — cutting food waste by 40%.

?? Step 5: Train Your Staff on FIFO, FEFO & LIFO Principles

?? Educate staff on:

?? When to use FIFO vs. FEFO vs. LIFO

?? How to restock properly

?? How to identify expiry dates and batch codes

? Action Tip: Conduct quarterly training to ensure staff maintain best practices.

? Example: Nestlé trains warehouse staff on FIFO and FEFO procedures to manage everything from chocolate bars to dairy products effectively.

?? Real-World Examples of FIFO, FEFO & LIFO in Action

1?? Walmart – Mastering FIFO in Grocery Retail ????

?? Walmart’s FIFO strategy ensures older dairy products like milk, cheese, and yogurt are sold first.

?? Staff are trained to move older stock forward during restocking — reducing food spoilage by 35%.

2?? Pfizer – FEFO for Life-Saving Medications ????

?? Pfizer uses FEFO to distribute vaccines and temperature-sensitive drugs.

?? Their automated system tracks expiry dates to ensure older medicines are prioritized — improving safety and reducing waste.

3?? Home Depot – LIFO for Building Materials ????

?? Home Depot uses LIFO to manage bulk inventory like wood, tiles, and cement.

?? New shipments are placed closer to the exit for faster loading — improving order fulfillment speeds.

?? Final Thoughts – Why Mastering FIFO, FEFO & LIFO is Essential

Inventory management isn’t one-size-fits-all — and that’s the magic of FIFO, FEFO, and LIFO.

? Use FIFO for freshness.

? Use FEFO for products with strict expiry dates.

? Use LIFO for bulk goods with no spoilage risks.

When done right, these methods can transform inventory from a cost burden into a profit-boosting system.

?? Have you seen FIFO, FEFO, or LIFO in action before? Which method has worked best for you? Share your thoughts below!

?? References & Sources:

?? Harvard Business Review: How FIFO Reduces Waste in Retail

?? McKinsey & Co. Report on FEFO in Pharmaceuticals

?? Food Waste Reduction Alliance Report – Grocery Industry Insights

?? Deloitte Supply Chain Report – Best Practices for FIFO & LIFO

?? Case Study: Pfizer’s FEFO Model for Vaccine Distribution

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