Key Takeaways

• FIFO (First In, First Out) means that the goods received first are picked and dispatched first. It is suitable for general merchandise and products that may deteriorate during prolonged storage.
• FEFO (First Expired, First Out) prioritizes expiration dates, meaning products with the earliest expiration dates are dispatched first. It is suitable for food, pharmaceuticals, and other products with a limited shelf life.
• LIFO (Last In, First Out) means that the goods received most recently are picked and dispatched first. It may be used for certain storage arrangements but is generally unsuitable for products with expiration dates.
• FIFO and FEFO are not the same because the goods received first do not necessarily have the earliest expiration dates.
• An effective Warehouse Management System (WMS) should be able to track Lot Numbers, Batch Numbers, Received Dates, and Expiration Dates to ensure accurate inventory selection and dispatch.

Warehouse management is not just about finding enough space to store goods. It also requires knowing which inventory lot should be picked from the warehouse first.

Without a clear stock-rotation policy, problems may arise, such as:

• Older goods remaining at the back of the warehouse
• Products expiring before they are sold
• Picking the wrong Lot
• Discrepancies between system stock and physical stock
• Product deterioration
• Dead Stock
• Having to destroy goods
• Increased Warehouse Costs

This is why inventory management principles such as FIFO, LIFO, and FEFO are used. Each follows a different picking sequence and is suitable for different types of products.

What Is the Difference Between FIFO, LIFO, and FEFO?

You can remember them simply as follows:

FIFO – First In, First Out
Received first → Dispatched first

LIFO – Last In, First Out
Received last → Dispatched first

FEFO – First Expired, First Out
Expires first → Dispatched first

The key difference is the criterion each system uses to select goods.

• FIFO uses the date the goods entered the warehouse.
• LIFO prioritizes the goods most recently received.
• FEFO uses the Expiry Date or Best Before date.

Before choosing a method, consider what the business needs to control: Stock Age, Storage Method, or Expiry Date.

What Is FIFO?

FIFO stands for First In, First Out, meaning that goods received into the warehouse first are picked and dispatched first.

For example:

Product A arrives in the warehouse in three Lots:

• Lot 1 received on October 1
• Lot 2 received on October 5
• Lot 3 received on October 10

When an Order is received, the FIFO system will aim to pick:

Lot 1 → Lot 2 → Lot 3

in that order.

The goal is to prevent goods that have been in the Warehouse for a long time from being blocked by newer stock and becoming old inventory.

What Types of Products Are Suitable for FIFO?

FIFO can be used for many product types, especially goods that need to rotate according to their receipt sequence, such as:

• Consumer Goods
• Household Appliances
• Some Fashion Products
• Some Electronics
• Raw Materials
• Packaging
• Manufacturing Materials
• Products with changing Versions or Packaging
• Food Products where Lot Receipt Dates and Expiry Dates follow a corresponding sequence

However, if products have significantly different Expiry Dates, FEFO should also be considered.

Advantages of FIFO

FIFO supports Inventory Rotation in several ways, including:

• Reducing old stock left in the warehouse
• Reducing the risk of deterioration from prolonged storage
• Making warehouse stock rotation more systematic
• Helping control Inventory Age
• Making Lot Tracking easier
• Reducing the risk of Dead Stock caused by newer goods blocking older stock
• Suitability for warehouses with continuous inbound and outbound movements

FIFO is therefore a common basic principle in Warehouses and Distribution Centers.

FIFO Does Not Always Mean That Products Nearing Expiry Are Picked First

This is a common source of confusion.

Suppose:

Lot A
Received on October 1
Expiry Date: June 30

Lot B
Received on October 5
Expiry Date: March 31

If FIFO alone is used, Lot A will be picked first because it entered the warehouse earlier.

However, Lot B expires sooner.

In this case, if the products are food or other goods for which Expiry Dates are important, FEFO is more suitable because Lot B will be picked first.

This is the key difference between FIFO and FEFO.

What Is LIFO?

LIFO stands for Last In, First Out, meaning that the goods most recently received into the warehouse are picked first.

For example:

• Lot 1 received on October 1
• Lot 2 received on October 5
• Lot 3 received on October 10

Under LIFO, the picking sequence is:

Lot 3 → Lot 2 → Lot 1

This can occur when the Physical Storage arrangement places the most recently received goods at the front or on top, making them easier to access and pick.

What Types of Products Are Suitable for LIFO?

LIFO may be used for products that:

• Have no Expiry Date
• Do not experience significant quality deterioration over time in storage
• Are Bulk Materials
• Are stored in a way that makes the most recently received goods easier to access
• Have a Physical Flow in which picking older goods first is difficult or unnecessary

Examples include:

• Sand
• Stone
• Some Construction Materials
• Some Types of Bulk Raw Materials

However, suitability must be assessed based on the characteristics of each product.

What Products Are Not Suitable for LIFO?

LIFO should generally not be used for products that are at risk from prolonged storage, such as:

• Food
• Beverages
• Medicines
• Cosmetics
• Dietary Supplements
• Chemicals with a Shelf Life
• Products with Expiry Dates
• Products with frequently changing Models or Versions

Picking the newest goods first can leave older stock at the back for longer, increasing the risk of Dead Stock or expiry.

Is LIFO in Warehousing the Same as LIFO in Accounting?

These should be distinguished.

In this article, LIFO refers to the Physical Stock Rotation or warehouse picking method.

It should not automatically be interpreted as a method for valuing inventory in financial accounting.

Accounting systems have their own standards and rules. The Accounting Department or an accounting professional should therefore review cost-recording methods separately from Warehouse Operations.

The LIFO picking method should not be used directly as a means of reducing taxes or determining accounting profit.

What Is FEFO?

FEFO stands for First Expired, First Out, meaning that goods with the earliest Expiry Date are picked first, regardless of which Lot entered the warehouse first.

For example:

Lot A
Received: October 1
Expiry Date: June 30

Lot B
Received: October 10
Expiry Date: March 31

FEFO selects:

Lot B before Lot A

because Lot B expires sooner, even though it was received later.

What Products Are Suitable for FEFO?

FEFO is suitable for products with a defined Shelf Life or Expiry Date, such as:

• Food
• Beverages
• Dietary Supplements
• Pharmaceutical Products
• Medicines
• Some Cosmetics
• Medical Supplies
• Some Chemicals
• Products with a Best Before date
• Temperature-Controlled Products

For these products, Expiry Dates should be controlled rather than relying only on the Received Date.

Advantages of FEFO

FEFO helps reduce inventory risks, including:

• Reducing expired stock in the warehouse
• Reducing Write-offs
• Reducing Waste
• Preserving more Remaining Shelf Life for customers
• Improving Lot Management Accuracy
• Supporting the management of Expiry-Sensitive Products
• Reducing the risk of sending near-expiry goods to customers
• Helping plan Promotions to clear stock more quickly

For Food and Pharmaceutical businesses in particular, FEFO can directly affect both Cost and Customer Satisfaction.

What Is the Difference Between FIFO and FEFO?

The difference lies in the criterion used to select goods.

FIFO

Based on the date goods were received into the warehouse

Goods received first → Dispatched first

FEFO

Based on the Expiry Date

Goods that expire first → Dispatched first

If the Supplier produces goods in the same sequence in which they are delivered to the Warehouse, the two methods may produce the same result in many cases.

However, if a newly received Lot has an earlier Expiry Date than an older Lot, FEFO will immediately change the picking sequence.

Should You Choose FIFO or FEFO?

Consider the type of product.

Choose FIFO When

• The product has no clearly defined Expiry Date
• Stock needs to rotate according to storage age
• Older Lots should not remain in storage for too long
• The Received Date is a key factor

Choose FEFO When

• The product has an Expiry Date
• Shelf Life is important
• Customers specify a Remaining Shelf Life requirement
• Different Lots of the same product have different Expiry Dates
• The product loses value as it approaches expiry

For food products, many businesses use FEFO as the primary rule and FIFO as a secondary rule when Expiry Dates are identical.

Why Should Food Often Use FEFO Rather Than FIFO?

A single food SKU may come from multiple Suppliers or Production Lots.

For example:

Supplier A delivers goods to the warehouse first, with a Shelf Life of 12 months.

Supplier B delivers goods later, but the products have only 6 months of Shelf Life remaining.

If FIFO alone is used, Supplier A’s goods will be picked first, even though Supplier B’s goods may expire sooner.

FEFO therefore allows the Warehouse to focus more directly on Expiry Risk.

Suggested Internal Link: How to Export Dried Food: Choosing Labels and Packaging

How Do Best Before Dates and Expiry Dates Affect FEFO?

The Warehouse should clearly record the Date Type.

Products may display terms such as:

• Expiry Date
• Use By
• Best Before
• Best Before End

Their meanings and requirements vary according to the product type and applicable laws.

The system should not record only a date value without identifying what type of date it represents.

If the information is entered incorrectly, FEFO may also pick products in the wrong sequence.

Why Are Lot Numbers and Batch Numbers Important?

Lot or Batch information helps trace products back to:

• Production Run
• Supplier
• Manufacturing Date
• Expiry Date
• Quality Inspection
• Shipment
• Customer

For example, if a Product Recall occurs, a well-managed Lot Tracking system allows the Warehouse to identify:

• Which Location contains the affected Batch
• How many units remain
• Which customers have already received the goods
• When the goods were dispatched

This means it may not be necessary to place every Lot on hold if the scope of the issue can be clearly identified.

Do FIFO and FEFO Require Lot Control?

Lot Control is not essential for every product type, but it can significantly improve accuracy, especially for:

• Food
• Pharmaceutical Products
• Cosmetics
• Chemicals
• Raw Materials
• Products requiring Traceability

Warehouse data should be linkable, for example:

SKU → Lot → Received Date → Manufacturing Date → Expiry Date → Location → Quantity

When all this information is available, the system can automatically recommend a Picking Sequence.

Does Warehouse Layout Affect FIFO or FEFO?

Yes, significantly.

Even if the system requires older Lots to be picked first, FIFO can be difficult to follow in practice if the Physical Layout places older goods behind newer goods.

The Warehouse must therefore design the following to align with its Stock Rotation Policy:

• Locations
• Racking
• Flow
• Putaway
• Picking Path

Some rack types support FIFO well because goods are loaded from one side and picked from the other.

Other storage systems may operate more like LIFO.

What Is Putaway, and How Is It Related to FIFO?

Putaway is the process of moving received goods into suitable storage Locations in the Warehouse.

If Putaway is incorrect from the start, FIFO or FEFO can become difficult to implement.

For example:

An older Lot is stored at the back of a Rack.

A newer Lot is placed in front of it.

Even if the WMS instructs the worker to pick the older Lot, the worker may need to move the newer Lot first.

Putaway Rules should therefore align with Picking Rules.

How Can a WMS Support FIFO and FEFO?

A Warehouse Management System (WMS) can help manage inventory data and picking sequences, including:

• Received Date
• Lot
• Batch
• Expiry Date
• Location
• Quantity
• Stock Status

When an Order is received, the system can direct the Picker to the Location that should be picked first under the applicable Policy.

For example:

FEFO Rule:
Select the Lot with the nearest Expiry Date first.

If the Expiry Dates are the same, apply:

FIFO Rule:
Select the Lot with the earlier Received Date first.

This allows a Warehouse to use multiple rules together rather than relying on only one system throughout the facility.

Can a Business Use Both FIFO and FEFO?

Yes. In practice, this is often more suitable than applying one Rule to every product type.

For example, a Warehouse may have:

Product A – Electronic Accessory
Use FIFO

Product B – Snack
Use FEFO

Product C – Pharmaceutical Product
Use FEFO with Lot Control

Product D – Packaging Material
Use FIFO

The Warehouse system should set Picking Rules at the SKU or Product Group level rather than treating all products the same way.

Can LIFO Be Used Alongside Other Methods in the Same Warehouse?

Yes, if the Physical Storage arrangement is suitable for that product.

For example, one Warehouse can use:

• FEFO for Food
• FIFO for General Goods
• LIFO for certain Bulk Materials

The important point is that the WMS and Operations Team must know which Rule applies to each SKU. Otherwise, picking can become confusing.

Should Imported Products Use FIFO or FEFO?

The choice depends on the Product, not on whether it is imported or locally sourced.

However, imported products require additional consideration of Transit Time.

For example, imported food has a total Shelf Life of 12 months:

• Production and waiting for export = 1 month
• Sea Freight = 1 month
• Customs and Distribution = 0.5 month

By the time it reaches a Warehouse in Thailand, approximately 9.5 months of Shelf Life may remain.

The Importer should therefore record the Expiry Date upon Receiving and use FEFO to manage Remaining Shelf Life appropriately.

Suggested Internal Link: 4 Steps Business Operators Should Know: How to Obtain Thai FDA Approval for Food Imports

How Does FIFO Help Reduce Dead Stock?

Dead Stock is inventory that remains unsold and can no longer generate sales under normal conditions.

FIFO helps prevent older goods from being continually left behind as newer stock is picked first.

However, FIFO alone cannot eliminate all Dead Stock.

Businesses must also monitor:

• Sales Velocity
• Demand Forecast
• Reorder Point
• Safety Stock
• Promotions
• SKU Performance

If a business orders more than demand requires, stock can still accumulate even when FIFO is followed.

How Does FEFO Help Reduce Waste?

FEFO identifies which products have the least time remaining before expiry.

Businesses can then use this information for actions such as:

• Priority Picking
• Promotions
• Discounts
• Stock Transfers
• Notifying the Sales Team
• Temporarily Stopping Replenishment

This helps avoid discovering products only after they have expired.

FEFO should therefore be used together with Expiry Monitoring, rather than waiting until an Order arrives for the system to select goods.

What Is Remaining Shelf Life?

Remaining Shelf Life is the time left before a product reaches its Expiry Date or Best Before date, according to the criteria used by the business.

For example:

A product has a total Shelf Life of 12 months.

When it enters the Warehouse, 8 months remain.

Remaining Shelf Life = 8 months

Some Buyers may specify that the product must have at least an agreed amount of shelf life remaining at Delivery.

FEFO must therefore work together with Customer Requirements.

It is not enough to pick the product that expires first without checking whether its Remaining Shelf Life is sufficient for the customer.

What Can Cause FIFO or FEFO to Fail in Practice?

Common problems include:

• No Lot Number
• Expiry Dates not recorded
• A mismatch between the date printed on the product and the system record
• Putaway to the wrong Location
• Workers picking the Lot that is easiest to reach
• Newer goods blocking older stock
• No Cycle Counting
• Stock data not updated in Real Time
• Incorrect Barcodes
• No Picking Rule defined for each SKU
• No product checks before Dispatch

Stock Rotation is therefore not solely the Picker’s responsibility. The process must be designed from Receiving onward.

A Good FEFO Process Should Start at Receiving

An example flow:

1. Receiving

Check:

• SKU
• Quantity
• Lot
• Expiry Date
• Condition

2. System Entry

Record Lot and Expiry information in the WMS.

3. Putaway

Assign Locations that allow Lots to be accessed in the correct sequence.

4. Picking

The system selects the goods that expire first.

5. Checking

Verify the SKU, Lot, and Quantity before Packing.

6. Dispatch

Record which Lot was sent to each customer.

When all these steps are completed, Traceability is maintained throughout the Warehouse Process.

How Are FIFO and FEFO Related to Exporting?

Export businesses must manage stock in line with the Lead Time to the Destination Country.

For example, a product will expire in three months.

Although the Warehouse can Dispatch it today, the Lot may not be suitable for an Export Order if:

• Sea Freight takes a long time
• Import Clearance takes time
• The Distributor needs to hold stock
• The Retailer requires substantial Remaining Shelf Life

Therefore, consider the following together before Shipping:

Expiry + Transit Time + Customer Requirement

FIFO and FEFO Are Not the Same as Shipping Methods

These principles are used to manage Warehouse Stock.

They do not determine whether goods must be shipped by:

• Air Freight
• Sea Freight
• Road Freight

However, the Mode of Transport affects Lead Time, which in turn affects Stock Planning, especially for products with a Shelf Life.

A product nearing expiry may not be suitable for Sea Freight, even if the FEFO system has selected the correct Lot.

Checklist for Choosing FIFO, LIFO, or FEFO

Before choosing a Stock Management principle, ask:

• Does the product have an Expiry Date?
• Does it have a Best Before date?
• Does its quality deteriorate over time?
• Does it have a Lot / Batch Number?
• How frequently does stock arrive at the Warehouse?
• Are there multiple Suppliers?
• Is the Shelf Life the same for every Lot?
• Does the Customer specify a Remaining Shelf Life?
• Which picking methods does the Physical Layout support?
• Can the WMS Track Lots and Expiry Dates?

You can then choose:

No Expiry Date, but Stock Rotation is needed → FIFO

Clear Expiry Date → FEFO

No Expiry Date and Physical Flow supports picking the newest goods first → LIFO may be considered

Frequently Asked Questions About FIFO, LIFO, and FEFO (FAQ)

What Is FIFO?

FIFO, or First In, First Out, means that goods received into the warehouse first are picked first. It is suitable for Stock Rotation and helps reduce the accumulation of older stock.

How Is FEFO Different from FIFO?

FIFO is based on the Received Date, while FEFO is based on the Expiry Date. If goods received later expire sooner, FEFO selects those goods first.

Should Food Products Use FIFO or FEFO?

When products have a clearly defined Expiry Date, FEFO is generally more suitable because it prioritizes expiry dates rather than simply the date goods entered the warehouse.

Is LIFO Suitable for Food?

Generally, no. Picking newer goods first can leave older stock in storage until it deteriorates or expires.

Can One Warehouse Use Both FIFO and FEFO?

Yes. This is often more appropriate than using one Rule for every SKU. General goods may use FIFO, while products with Expiry Dates use FEFO.

Is a WMS Required to Use FIFO or FEFO?

Not necessarily for small-scale Operations. However, a WMS can reduce Human Error and manage Lots, Expiry Dates, Locations, and Picking Sequences more efficiently as the number of SKUs and Orders increases.

Warehousing and Logistics Services with CPL INTER

CPL INTER provides Warehousing and international transportation services, along with Packing, Shipping Documents, and customs clearance according to each Shipment’s Service Scope.

A suitable warehouse management system should consider the product type, Lots, Expiry Dates, stock quantities, and distribution model to determine whether FIFO, FEFO, or another stock management method best fits the actual Operation.

For import–export businesses, you can prepare details such as product information, number of SKUs, Shipment volume, dimensions, weight, and storage requirements so the CPL INTER team can help plan suitable Logistics and Warehousing arrangements.

Tel: 02-519-4426 / 091-519-4426
LINE: @cplinter

Written by: CPL Inter Logistics Operations Team, specialists in international freight transportation and customs procedures, with more than 15 years of experience and an internationally recognized ISO 9001:2015 quality management system.