FIFO, or First-In, First-Out, is a concept widely used in supply chain management. It refers to a method of inventory management where the first items received or produced are the first ones to be sold or used.
In other words, the oldest inventory is utilized first, ensuring that products do not become obsolete or expire. Implementing FIFO in the supply chain offers several benefits. It helps prevent inventory spoilage, reduces the risk of obsolescence, and minimizes storage costs.
By using the oldest items first, companies can maintain product freshness, avoid waste, and optimize their inventory turnover. FIFO is particularly relevant in industries with perishable or time-sensitive goods, such as food, pharmaceuticals, or electronics. It promotes efficiency, cost-effectiveness, and customer satisfaction by ensuring that products are delivered in a timely manner while maintaining quality.