FIFO (First In, First Out)

FIFO (First In, First Out) is an inventory management method where the oldest stock in a warehouse is sold or used before newer stock. The first units received are the first units shipped. A pallet of shampoo bottles that arrived on January 5 ships before a pallet of the same product that arrived on January 20, even if the newer pallet is in a more convenient location. FIFO ensures that inventory rotates properly, preventing older stock from sitting in the back of the warehouse while fresh arrivals get picked first.

Why FIFO Matters

For perishable goods, FIFO is a regulatory and operational requirement. A grocery distribution center shipping yogurt with a 45-day shelf life cannot afford to let older stock sit while newer shipments go out first. If the January 5 batch stays on the shelf while the January 20 batch ships, the January 5 product might expire before it reaches a customer. The financial loss is direct: expired inventory that must be destroyed and written off.

For non-perishable goods, FIFO still matters. Consumer products can degrade over time even without an expiration date. Packaging fades, adhesives weaken, batteries lose charge, and formulations in cosmetics and supplements change. Amazon enforces expiration date requirements for many product categories and will flag FBA inventory approaching its expiration date as unfulfillable. Sellers who do not practice FIFO at their prep center risk sending older inventory to Amazon that gets aged out and removed at the seller’s expense.

FIFO vs. LIFO

LIFO (Last In, First Out) is the opposite approach: the most recently received inventory ships first. LIFO is used in some accounting contexts (it can offer tax advantages during periods of rising costs) but is rarely used in physical warehouse operations for consumer goods. The risk of obsolescence and product degradation makes LIFO impractical for most product types.

There is also FEFO (First Expired, First Out), which prioritizes inventory by expiration date rather than receipt date. FEFO is common in pharmaceutical and food distribution where the expiration date matters more than the arrival date. A batch of vitamins received on March 1 with a June 30 expiration ships before a batch received on February 15 with a September 30 expiration, even though the February batch arrived earlier.

Implementing FIFO in a Warehouse

FIFO requires discipline in both storage and picking. At the storage level, new inventory must be placed behind or above existing stock of the same SKU. This is straightforward with flow racks (gravity-fed shelving where product is loaded from the back and picked from the front). It is more challenging with standard pallet racking, where the most recently received pallet may block access to the older pallet behind it.

Warehouse Management Systems (WMS) enforce FIFO by directing pickers to the storage location containing the oldest inventory for each SKU. When a pick order comes in, the WMS identifies which lot or pallet was received first and assigns the picker to that location. Without a WMS, FIFO compliance depends on manual discipline, which degrades under time pressure. During peak season, pickers under pressure to meet order deadlines will grab the nearest available unit rather than walking to the back of the warehouse for the oldest stock.

FIFO and Amazon FBA

Amazon’s fulfillment centers use their own inventory management logic, and sellers do not control which specific units Amazon ships for a given order. However, FIFO principles apply at the prep center level. When a seller sends inventory to a prep center in multiple shipments over time, the prep center should ship the oldest received units to Amazon first. This is especially relevant for products with expiration dates, as Amazon charges removal fees for inventory that expires in its warehouses.

MeisterPrep and similar prep services implement FIFO tracking by assigning receiving dates to each inbound lot and instructing the warehouse team to prep and ship the earliest-received lots first when creating FBA inbound shipments. For sellers with dated products, this rotation process prevents the costly scenario of expired inventory sitting in Amazon’s warehouse while fresher stock that arrived later sits at the prep center.