The Benefits and Drawbacks of FIFO Inventory Control

When it comes to managing inventory, First In First Out rotation (FIFO) has long been considered the best approach. Nevertheless, many firms only follow it loosely or disregard it altogether, whether it’s because they don’t realize how beneficial compliance can be or they are having trouble implementing it. Here is a look at some of the pros and cons of FIFO for inventory control.

Why It’s Ideal

A smart FIFO system can help you improve quality control and, by extension, customer satisfaction. Moving older stock out quickly means that customers will get consistent products and are less likely to end up with obsolete items that weren’t rotated adequately.

In addition, it cuts down on waste dramatically by ensuring items are moved out before they become obsolete. This is particularly important in rapidly evolving fields like technology, where items become outdated quickly.

When a product comes with a warranty that is valid from the manufacture date, FIFO becomes even more vital because it can help ensure the warranty is in effect as long as possible for customers.

Drawbacks of FIFO

Even with the many benefits offered by FIFO, there are some reasons firms choose a different approach. One of the biggest problems is that it needs better compliance systems to be implemented. Layout and accessibility issues can mean that upgrades are needed to faithfully enact FIFO, particularly when it comes to automation and management systems.

Sometimes a warehouse’s physical space makes it difficult to implement FIFO. Some setups simply do not allow for new deliveries to be rotated to the back of the stock, and changing them isn’t always worth the time and effort.

FIFO efforts can also prove challenging to track at scale. When a giant warehouse has thousands of stock items across several locations and a lot of turnover, it often becomes necessary to invest in a good tracking system.

While there is no doubt that there are plenty of advantages to be gained by using FIFO inventory control, it is important to take a close look at your operations and make sure it is the right choice.

This blog post was based off of an article from Archon Interactive.