🍓 Keep It Fresh: FEFO to Save Money and Reduce Waste in Food and Beverage Warehouses

Did you know 30% of the food produced for human consumption globally is lost or wasted somewhere in the food supply chain? A big chunk of that waste is due to poor freshness management. Are you using shelf life as a trigger when deciding what to ship next or are you just relying on visual checks and what your staff thinks should be shipped first? Read on to learn how to automate the rules to reduce your losses.

If you’re in the food manufacturing, distribution or processing business you know how critical it is to manage expiration dates. From spoiled ingredients and stock overages to wasted labor and spot checks, not having the right processes in place can cost you big time. Proper expiration date management means your products are safe and of high quality which is key to customer trust and satisfaction.

What is FEFO?

Let’s break down a cool little acronym: FEFO. It stands for First Expired, First Out. This inventory management strategy is a game changer for businesses dealing with perishable goods or products with use-by dates. The core principle of FEFO is simple: items with the closest expiration dates should be consumed or distributed before those with later expiration dates. In other words, the first product to expire is the first to be used or shipped. This approach reduces waste and ensures customers get the freshest products possible.

FEFO vs FIFO vs LIFO

Before we get into FEFO, let’s take a quick detour to understand how it compares to other inventory management strategies: FIFO and LIFO.

FIFO (First In, First Out): This is using the oldest stock first. It’s common in industries where products don’t expire quickly but need to be cycled to prevent obsolescence. FIFO ensures older inventory is used before newer stock.

LIFO (Last In, First Out): This works the opposite way, where the most recent added items are used first. LIFO can be useful in industries where prices are volatile, it can match current sales with the most recent costs, but it’s less common in food and beverage industry due to the perishability of products.

Why You Need FEFO Rules

You need FEFO rules for:

Ensure Product Quality: By using products with the earliest expiration dates first, FEFO ensures customers get the freshest and highest quality products. This is especially important in food and beverage industry where product quality is key.

Minimize Waste: Without FEFO, products with closer expiration dates will be overlooked and spoiled and wasted. This means financial loss and environmental waste.

Regulatory Compliance: Many industries especially food and pharmaceuticals have strict regulations on product expiration dates. FEFO helps businesses comply with these regulations and avoid legal issues and fines.

Proper Stock Rotation: Using older stock before newer stock helps in maintaining product quality and reduce the risk of selling expired products.

Cost Savings: By reducing waste and avoiding spot checks and manual monitoring, FEFO can lead to huge cost savings. These savings can be reinvested in other areas of your business to drive growth and efficiency.

How to Implement FEFO in Your Warehouse

Okay, now let’s get into the details of how you can implement FEFO in your warehouse. Here’s a step by step:

Conduct a Full Inventory Audit: Start by conducting a full audit of your current inventory. This will help you understand the current state of your stock and identify areas to improve.

Label and Date All Items: Label all goods with their use-by dates from the moment they enter the warehouse until they are shipped out. Accurate labeling is the first step to managing products by their expiration dates.

Storage and Picking by Expiration Date: Store new products behind existing stock. During picking, operators pick products with the closest expiration dates first. This keeps FEFO order and no product will expire.

Train Staff and Procedures: Train all staff on FEFO and how to do it. Establish procedures and guidelines to ensure consistency and accuracy.

PULPO WMS

PULPO WMS ensures life cycle traceability for all types of products in the warehouse. The system guides the employee to the product with the shortest expiration date and tells which lot to pick, minimizing errors and product losses.

Products are synced from third party systems, PULPO WMS can be the master system for product information. Products can have additional attributes and types which can be imported from third party systems and used to control automations in processes. Perishable products usually have a production lot number and a best before or expiration date. At PULPO WMS, our customers use first expired, first out (FEFO) for these products.

PULPO WMS by default ensures products with the shortest expiration date leaves the warehouse first. If a customer has special requirements (e.g. expiration date at least 365 days away), this can be managed from the master system when creating the order or directly in PULPO WMS.

See 1 minute demo here on how to manage lot expiration dates and create replenishment rules:

Real-World Application: Case Study

SugarGang uses PULPO’s FEFO to manage several perishable products in their warehouse. With PULPO WMS, SugarGang can track and manage expiration dates accurately, so products with the shortest shelf life are prioritized, reducing waste and customer satisfaction.

FEFO rules in your warehouse is not just a best practice, it’s a smart business decision that will save you money and ensure product quality and safety. With PULPO WMS you have the tools and support to make FEFO work for your food and beverage business. By using our full solution you will keep product fresh, comply with industry regulations and increase your profit.