Is A FIFO Or LIFO Stockroom Shelving System Better?

In industrial design, form follows function, and the most suitable stockroom shelving system will largely depend on how it is used.

While this principle is universal, it is easy to overlook the fact that not all shelving systems are created equal. From pallet racks to shelving tailored for picking and packing operations with bins and containers, shelving systems are typically designed around the specific ways items are stored and moved within a warehouse or stockroom.

Inventory Management Approaches

When it comes to storage and inventory management, two primary approaches dominate:

1. First In, First Out (FIFO)
2. Last In, First Out (LIFO)

Both methods allow warehouse staff to access inventory as needed, but each has distinct efficiency implications and suits particular industries and stockroom layouts. Most warehouses naturally gravitate towards one of these systems based on their operational needs.

Why Choose FIFO?

A FIFO (First In, First Out) system ensures that the oldest items in storage are the first to be picked and shipped. This is critical for industries with time-sensitive products and helps maintain the order of stock movement.

Key Benefits of FIFO

• Time-Critical Products: FIFO is indispensable in sectors such as food and beverage, where perishable goods must be used before their expiry dates. It ensures that products with the nearest use-by dates are picked first, minimising spoilage and waste.
• Seasonal Stock: Seasonal businesses rely on FIFO to ensure timely and organised stock rotation, enabling efficient management of products that are only relevant for limited periods.
• Orderly Stock Movement: In many industries, FIFO helps keep stock moving through the supply chain in the same sequence it was received, maintaining a logical flow.

Systems That Use FIFO

FIFO systems are commonly found in conveyor systems and push-roller racks, which ensure products are accessed in the order they were stocked. These systems are typically placed on the fulfilment side of a warehouse, making them ideal for high-turnover or time-sensitive products.

Why Choose LIFO?

A LIFO (Last In, First Out) system prioritises the removal of the most recently stocked items. While it sacrifices some of the orderliness of FIFO, LIFO offers increased efficiency and ease of access for certain types of stock.

Key Benefits of LIFO

• Efficient Storage: LIFO is simpler and often more efficient, especially for high-turnover stock or products that do not require strict rotation.
• Reduced Movement: With less travel distance and fewer stock movements, LIFO systems maximise space and streamline long-term storage.
• Ideal for Top Sellers: LIFO is highly effective for fast-moving items, such as best-sellers, or stock where any unit is identical regardless of how long it has been on the shelf.

Systems That Use LIFO

Many drive-in pallet racking systems operate on a LIFO basis, where forklifts can place inventory directly into the rack and retrieve it as needed. These systems are particularly advantageous for warehouses handling large volumes of fungible goods.

Finding the Right Solution

The choice between FIFO and LIFO will depend on your business needs:

• Choose FIFO if your stock is time-sensitive or perishable, or if maintaining a logical stock flow is critical.
• Opt for LIFO if you need to maximise efficiency, particularly for fast-moving or non-perishable goods.

A well-chosen shelving system tailored to your inventory approach can greatly enhance the efficiency and effectiveness of your stockroom or warehouse. Understanding the unique demands of your operations is the first step towards designing a storage solution that works best for your business.