Some business sectors require precise, controlled stock management. This is particularly the case in certain industries that use batch numbers to trace their products. In this article, find out more about the different inventory management methods: FIFO, FEFO, LIFO and LEFO.
The importance of batch number management in inventory
Batch number management is essential for companies in the agri-food, pharmaceutical and cosmetics industries. Indeed, they need to meet product traceability requirements. Poor management of stocks and batch numbers can have major consequences: serious health risks, product recalls, loss of turnover, impact on consumers, etc.
3 business sectors concerned:
🍕 Food industry. Traceability is important to guarantee product safety and quality. For example, when contamination occurs, it is essential to quicky identify the batches affected to limit their impact.
💊 Pharmaceuticals. Patient safety depends on it! Rigorous batch number management allows to track every stage from production to distribution, in order to provide effective medicines.
💄 Cosmetics. Cosmetics products must be healthy and free from contaminations for optimal use and risk-free for consumers. Efficient stock management enables compliant products on the market.
Focus on BBD and “Use-by” 🔎
In these different sectors, two acronyms are commonly used. “Use-by” date and BBD for “best before” date. The best-before date is a date after which the product should no longer be consumed for health and safety reasons. The use-by date indicates the date until which the product retains its optimal properties. The product can still be consumed but will lose its quality. The BBD is most often used in cosmetics and pharmaceuticals.
Different inventory management methods
To meet the challenges of product traceability and safety, accurate and efficient stock management is essential. There are a number of different methods available to meet the different needs of companies and their products.
FIFO (First In, First Out)
The FIFO method consists of using the first products entered: “first in, first out”. However, this method is not based on BBD or SLED, but on the date of arrival in the warehouse.
Food companies therefore use this method to ensure that the first products to arrive (which are often the first products to expire) are dispatched before their expiry date.
FEFO (First Expired, First Out)
The FEFO method, on the other hand, focuses solely on the expiry date of products: “first out of date, first out”.
Pharmaceutical companies therefore make sure they sell the vaccines with the earliest expiry date first.
LIFO (Last In, First Out)
The LIFO method consists of using the products that were most recently put into stock first: “last in, first out”. This method is often used when products do not have an expiry date.
Cosmetics companies can then apply the LIFO method to their non-perishable raw materials. This allows them to minimize storage costs by using the last products to arrive first.
LEFO (Last Expired, First Out)
Finally, the LEFO method priorities the use of products with the earliest expiry date: “the last who expired is the first out”. Although rarely used by companies, this method is nevertheless relevant if the objective is to maximize the shelf life of stocks and minimize frequent replacement costs.
However, unlike the FEFO method which uses products with the nearest expiry date, the LEFO method ensures that the most stable products, with a long expiry date, remain in stock for longer.
A WMS designed to optimize stock management 📈
In short, whether you are a company in the agri-food, pharmaceutical or cosmetics sector, managing your stocks is essential to ensure the quality of your products and the satisfaction of your customers.
The Satelix Logistics WMS helps you daily to:
- Manage the flow of goods. Precisely track entries, orders and deliveries to optimize traceability and management of your stocks.
- Automate and reduce errors. Improve operational efficiency and save time.
- Control your stocks. With real-time visibility, maintain product quality from arrival to departure.
- Reduce costs. By avoiding under or overstock situations.
All your data gathered in one app: Satelix Logistics WMS, directly connected to your ERP.
Discover the Satelix Logistics WMS