FIFO vs. LIFO
FIFO vs. LIFO
FIFO and LIFO are two common inventory-management methods that determine the order in which products enter and leave a warehouse. Choosing the right method can improve inventory rotation, reduce waste, and make warehouse operations more efficient.
What Is FIFO?
FIFO means First In, First Out. The inventory stored first is also the first inventory removed.
This method is commonly used for:
Food and beverages
Pharmaceuticals
Perishable products
Items with expiration dates
Products that may become outdated
Time-sensitive inventory
Pallet flow racking is often used for FIFO operations because products are loaded from one side and retrieved from the opposite side.
What Is LIFO?
LIFO means Last In, First Out. The most recently stored inventory is removed first.
This method may be suitable for:
Non-perishable products
Building materials
Bulk inventory
Products without expiration dates
Large quantities of similar items
Inventory with low rotation requirements
Push-back and drive-in racking systems are commonly associated with LIFO storage because products are loaded and retrieved from the same side.
Key Differences Between FIFO and LIFO
Inventory order: FIFO removes older products first, while LIFO removes newer products first.
Product rotation: FIFO provides better stock rotation for dated inventory.
Warehouse access: FIFO generally requires separate loading and unloading points, while LIFO can operate from one side.
Space utilization: LIFO systems can provide greater storage density in certain warehouse layouts.
Suitable products: FIFO is ideal for time-sensitive products, while LIFO is better suited to durable inventory.
How to Choose the Right Method
Consider the following factors before selecting FIFO or LIFO:
Does your inventory expire or lose value over time?
How frequently does each product move?
Do you store many SKUs or large quantities of similar products?
How much warehouse space is available?
Does your layout provide access from one or both sides?
What type of racking and handling equipment do you use?
Choose the Right Storage System
FIFO and LIFO can both be effective when matched with the right products, warehouse layout, and racking system. Understanding your inventory flow will help you improve accessibility, reduce handling time, and use your available space more efficiently.
Need help choosing between FIFO and LIFO? Contact Bob’s today for a warehouse assessment and a storage system designed around your inventory and workflow.