FIFO – First in, first out, illustrated as a principle in logistics using colourful cubes and arrows on a blue background

FIFO principle

The FIFO (first-in, first-out) principle is a fundamental control rule for production and intralogistics, whereby the materials stored first are also the first to be removed. By strictly adhering to this order, companies ensure the traceability of batches and guarantee the highest level of transparency throughout the entire value chain.

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The FIFO principle explained simply

Are you looking for a reliable method to completely eliminate obsolescence and mix-ups in your intralogistics? The FIFO principle (first-in, first-out) guarantees that stock is processed or dispatched exactly in the order in which it was received, which in practice functions like an unbroken string of pearls. Without this systematic warehousing based on the FIFO principle, there is a risk of confusing stock transfers, a lack of transparency and, in the worst case, the critical loss of batch traceability. ebp-consulting GmbH supports you with in-depth engineering expertise to integrate this essential logic into your shop floor without technical or procedural errors. Benefit from our many years’ experience in Lean management to radically eliminate waste and establish seamless control from goods receipt right through to production.

At a glance: Understanding the FIFO principle

Definition of first-in, first-out in the warehouse

The first-in, first-out principle in the warehouse stipulates that logistics handover points must always release the items that arrived first back into the process first. This strict adherence to the sequence prevents stock from becoming obsolete and minimises the need for time-consuming reclassifications or physical stock transfers. Technically, this logic can be very easily implemented in an IT-supported environment using a stock control system (SCS) or a warehouse management system (WMS).

FIFO vs. LIFO (Last-in-First-Out)

The logistical counterpart to the FIFO principle is the Last-in-First-Out (LIFO) method, in which the order of items is reversed during removal. At manual handover points, LIFO poses an enormous risk of mix-ups and generates massive waste (muda), as time-consuming repositioning is required to restore the original order. Strict FIFO stock management is therefore essential as soon as certifications, supplier agreements or shelf-life requirements demand strict adherence to chronological order.

The ‘string of pearls’ of production control

The consistent implementation of FIFO is the fundamental prerequisite for reliably processing the ‘string of pearls’ of production orders established by production planning. If short-term changes are made here that are not immediately fed back into the ERP system, the control centre loses control over the entire production process. Therefore, only a FIFO system that is strictly adhered to at all material transfer points guarantees reliable compliance with the completion dates promised to the customer.

The ebp-consulting Approach: Holistic FIFO Implementation

With our many years of experience in developing material staging processes, we offer an excellent foundation for embedding the FIFO principle sustainably on your shop floor. Our approach begins with a thorough value stream analysis to ruthlessly identify current bottlenecks in the material flow. Based on this data, we design bespoke warehouse concepts and ‘supermarkets’, which are physically supported by the targeted use of hardware such as the FIFO flow rack. Alongside the technical installation, we conduct dedicated lean training sessions to thoroughly raise staff awareness of the need to comply with these guidelines. In this way, we create an end-to-end system that eliminates waste and guarantees maximum process efficiency.

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The core components of FIFO warehousing

A widely used technical solution for implementing the FIFO principle on the shop floor is flow racks in various sizes for bins or pallets. This can be combined with a Kanban system, which uses numbered Kanban cards to ensure compliance with the FIFO principle. Guide rails bolted to the floor are also used for trolleys carrying small load carriers. For heavy trolleys, such guide rails can be recessed into the floor; loads weighing several tonnes can thus be moved whilst adhering to FIFO.

In an IT system such as an LVS or WMS, the sequence of items can be tracked and ensured right through to dispatch. Where required, a link can be established to the Manufacturing Execution System (MES) or the ERP system. Barcodes and QR codes can be affixed to containers or items to ensure the correct sequence is maintained via automatic scanning. A cost-benefit analysis will point the way to suitable technology and solutions to ensure your processes comply with FIFO.

FIFO flow racking and physical control

One of the most effective methods for physically enforcing the FIFO sequence is the use of specialised racking systems directly on the shop floor. The classic FIFO flow rack for containers or the large-format FIFO pallet rack utilise gravity to allow materials to roll from the storage side to the retrieval side, thereby making it physically impossible for load carriers to overtake one another. For the transport of heavy trolleys carrying small load carriers, guide rails can also be integrated directly into the factory floor. In this way, loads weighing several tonnes can be moved gently whilst strictly adhering to the FIFO principle. These hardware restrictions prevent incorrect retrieval by staff in day-to-day logistics operations and noticeably stabilise the flow of goods in supermarkets.

Kanban systems and visual control

To ensure FIFO in manual picking, logistics planning frequently draws on tried-and-tested principles of lean management. A visually controlled Kanban system, for example, uses numbered Kanban cards that tell staff exactly which container to use next. This method is particularly effective when items cannot be managed via a traditional FIFO shelving system but must instead be buffered in storage locations. Consulting practice shows that such visual control mechanisms massively increase transparency in the workplace and prevent mix-ups. Accompanying lean training is essential here to ensure that awareness of the strict adherence to the ‘string of pearls’ principle is deeply ingrained in all workers.

Digital safeguards through WMS and MES

In modern intralogistics, the IT architecture takes on the essential task of monitoring the chronological order of stock in real time and systematically enforcing it. A warehouse management system (WMS) strictly adheres to the FIFO principle right through to goods dispatch and blocks any deviating picking operations. Through the comprehensive scanning of barcodes or QR codes on containers, every movement is digitally recorded, which drastically reduces manual booking errors on the shop floor. To ensure a cross-departmental flow of information, these logistics systems are deeply integrated with the Manufacturing Execution System (MES) or the ERP system. A robust IT infrastructure thus ensures traceability at batch level and forms the backbone of highly automated FIFO warehousing.

Areas of application for the FIFO principle

The FIFO principle is most widely used in sectors where production batches, production dates or best-before dates must be adhered to (traceability); whether required by regulations, certifications or customer specifications, etc. This is particularly the case in the chemical or pharmaceutical industry, but also in the food industry.

In other sectors, FIFO is practised and required in supply agreements to ensure the basis for efficient working in line with lean principles. Furthermore, the traceability of items and products delivered to customers is another argument in favour of consistent FIFO. In the event of a complaint, the ability to quickly locate documents from quality management, production, logistics, etc. is crucial; it serves as the starting point for accessing a wealth of other information, enabling a rapid and reliable root cause analysis to be carried out and errors to be eliminated in the long term.

Optimising logistics processes with ebp-consulting

As proven logistics experts, we empower your company to realise the full potential of an efficient, FIFO-driven factory organisation. We do not stop at theoretical analyses, but provide practical support from the design of the ‘supermarkets’ right through to the physical implementation of robust FIFO shelving systems. Drawing on our engineering heritage, we combine robust IT structures with proven lean methods to measurably reduce your stock levels and create maximum transparency. Put your trust in ebp-consulting to transform your entire supply chain into a resilient competitive advantage through error-free logistics processes.

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Questions and answers on the FIFO principle

Can variants of the same product be fed into a FIFO flow path?

In practice, this is only permitted if the downstream process or the internal customer has explicitly accepted this mixing. However, if the assembly line expects a supply that is absolutely free of variants, the FIFO pipelines in the warehouse or supermarket must be strictly segregated by variant. In our consultancy projects, we clarify these interface requirements in detail in advance to avoid subsequent process disruptions on the production line.

How is the buffer storage for a FIFO transfer point correctly sized?

The design of a buffer or FIFO flow rack is strictly based on actual consumption and the defined container quantities, in the same way as the calculations in a traditional Kanban system. Under no circumstances must the buffer be undersized, as overfilling would force operators to place items outside the pipeline and break the FIFO principle. We calculate these buffer limits precisely to ensure consistently stable operating conditions on the shop floor.

What impact do scrap and rework have on the FIFO bead chain?

Ideally, reworked items should be returned to the FIFO bead chain at the exact position from which they were originally removed. If this is no longer logistically possible, we prohibit silent reinsertion in practice, as this corrupts the sequence planning. Instead, items may only be returned following consultation with production control, accompanied by a clearly documented 8D process for fault analysis.

Why does FIFO stock management often fail at manual handover points?

The FIFO principle usually fails at manual handover points due to a lack of process awareness amongst staff. If the fundamental importance of the ‘string of pearls’ is not understood, workers often reach for the most convenient bin rather than adhering to the exact sequence. For this reason, an essential component of our consultancy approach is to deliver intensive lean training to embed an awareness of process effectiveness throughout the entire workforce.

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