30.10.2017

Warehouse Expiration Date Management with FIFO and FEFO

Warehouses are one of the critical points that are required for the fast and smooth process functioning in enterprises. Warehouse optimization must be carried out and the flow of raw materials, semi-finished goods and/or finished goods must be organized correctly as these are the key factors that enable the work flow of the company to run smoothly. Warehouses are actually one of the insidious problem sources in cases where the source of the problem cannot be pinpointed when a problem occurs at a company.

There are 3 basic techniques in warehouse management: FIFO, FEFO and LIFO.

First In First Out (FIFO):

In this technique, the rule is to move the stocked products or the products that are brought in first, in other words, to move them out of the warehouse first.

First Expire First Out (FEFO):

In this technique, the point of the action source is the product's expiration date. The products are dispatched from the warehouse based on their expiration dates. That is; the products whose expiration dates are approaching are moved out of the warehouse first.

Last In First Out (LIFO):

In this technique, the product which enters the warehouse last, leaves first.

Expiration Date Management with FIFO and FEFO at Warehouses

We observe that LIFO and FIFO are generally applied in our companies. However, there are also cases where the use of FIFO for products which include expiration dates in their stock codes in sectors such as FMCG, pharmaceuticals and various chemical raw materials, is not right and FEFO is required to be put into practice.  For instance, instead of moving products out of the warehouse with the FIFO technique because of products that are last brought in when in fact there are products with sooner expiration dates due to campaigns or other circumstances, using the FEFO technique to move the products out of the warehouse is a must. Otherwise, it would not be possible for the company to avoid losing money and customers.

Please remember that it is necessary to organize the interaction between these 3 techniques appropriately and to be careful in selecting the right technique by creating scenarios so that behaviour models as this one or similar to this one, which are unique to each sector, can be managed properly.

I hope this will be beneficial for you.

Yours sincerely,

Author: Ahmet Savaş Göktürk