What does FIFO mean?
First in, first out (FIFO) is a popular warehousing method in logistics. Goods leave the warehouse in the order in which they arrived. In other words, the first items to be delivered are the first ones to leave the warehouse. Load carriers such as pallets or containers are placed in the racks on one side and pulled out from the other side and prepared for shipping. The purpose of FIFO is to keep throughput constant and minimise the loss of value of the goods.
FIFO application areas
FIFO is traditionally used in the food, pharmaceutical or cosmetics industries, which focus heavily on best-before dates and the order in which items are consumed. However, the fashion and electronics industries also use FIFO warehouses because these items quickly become obsolete. The FIFO method is also used by retailers who sell the items produced by the above industries.
Reasons for using the FIFO approach
The FIFO method gets goods out of the warehouse promptly and keeps the loss in value to a minimum, especially when goods lose value over time. Other reasons for using FIFO:
- Consistent storage time
- Constant inventory renewal
- Ideal stock rotation
- Simplified article tracking
- Ideal picking by using both sides of the racks
To make the most use of FIFO storage, racks should be accessible from both sides. The warehouse must be specifically designed and built for FIFO storage. In some cases, this method will reduce storage capacity.
Types of racks in FIFO warehouses
First in, first out racks vary depending on the need and type of storage. However, they should each have different entrances and exits for loading and unloading:
- Drive-through racking: This type of racking is like a canal. Industrial trucks can enter the rack with a pallet and store the goods at the exit end. There are separate load and unload aisles. To successfully employ the FIFO principle with this type of racking, the goods are in a kind of queue. The rack first has to be completely unloaded before it can be loaded again.
- Pallet flow racking: Pallets with goods are stored on one side. These pallets then move on conveyor wheel sections to the other side and can be prepared directly for shipping. This rack solution is ideal for fast-moving goods. One closely related design is carton flow racking, in which lightweight containers or products move from the input to the output side on rollers.
- Pallet shuttle racking (semi-automated):: Forklifts bring the pallets to motorised shuttles in the racks. The shuttles transport the goods to the end of the racks so they can be prepared for shipping from the other side.