FEFO (First-Expired, First-Out)
FEFO stands for First-Expired, First-Out, an inventory management technique primarily used for products with expiration dates
What is FEFO?
FEFO stands for First-Expired, First-Out, an inventory management technique primarily used for products with expiration dates. Under this method, products closest to their expiration are sold first, regardless of when they were added to inventory.
Operational Dynamics of FEFO
Stock Organization
Inventory is organized based on expiration dates, with the soonest-to-expire items at the forefront.
Critical for Perishables
Especially important for businesses dealing with food items, pharmaceuticals, and other perishable goods.
FEFO Example in a Grocery Store:
Consider a grocery store stocking milk with varying expiration dates. Milk cartons received on April 1st expire on April 10th, while those received on April 5th expire on April 15th. Under FEFO, the store prioritizes selling the April 1st batch before the April 5th batch, regardless of the arrival sequence, to ensure customers always get the freshest milk and reduce waste.
Top 4 Benefits of FEFO:
1. Reduces Waste
By selling products closest to expiration first, FEFO minimizes the amount of expired and unsellable inventory.
2. Maintains Product Quality
Ensures customers receive products with maximum freshness and usability, maintaining high quality standards.
3. Enhances Customer Satisfaction
Customers are more likely to be satisfied with their purchase, knowing they are receiving fresher products.
4. Efficient Inventory Rotation
Encourages a more systematic rotation of stock, reducing the chances of products being overlooked and expiring on the shelves.
Which Businesses Should Use FEFO Method?
FEFO is ideal for industries dealing with perishable goods or products with an expiration or best-before date. This includes sectors like:
Food and Beverages
Essential for items like dairy products, meat, fruits, and vegetables.
Pharmaceuticals
Critical for medications, vaccines, and other health products with expiration dates.
Cosmetics and Personal Care
For products like skincare items, where efficacy can diminish over time.
Chemicals and Lab Supplies
Certain chemicals and lab materials that degrade or become less effective as they age.
In these sectors, FEFO helps maintain health and safety standards, ensuring that customers receive products that are safe and effective to use.