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  • Writer's pictureSupply Chain Warehouses

FIFO in a 3PL Operation

When it comes to best practices in a 3PL operation, one standout strategy is FIFO. FIFO, or First-In-First-Out, is a method of managing inventory where the oldest items are used or sold first. When products arrive, they're put in the warehouse with the oldest ones at the front and newer ones behind. When filling orders, the 3PL makes sure to pick the oldest items first to send out. They regularly check and move stock around to keep the oldest items easy to reach. This method ensures that goods are rotated efficiently, minimizing the risk of products becoming outdated or obsolete.  FIFO should be implemented as a part of daily operations, bringing efficiency to the forefront. Let's delve into how FIFO streamlines and elevates operations in third-party logistics.

FIFO first in first out

The Logic behind FIFO:

At the heart of FIFO lies a simple principle: using the oldest inventory before the newer ones. Think of it like your pantry or refrigerator after going grocery shopping. You would want to use up the milk or bread that you already have that is closer to its expiration date as opposed to the new items you just bought. In the 3PL world, FIFO ensures that products are utilized in the order they arrive, minimizing waste and optimizing storage space.

FIFO is not a new concept, and it is widely used in various industries due to its practicality. In a world where logistics can get complicated, FIFO offers a simple and efficient way to handle inventory flow. It's just common sense to rotate products effectively and minimize the chances of them becoming obsolete.

Some benefits of FIFO in 3PL:

Cost Reduction: FIFO can lead to cost savings by minimizing the need for costly write-offs due to expired or obsolete inventory. It also supports efficient supply chain management, reducing overall operational costs.

Streamlining Operations: FIFO simplifies the flow of products, preventing bottlenecks in the warehouse and ensuring a smooth and systematic process.

Client Satisfaction: Ensuring product consistency and freshness contributes to overall client and customer satisfaction.

How To Implement FIFO Methodology:

In a 3PL operation, the application of FIFO is straightforward. Having a warehouse management system (WMS) that tracks product arrival dates is crucial as it enables you to effectively implement and adhere to FIFO principles. Items are scanned in with their best buy dates in order to track which items need to go out on orders first. It's important that the FIFO approach isn't just theoretical, but that it's easily integrated into everyday 3PL operations. Having employees properly trained on best FIFO practices is important. If the entire warehouse staff is well versed in FIFO and why it is being implemented, then your operation will be on the fast track to success! 

In Conclusion:

In the world of logistics, prioritizing older inventory through FIFO (First-In-First-Out) is a game-changer. This strategy not only meets the needs of customers and reduces waste, but also conforms to industry norms. As the demand for efficient logistics solutions rises, embracing FIFO isn't just a choice – it's a must for 3PL success. Understanding and applying FIFO becomes essential for staying competitive and meeting market demands.  If you are in need of a third party logistics partner that implements FIFO effectively and accurately, click the link below to request a quote from Supply Chain Warehouses! One of our team members will reach out to you shortly. 


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