What is FEFO?
First Expired, First Out (FEFO) is an inventory management method that prioritizes shipping or using products with the nearest expiration dates first, regardless of when they arrived at the facility. A FEFO system enables operations leaders to minimize waste from expired inventory, ensure product quality and safety, and maintain regulatory compliance for perishable goods and time-sensitive products.
Understanding FEFO Systems
FEFO systems address the critical challenge of managing inventory with limited shelf life. Unlike traditional warehouse methods that move products based on arrival sequence, FEFO tracks expiration dates as the primary sorting criteria for picking and fulfillment. This approach ensures that products closest to their expiration dates leave the warehouse first, preventing spoilage and protecting customers from receiving items with inadequate remaining shelf life.
The operational logic of FEFO requires meticulous date tracking throughout the supply chain. When receiving shipments, warehouse teams capture expiration dates for every lot or batch, storing this information in the warehouse management system. During order fulfillment, the system automatically generates pick lists that direct workers to inventory locations containing products expiring soonest. If a customer order requires 100 units and the warehouse holds three lots expiring in 30, 45, and 60 days respectively, FEFO logic pulls from the 30-day lot first, then the 45-day lot, preserving the 60-day inventory for future orders.
Modern FEFO implementation extends beyond simple date sorting to incorporate sophisticated business rules. Advanced warehouse management systems apply FEFO logic while respecting customer-specific requirements for minimum remaining shelf life, allocating inventory that expires soonest while still meeting contractual obligations. These systems also generate alerts when inventory approaches critical expiration windows, enabling proactive measures like promotional pricing or donations before products must be written off. Companies implementing FEFO typically reduce spoilage costs by 30-50% while improving customer satisfaction through consistently fresh product delivery.
Core FEFO Components
- Expiration Date Tracking: Comprehensive capture and maintenance of expiration dates at the lot, batch, or serial number level throughout receiving, storage, and picking operations
- Automated Pick Prioritization: Warehouse management system logic that automatically sequences pick tasks based on expiration dates, directing workers to inventory requiring immediate movement
- Shelf Life Management: Business rules that balance FEFO principles with customer requirements for minimum remaining shelf life, ensuring compliance with contractual specifications
- Expiration Alerts and Reporting: Proactive notification systems that flag approaching expiration dates, enabling inventory disposition decisions before products expire on warehouse shelves
- Lot and Batch Traceability: End-to-end visibility linking specific inventory lots to suppliers, production dates, and customer shipments for quality control and recall management
FEFO in Practice
A pharmaceutical distributor implementing a FEFO system transforms its operations dramatically. Before FEFO, warehouse staff picked medications based on warehouse location convenience, occasionally shipping products that expired before patients could use them while other lots expired unsold in storage. Returns from expired products cost the company $2 million annually, and regulatory warnings threatened their distribution license. After implementing a warehouse management system with FEFO capabilities, pick lists automatically prioritize medications by expiration date while respecting customer requirements for 180-day minimum shelf life. Barcode scanning at receiving captures lot numbers and expiration dates, and daily reports flag inventory within 60 days of expiration for immediate action. Within six months, expired product write-offs drop by 65%, customer complaints about short-dated products decrease by 80%, and the company achieves full regulatory compliance while improving gross margins.
Related Concepts
- FIFO (First In, First Out) : An inventory method that prioritizes the oldest received inventory for shipment first, commonly used for non-perishable goods where receipt date matters more than expiration date
- Warehouse Management System (WMS) : Software platforms that orchestrate warehouse operations including receiving, storage, picking, and shipping, often incorporating FEFO logic for date-sensitive inventory
- Lot Tracking: The practice of monitoring and tracing specific production batches throughout the supply chain, essential for quality control, recalls, and FEFO implementation
- Shelf Life Management: The broader discipline of monitoring product viability over time, including storage conditions, temperature control, and expiration date tracking across the distribution network
- Cold Chain Logistics: Specialized supply chain management for temperature-sensitive products that often requires FEFO combined with precise climate control to maintain product integrity
