12 Sep
In the fast-paced world of warehousing and fulfilment, accuracy and efficiency are everything. One of the most effective methods to keep operations running smoothly is FIFO – First In, First Out. But what does FIFO really mean, and why is it such an important part of modern inventory management? Let’s break it down.
What is FIFO?
FIFO (First In, First Out) is an inventory management method where the earliest received stock is the first to be picked, packed, and dispatched. It is a system designed to maintain proper stock rotation, minimise waste, and ensure consistent product quality.
Unlike alternative approaches such as LIFO (Last In, First Out), FIFO prioritises older stock first, which is particularly important for products with expiry dates or where product relevance changes quickly.
Why FIFO is Important for Warehouses
Reduces Stock Waste
By dispatching older stock before newer items, FIFO prevents products from becoming obsolete or expiring in storage. This is especially critical in industries such as food, pharmaceuticals, and cosmetics.
Improves Order Accuracy
FIFO ensures items are picked in the correct sequence, reducing the risk of sending out products that are outdated, damaged, or nearing expiry.
Enhances Customer Satisfaction
Using FIFO provides customers with products in the best possible condition, leading to fewer complaints, returns, or reputational issues.
Regulatory Compliance
In many industries, particularly healthcare and food, FIFO stock rotation is required to meet safety and compliance standards.
Optimises Inventory Control
A FIFO system keeps warehouse inventory levels accurate and predictable, simplifying demand forecasting and preventing overstocking.
Where FIFO is Most Effective
FIFO delivers the biggest gains in sectors where product age directly affects value. In food and beverage, disciplined stock rotation prevents write-offs and supports retailer shelf-life requirements. Pharmaceutical and healthcare operations rely on FIFO (often FEFO—first-expired, first-out) to protect patient safety and meet regulatory standards. Cosmetics and personal care brands use FIFO to avoid degradation in active ingredients and packaging changes that date older batches. Even electronics and technology benefit: versions and SKUs refresh quickly, so pushing older lots first reduces obsolescence and discounting. If your catalogue includes seasonal goods, promotional packaging, or any item with a best-before date or fast product cadence, FIFO is the lowest-friction way to protect margin and inventory accuracy.
How to Implement FIFO in a Warehouse
Successful FIFO is a process, not just a picker instruction. Build it end-to-end:
Standardise receiving- Capture arrival date, batch/lot, manufacture and expiry dates at the dock. Scan GS1 barcodes where available and quarantine exceptions for QA so unverified stock never reaches the pick face.
Design for flow- Slot high-velocity SKUs close to despatch and use flow racking or clearly signposted lanes so older pallets or cases sit in the primary pick position. Keep newer receipts in reserve until the older inventory clears; avoid mixing dates within the same location unless your WMS enforces strict lot picking.
Automate putaway and replenishment- Configure putaway rules so locations prefer the oldest available inventory. Replenishment jobs should always top up pick faces from the oldest reserve stock, not the most convenient pallet.
Enforce at pick- Mobile scanning should validate that the picker is taking the correct lot/date. For date-sensitive products, switch from FIFO to FEFO so the soonest-to-expire item is always dispatched first.
Label and visibility- Use clear, standardised labels (1D/2D codes) and ensure the WMS exposes ageing and days-on-hand by lot. Supervisors need real-time views of at-risk stock so they can trigger promotions or transfers before write-offs occur.
Audit continuously- Run cycle counts by lot/date, review aged inventory reports, and track exceptions where pickers override FIFO. Close the loop with corrective training and layout tweaks.
Measure what matters- Monitor KPI baselines such as % of lines shipped FIFO-compliant, write-offs due to expiry/obsolescence, average days-to-expiry at despatch, and stock turns. Improvements here confirm the process is working.
FIFO for Warehousing: Conclusion
FIFO is a proven method for maintaining inventory accuracy, protecting margin, and improving fulfilment reliability. When it is embedded from receiving through to despatch—and enforced by scanning, location logic, and clear KPIs—it reduces write-offs, shortens dwell time, and supports compliance across regulated industries. For operations managing large SKU counts or multiple clients, a Warehouse Management System (WMS) that natively supports lot control, FEFO/FIFO rules, directed putaway, and replenishment is the most dependable way to scale FIFO without adding manual checks.
Author:
Colleen Ballantine
Colleen is a marketing specialist at Meteor Space , writing in-depth blog content on warehouse management, inventory control, and logistics. With extensive industry experience, Colleen focuses on delivering informative and insightful posts.
UPDATED ON: 12/09/2025
FAQs
What KPIs should we track to measure fulfilment performance?
Customers judge brands on speed, accuracy, and condition on arrival. Late or incomplete orders erode trust quickly, especially on marketplaces where ratings are public and algorithmic. Consistent issues increase return rates and customer service contacts, raising costs and generating negative reviews that reduce conversion for future shoppers. If catalogue accuracy is poor—wrong size/colour/variant delivered—customers assume the brand is unreliable. Over time, this lowers lifetime value and increases acquisition costs because you must pay more to replace unhappy customers. Strong fulfilment reverses that dynamic: accurate first-time delivery drives positive reviews, repeat purchase, and word-of-mouth.
What KPIs should we track to measure fulfilment performance?
Track a balanced set across speed, accuracy, cost, and stock health. Core KPIs include OTIF (On-Time, In-Full), order cycle time (receipt to despatch), pick accuracy (line/item), inventory accuracy (system vs physical), dock-to-stock (receiving efficiency), cost per order, and return rate with reason codes. For ageing control, monitor days on hand, expiry/obsolescence write-offs, and % shipped FIFO/FEFO-compliant. Capacity signals such as lines picked per labour hour and same-day despatch rate help plan peak. Dashboards should segment KPIs by channel (web, marketplace, wholesale) so you can isolate issues and act quickly.
How does a WMS reduce fulfilment errors?
A robust Warehouse Management System standardises every task and replaces judgement calls with rules. Barcode scanning validates item, lot/batch, and location at pick and pack. Directed putaway and replenishment keep the right stock in the right pick face and enforce FIFO/FEFO to avoid date mix-ups. Wave or batch picking optimises routes, while pack benches can use weight checks and last-scan verification to catch mis-picks. Real-time inventory prevents overselling and triggers replenishment before stockouts. Audit trails by user and timestamp make root-cause analysis straightforward so training can be targeted where it matters.
FIFO vs FEFO: which should we use?
Use FIFO (First-In, First-Out) for general merchandise where arrival date is the primary rotation rule. Use FEFO (First-Expired, First-Out) wherever products carry expiry or best-before dates—common in food, beverages, nutraceuticals, cosmetics, and pharmaceuticals. FEFO prevents dispatching items with shorter remaining shelf life behind newer receipts. Many operations deploy both: FEFO for date-coded SKUs and FIFO elsewhere. Your WMS should apply rules at SKU level, ensuring the right logic is enforced automatically at putaway, replenishment, and pick.
