What is the difference between FIFO and FEFO?

🥇 FIFO – First In, First Out

Definition:
FIFO means the first items received (the oldest inventory) are the first to be shipped out or used.

Purpose:
To ensure products don’t sit too long in storage, reducing the risk of obsolescence or spoilage.

Used When:

• Products don’t have strict expiration dates but can age or lose value over time (e.g., apparel, electronics, general goods).

• You want to maintain accurate cost flow in accounting — FIFO aligns well with how goods typically move in real life.

Example:
If you receive 100 shirts in January and 100 in February, FIFO ensures the January stock ships out first.

⏳ FEFO – First Expire, First Out

Definition:
FEFO means the items that expire soonest are the first to be shipped or used, regardless of when they were received.

Purpose:
To prevent waste or spoilage by prioritizing expiration dates over arrival dates.

Used When:

• Products have expiration dates or limited shelf life — food, supplements, pharmaceuticals, cosmetics, etc.

• You need compliance with cGMP or FDA requirements for lot traceability.

Example:
You receive two batches of supplements:

• Batch A (received Jan 1) expires June 2026

• Batch B (received Feb 1) expires March 2026

Even though Batch B arrived later, FEFO would ship Batch B first, because it expires sooner.

⚖ Summary Table