FEFO vs FIFO in the Warehouse: Which to Use, with Example

What FEFO and FIFO are

FIFO (first in, first out) ships the lot that arrived first. FEFO (first expired, first out) ships the lot that expires first, even if it arrived later. For perishable goods the right criterion is the expiry date, not the receipt date.

Both describe the physical flow in the warehouse. FIFO as a cost valuation method is a different subject, covered in FIFO, LIFO and average cost.

Visual map: when to use FIFO, FEFO and LIFO

The map compares the three rules and shows the 3-lot example with the loss avoided.

FIFO vs FEFO vs LIFO

A rule of thumb: if lot age matters, use FIFO; if the expiry date matters, use FEFO; if neither matters and access is limited, LIFO can be acceptable.

Example: 3 lots of the same item

A fictional case. A perishable item costs $8 per unit, with usage of 20 units per day starting Apr 20. A lot that arrived later has a shorter shelf life.

Lot L-102 arrived after L-101 but expires 46 days earlier. Assume the product can be sold up to the day before expiry.

With FIFO, L-101 (400 units) lasts 20 days, through May 9. Only on May 10 does L-102 start to ship, leaving 5 selling days before the expiry on May 15: 100 units ship and 200 units expire. The loss is 200 × $8 = $1,600, or 16.7% of the value of the 1,200 units ($9,600).

With FEFO, L-102 ships first, its 300 units last 15 days (through May 4) and the loss is zero. All three lots are used up by Jun 18, before the Jun 30 expiry.

How to implement FEFO in the warehouse

1. Record lot and expiry at receiving. Without the data at entry there is no FEFO. Read the expiry during inspection and reject lots with remaining shelf life below the minimum agreed with the supplier.
2. Slot by lot. A location should not mix lots with different expiry dates. See picking and slotting.
3. Choose a layout that gives access to the right lot. Selective pallet racking and gravity flow (load at the back, pick at the front) support FIFO and FEFO; drive-in supports LIFO.
4. Set the picking rule in the system. A WMS suggests the lot by expiry. Without one, use color labels by expiry month and a lot register.
5. Create an expiry alert. Each week, list the lots expiring in the next 30 days so you can promote, transfer or donate them before they are lost.
6. Audit compliance. Include lot and expiry checks in cycle counting.

Metrics to track

• Expiry loss: expired value ÷ value handled in the period. In the FIFO example, 200 × $8 = $1,600.
• Remaining shelf life at shipment: days to expiry when the item leaves. Many customers require a minimum.
• Days of cover: stock ÷ daily usage; if cover exceeds shelf life, losses will occur. See inventory turnover.

Also watch slow movers from the ABC analysis: low-turnover items expire most often.

Common mistakes

• Using FIFO for perishables: the older lot does not always expire first, as in the example.
• Mixing lots in one location: the operator cannot tell which one to take.
• Keying in the wrong expiry date: one date error puts the lot out of sequence. Check at receiving.
• Ignoring the customer's minimum shelf life: the lot expires later but can no longer be shipped.
• Relying on operator discipline: without the system pointing to the lot, picking drifts to whatever is easiest to reach.

Frequently asked questions

What is the difference between FEFO and FIFO?

FIFO ships the lot that arrived first. FEFO ships the lot that expires first, regardless of when it arrived.

Is FEFO the same as FIFO?

No. FIFO follows receipt order; FEFO follows expiry date. When expiry dates follow receipt order, the two give the same result.

When should you use FEFO?

For items with a shelf life: food, beverages, medicines, chemicals, adhesives, paints and rubber parts.

What is LIFO in a warehouse?

Last in, first out. It only suits items with no expiry and no age effect, usually bulk goods or racking where only the top is accessible.

How can you apply FEFO without a WMS?

Record lot and expiry at receiving, give each lot its own location, use color labels by expiry month and run a weekly check.

Does FEFO reduce inventory turnover?

No. It does not change turnover. It reduces expiry loss because the lot with less shelf life is used first.

About the author

Vagner Soares

Lean Manufacturing & Behavioral Management Specialist

Over 20 years in the automotive and metalworking industries (GM and Dana), Lean Manufacturing practitioner since 2006. SENAI instructor and mentor in Brazil’s Brasil Mais Produtivo program, delivering consulting, training and audits for 50+ companies, combining quality, productivity and people development.

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