First In, First Out (FIFO) is a stock management method where the oldest stock (the first in) is used or sold first (the first out). It’s often used in warehousing, retail, and fulfilment to keep products moving in the right order.
Why FIFO Matters
FIFO helps keep stock fresh and prevents waste, especially for items with expiry dates.
- Reduces the chance of old stock going out of date
- Keeps inventory flowing smoothly
- Helps with accurate stock valuation and reporting
Where It’s Used
- Food and drink: Older items go out first to avoid spoilage
- Pharmaceuticals: Ensures medicine is used before its expiry date
- General warehousing: Keeps products moving in the right order
Example
If a business receives 100 boxes of product in January and another 100 in February, the January stock is sold or shipped first under the FIFO method.