Logical storage solutions blog

LIFO vs FIFO Stock Management Methods

There are many stock management methods available to warehouses. Two of the most popular are LIFO (Last In, First Out) and FIFO (First In, First Out). Here, we compare LIFO vs FIFO to see which one is the most effective method and in which scenarios they should be used.

What is LIFO?

LIFO (Last In, First Out) means that the last unit loaded and entered into the warehouse will be the first one to go out. This method prioritises the last products to enter the warehouse.

When should LIFO be used?

Overall the LIFO method is used significantly less than FIFO and should only be used in warehouses with products that do not have a particular shelf life and do not lose value over time. The stock that arrived in the warehouse first will be the last to leave and depending on the item, they could stay in the warehouse for a long period of time. It is important that these items are not perishable in any way.

Examples of when LIFO is a great option is for items such as building materials or furniture.

Advantages of LIFO

• It is easy to obtain stock as employees do not need to travel far, reducing the use of forklifts in the warehouse. This is because they will always be working down the same aisle when loading and unloading

Types of Storage System for LIFO

Here are some of the storage systems that are suitable for LIFO
• Drive-In pallet racking
• Dynamic Push Back racking

What is FIFO?

FIFO (First In, First Out) is a very widely used warehouse management system. The first goods that enter the warehouse will also be the first to leave. Although this system is often used for perishable items, it is a common method that is used regardless of product type.

The main goal of FIFO is to achieve an efficient and quick turnover of stock, ensuring that the older items are removed from the warehouse first before they spoil. This system is proven to work as it is also used in supermarkets and retail stores, not just warehouses.

FIFO is extremely effective for food, cosmetics and medicine.

Advantages of FIFO

• Makes stock turnover efficient if the oldest product is being used first
• Prevents any loss of value of expiration as the oldest products are the first to leave the warehouse.

Types of Storage System for FIFO

Here are some of the storage systems that are suitable for FIFO
• Drive Through Racking
• Dynamic Pallet Flow Racking

Which is better?

Although they both have their purposes and benefits, overall warehouses should try and use the FIFO method where possible as it generates more efficient stock turnover. It allows a company to always use their older products first which is a benefit even if the product isn’t perishable.

Whichever method you use, ensure you are choosing the correct storage systems to facilitate your stock management process.

If you need any advice on deciding which system and which storage racking is best suited to your warehouse, then please get in touch. Logical Storage are ready to discuss your warehouse storage requirements. For more information visit our website or call us on 0845 689 1300.