FIFO (First In, First Out)

First In, First Out (FIFO) is a fundamental inventory rotation method where the earliest-received goods are dispatched first. This approach prevents stock from aging unnecessarily in the warehouse and reduces the risk of obsolescence or deterioration. FIFO is the default inventory method for most non-perishable goods and is also an accounting standard for inventory valuation.

Without FIFO discipline, newer stock gets placed in front of older inventory, creating a last-in-first-out situation where older goods languish at the back. Over time this leads to expired products, quality degradation, and increased waste. FIFO is particularly important for items with limited shelf lives, seasonal relevance, or version-sensitive specifications like electronics and cosmetics.

FIFO dispatches based on receipt date — whichever arrived first, ships first. FEFO dispatches based on expiry date — whichever expires soonest, ships first. For products where receipt date and expiry date correlate perfectly, FIFO and FEFO produce the same result. However, when batches have different expiry dates independent of their arrival sequence, FEFO takes priority in regulated industries like food and pharma.