What is the "First-In, First-Out" (FIFO) system in logistic terms?

The "First-In, First-Out" (FIFO) system is a fundamental inventory management principle in logistics that ensures the oldest items in stock are utilized or loaded first. This method is particularly important in contexts where items have a limited shelf life, such as food, pharmaceuticals, or any perishable goods, as it helps minimize waste and ensures that products are used while they are still effective or safe.

By prioritizing the use of older inventory, the FIFO system helps maintain quality control and manage inventory more efficiently. This approach reduces the risk of obsolescence and ensures that the inventory turnover aligns with operational needs. Implementing FIFO can also enhance customer satisfaction, as clients receive products that are fresher and within their usability period.

In contrast, methods where newer items are consumed first, such as the Last-In, First-Out (LIFO) system, may be applicable in certain scenarios but do not adhere to the principles of FIFO. Additionally, methods focused on packaging or disposal of expired items do not capture the essence of FIFO as it relates to inventory management.