FIFO Method: What is it and How is it Used in Warehouse?

Introduction to the FIFO Method

The FIFO (First In, First Out) method is a fundamental principle in warehouse management, emphasizing that the first products stored should be the first ones retrieved. This approach ensures efficient stock turnover, reduces the risk of obsolete inventory, and maintains product quality. Implementing FIFO is indispensable for businesses managing perishable goods, pharmaceuticals, and any inventory with expiration dates.

Principal Advantages of the FIFO Method

The primary advantage of the FIFO method is its ability to guarantee efficient stock turnover. In systematic stock rotation, the oldest products are always the first to be used or sold, minimizing waste and optimizing storage space. This method also prioritizes the output of products with the earliest expiration dates, which is particularly beneficial for industries dealing with perishable goods or shelf-life-sensitive products.

FIFO can assist warehouses to prevent the partial or total loss of product value due to prolonged storage.

Furthermore, FIFO helps in maintaining product quality. Older products, if left unused, can deteriorate, leading to significant losses. This method also aligns with accounting practices, providing a clear and consistent method for tracking inventory costs and profits.

FIFO Method in Warehouse: Racking systems for FIFO

To effectively implement FIFO, certain warehouse systems are designed to facilitate this method. These systems share a common feature: separate aisles for loading and unloading, ensuring smooth and orderly product flow. The following are some of the most effective systems for FIFO management:

• Live Pallet Racking
• Drive Through Racking
• Radio Shuttle Systems
• Carton Flow Systems
• Push-Back Racking

Detailed Look at FIFO-Compatible Systems

• Live Pallet Racking: This high-density storage system is ideal for managing pallets. Palletized loads move along a bed of rollers from the loading area to the unloading area. This continuous flow ensures that the first pallet in is the first out, making it perfect for FIFO operations. The system's efficiency and high storage density make it suitable for warehouses with limited space but high turnover requirements.

• Drive Through Racking: Unlike the Drive In system, Drive Through racking has separate aisles for loading and unloading. This design supports the FIFO method by ensuring that once an aisle is loaded, it must be completely unloaded before reloading begins. This system is compact, reducing the number of work aisles and maximizing storage space. It is particularly useful for operations requiring strict adherence to FIFO principles

• Radio Shuttle Systems: These high-density, semi-automatic storage systems use motorized shuttles to transport pallets within the racking. By loading goods on one side and unloading on the other, the system adheres to the FIFO method efficiently. The use of motorized shuttles reduces manual labor and speeds up the retrieval process, making it ideal for large warehouses with high inventory turnover.

• Carton Flow Systems: Designed for boxes and lighter products, Carton Flow systems utilize a bed of rollers to move products from the loading area to the unloading area. This system is perfect for picking operations where fast access to products is essential. The gravity-fed rollers ensure a continuous flow of goods, adhering to FIFO principles while minimizing manual handling.

• Push-Back Racking: Although typically used for LIFO (Last In, First Out) operations, Push-Back racking can be adapted for FIFO by using a double-deep configuration with one aisle for loading and another for unloading. This system offers high storage density and is suitable for warehouses needing flexible storage solutions that can switch between FIFO and LIFO as needed.

Selection Criteria for FIFO Systems

Selecting the right FIFO-compatible system involves considering several key factors:

• Inventory Type: The nature of the products being stored, such as their size, weight, and perishability, will influence the choice of storage system. Perishable goods benefit most from systems that ensure strict FIFO compliance.
• Warehouse Size: The available space in the warehouse will determine the feasibility of high-density storage solutions like Live Pallet Racking or Radio Shuttle Systems.
• Automation Level: The degree of automation required depends on the scale of operations and labor availability. Semi-automatic systems like Radio Shuttle can significantly reduce manual handling and increase efficiency.

Comparing FIFO with LIFO systems is essential for understanding their respective benefits. While FIFO ensures older stock is used first, LIFO might be more suitable for non-perishable items where the last items stored are prioritized. However, FIFO is generally preferred for maintaining product quality and reducing waste.

Tailoring FIFO systems to specific warehouse needs involves evaluating the unique requirements of the operation. Consulting with warehouse management professionals can provide valuable insights into optimizing storage solutions and implementing the most effective inventory management strategies.

Final Thoughts

Implementing the FIFO method requires careful planning and the right storage systems. Professional consultation can help identify the most suitable solutions tailored to specific warehouse needs.

In the supply chain industry, there exist multiple factors to be considered such as inventory type, warehouse size, and automation level, For further assistance in selecting the best FIFO storage system for your warehouse, contact our team of experts now who are ready to provide personalized advice without any obligation.