FEFO: Fundamentals for Beginners

FEFO stands for First-Expired, First-Out and is an inventory management rule that directs that units with the nearest expiration or use-by dates are picked and shipped before those with later dates. Unlike purely chronological systems that focus on arrival dates, FEFO is explicitly concerned with remaining usable life. For a beginner, understand FEFO as a safety-first approach: it reduces waste, protects end users, and keeps organizations compliant with regulations that govern perishable or time-sensitive products.

The core principle of FEFO is straightforward: whenever multiple identical SKU units exist in inventory, the unit with the earliest expiration date should be used or sold first. This applies across storage locations, pallet layers, cartons, and inner units. FEFO is especially relevant for products that degrade over time, such as food, beverages, chemicals, pharmaceuticals, cosmetics, and some electronic consumables.

Why FEFO matters:

• Waste reduction: Prioritizing expiring stock reduces spoilage and the associated financial losses.
• Regulatory compliance: Many industries require traceability and control over product expiry; FEFO supports these demands.
• Customer safety: Ensures products with safe usable life are delivered to end users, minimizing recalls and safety incidents.
• Operational clarity: Creates a consistent decision rule for picking and replenishment.

Basic components required to implement FEFO at a beginner level:

• Expiry date capture: Each batch or lot must carry a clear expiration or best-before date recorded in the inventory system.
• Lot-level tracking: Inventory locations and quantities must be tied to lot or batch identifiers (not just SKU totals).
• Labeling and visibility: Physical labels must display expiration dates; electronic systems should surface expiry information on pick lists and dashboards.
• Standard operating procedures (SOPs): Clear rules for receiving, putaway, picking, returns, and disposal that reference FEFO.

Example scenario (simple): A warehouse receives three pallets of the same SKU with expiration dates of May 1, July 15, and March 20. Under FEFO, workers must pick items from the pallet expiring March 20 before any other pallet. If delivering 500 units in total and the March 20 pallet contains 300 units, the picker will completely deplete that pallet before taking units from May 1.

Common beginner mistakes when adopting FEFO:

• Treating FEFO as FIFO: Confusing First-Expired with First-In can cause older-but-longer-life stock to be consumed before closer-to-expiry items.
• Incomplete lot data: Receiving without recording expiration dates prevents system-enforced FEFO.
• Poor labeling: Illegible or incorrectly placed expiry information leads to picking errors.
• Lack of overrides and controls: Not defining when exceptions are allowed (e.g., urgent orders that may require later-expiry stock) leads to inconsistent practices.

Regulatory and audit considerations: Many sectors require retained records of lot movement tied to expiration dates for recall readiness. Implementing FEFO improves traceability since it forces lot-level awareness. During audits, organizations should be able to demonstrate that expiry data is recorded at receipt, displayed in pick workflows, and enforced by SOPs and reports.

Key beginner metrics to monitor after implementing FEFO:

• Expiry-related shrinkage: Quantity and value of stock written off due to expiry (should decline when FEFO is effective).
• On-time fulfillment without expiry issues: Percentage of orders shipped without near-expiry items unless explicitly requested.
• FEFO compliance rate: Fraction of picks that followed the system-suggested lot with earliest expiry.

Final practical tips for beginners:

• Start small: Pilot FEFO on a subset of SKUs that are high-risk for spoilage or high-value to demonstrate ROI.
• Use simple labeling: Print expiry date labels at receipt in a consistent format (YYYY-MM-DD) and place them in the same visible spot.
• Train staff: Explain why FEFO matters operationally and legally; run quick competency checks at stations.
• Leverage software: Even basic inventory systems can store expiry dates and produce pick lists sorted by expiration — use them.

In summary, FEFO is a targeted and practical inventory rotation method that prevents waste, supports compliance, and protects customers. For beginners, adopting FEFO requires consistent capture of expiry data, lot-level control, clear labels, and simple SOPs to ensure the oldest expiry dates are always the first to leave the shelf.