Operadores logísticos Madrid

Operador logístico en Madrid

Operador logístico Madrid

What is the LIFO and FIFO method in warehouse management?
Definition of LIFO, FIFO methods and their valuation in warehouse management

The FIFO (First in - First Out) and LIFO (Last in - First Out) methods are widely used in warehouse management, they are two inventory management systems for merchandise management widely used in a warehouse. They are methods that have to do with how the products that are assumed to be sold are registered in the stock management of a warehouse. Although their acronyms may connote a meaning and therefore similar management, they are opposite inventory management methods in practice.

In this note we detail the meaning of FIFO and LIFO with examples of use for each type of merchandise.

The FIFO method is a method used in accounting and means “First in - First Out” (First in - First Out), while the LIFO accounting method means “Last in - First out” LIFO (Last in - First Out). They are the most widely used methods in accounting systems for warehouse management and merchandise load management, they are related to the way in which products are registered, how they are tracked to be labeled as sold.

FIFO method

FIFO of its acronym in English "First In - First Out", in Spanish "First to enter, first to leave". The definition of the FIFO method refers to the batch of stock or merchandise first to enter, it is the first to leave. The FIFO method is used more frequently for perishable products such as food and medicine, which have an expiration date. The FIFO method is used both in logistics operators that provide warehousing services, warehouses, supermarkets and pharmacies. An example of implementation of the FIFO method is milk in a supermarket which has an expiration date, so milk and dairy products are the first to enter and must be the first to leave. Warehouses and counters must have at first sight the products first enter so that they have a much faster exit due to their expiration date. With the implementation of the FIFO method, the company ensures the correct rotation of goods and thus avoid their expiration.

LIFO method

LIFO from its acronym in English "Last in - Last Out", in Spanish "Last in, last in out". The LIFO accounting and stock management method, in contrast to the FIFO system, is used for non-perishable warehouse products. The LIFO method is used in the stock of products that can be stacked, stored on shelves using a palletizing system or similar in order to be able to access easily through their labeling. Labeling in warehouse management must have a coding for each product, in LIFO systems the labeling usually has a specific code for the location of the product within the company's warehouse.

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