The FEFO principle – priority of freshness in warehouse management

Modern warehouse management is based on the application of a number of solutions to streamline logistics; minimise waste and increase the efficiency of warehouse processes. One of the basic principles used in warehouses is the FEFO (First Expired, First Out) principle. It is particularly gaining popularity in industries related to food, pharmaceuticals and other products with a limited shelf life. Let’s take a look at what the FEFO principle is and the benefits it brings.

What is the FEFO principle?

The FEFO principle means that products with the fastest expiry date should be released first. This strategy contributes to both minimising losses due to out-of-date products and is particularly important in industries where freshness and timeliness are key to the quality of the goods on offer. In practice, this is only possible by strictly defining the expiry dates of each product in the warehouse. In this process, modern warehouse management systems play an important role, enabling ongoing control of stock levels and warehouse processes.

Differences between FEFO, FIFO and LIFO

To fully grasp the importance of the FEFO principle, it is worth contrasting it with the two other most popular inventory management principles: FIFO (First In, First Out) and LIFO (Last In, First Out).

• The FIFO principle assumes that items delivered to the warehouse first, should also be first out. First In, First Out works well for goods whose validity is not a key criterion, but we still want the warehouse to be stripped of older items before newer ones.
• The LIFO principle, as the name suggests, emphasises the opposite of the previous option – the newest goods are released first. This type of tactic is applicable in situations where we are stocking durable goods, and where the cost of stocking newer batches is lower.
• The FEFO principle, as opposed to FIFO and LIFO, is not based on the order in which the goods were received into the warehouse. Only the expiry date is important here. In practice, it may happen that goods that we received later will be released earlier.

Why use the FEFO principle for storing goods?

Using the FEFO principle in the storage of goods provides several advantages, here they are:

• Reduced waste – by issuing goods according to their best-before dates, we minimise the risk of losing goods because we do not have time to sell or use them before they expire.
• Greater customer satisfaction – with FEFO, buyers receive goods with the longest possible best-before date, and this does not go unnoticed by customers.
• Greater labour efficiency – Warehouse systems that help implement the FEFO principle allow for more efficient warehouse management.
• Regulatory compliance – For some industries, such as pharmaceuticals or food, there are very strict regulations regarding the control of best-before dates for goods. The FEFO principle helps to meet this,

Implementation of the FEFO principle in the warehouse

The implementation of the FEFO principle requires the appropriate design of warehouse processes and the use of modern technologies. Product labelling – each product in the warehouse should be appropriately labelled with information on the best-before date.

• WMS systems – Modern warehouse management systems are able to automatically monitor best-before dates and support order picking according to the FEFO principle.
• Staff training – Warehouse staff must be aware of the FEFO principle and properly trained in the use of the systems that support this process.
• Optimising storage space – Goods with shorter expiry dates should be stored in easily accessible areas.

Examples of FEFO applications

The FEFO principle is particularly relevant in the food industry, where the priority is to sell fresh products. In supermarkets, for example, products with a shorter shelf life are placed at the front of the shelves so that customers choose them first.

Similarly, in pharmacy, where out-of-date medicines can lead to serious financial losses, FEFO helps to minimise risk and ensure compliance with regulations.

Summary

The FEFO principle is not only a tool to minimise losses due to overdue products, but also a way to improve the efficiency of warehouse processes and increase customer satisfaction. Compared to FIFO and LIFO principles, FEFO is distinguished by its priority on freshness, making it indispensable in industries where shelf life is crucial.

However, implementing the FEFO principle in the warehouse requires proper planning. Companies such as Foodcom S.A optimise their operations, but also build a competitive advantage, while taking care of the quality of the products delivered.