FIFO and LIFO storage systems: how do they work?

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Inventory management and organization is one of the fundamental aspects of a company's proper functioning. After all, you can only offer your customers what you have in reserve, right? To help with this, it is recommended to use the FIFO and LIFO storage systems.

These two systems are important to avoid losses and help with inventory management. So, if you’ve never heard about them, keep reading. In this post, we’ll explain a little more about them. Stay tuned!

What are FIFO and LIFO storage systems?
Both FIFO (First In, First Out) and LIFO (Last In, First Out) are methods used to ensure greater efficiency in inventory management . Let's talk about each term separately.

FIFO
FIFO is essential for some companies that need to have greater ios database over products that are about to expire. This is very common in restaurants and also in supermarkets. With this technique, it is easier to not lose products that are close to their expiration date.

And how is this done? In fact, the idea is quite simple. FIFO helps to organize products with the closest expiration date at the front of the shelves. This way, the consumer ends up buying the products that are closest to expiry.

It is important to understand that this is not deceiving the consumer, but simply a way to optimize the circulation of the product. After all, if the consumer buys, for example, two cans of peas, they will be consumed before the expiration date. This is different from what would happen if the product remained in stock.

The same goes for restaurants. It is very important to put the most perishable foods at the front when stocking your food. This prevents serious mistakes, especially when preparing food for customers.

LIFO
Here, it is not the expiration date of the products that should be taken into account. This model aims to place the newest products before the oldest ones, that is, exactly the opposite of FIFO. The value of the stock is calculated according to the last price, that is, the most recent and highest value is considered. This way, it is possible to achieve a higher profit margin.

This storage system is recommended for businesses that sell products without an expiration date. But be careful, this does not mean that you do not have to organize your stock so that other products do not deteriorate over time. Doing this “rotation” is also necessary .

What are the main differences between these systems?
With this information, it is easier to understand the main differences between one method and the other. In FIFO, the product that enters first must be sold first. In LIFO, the product that enters first can be sold later.

Implementing these storage systems in your company is a great way to avoid costs and losses for your business. Think about how much product you have lost just because you didn't know how to store it? Using these techniques can save you a lot of headaches in the future.