First in, First out (FIFO) is a cost-flow inventory management system used in the food industry to manage the order items are being processed. It values inventory stock. In its simplest form, the first item added to a queue or storage system is the first item which will be removed or processed. FIFO is quite popular and used across many food industry streams to ensure a productive, efficient, waste reduction, and food safe environment.
Key Benefits of FIFO:
- Waste prevention and spoilage reduction: Reducing the amount of waste is a key benefit of FIFO. Foods are perishable and many have best by or best before dates. Unsing the FIFO system ensures perishable goods are utilized in a timely manner before their expiration date. The same system applies for canned products which also have dates affixed. The consistent rotation of stock ensures product that meets government guidelines regarding safe food holding and decreasing obsolete items being utilized.
- Reducing the Risk of Foodborne Illness: Foodborne illnesses are prevented when organizations and individuals institute proper food handling practices. FIFO ensures an approved process is being followed. Identification of expired or spoiled products reduces the risk of foodborne illness occurrences.
- Better Fiscal Responsibility and Inventory Management: From an accounting perspective, it helps to assess the cost of goods sold or goods used over a set time frame. When the oldest inventory is used and the stock rotation is being carried out in a consistent and measured way, it is easier to tabulate costs and amounts utilized. This can also assist in future projections and budgeting. This results in more accurate reporting of financials.
- Food Quality Maintenance: Constant rotation and evaluation of stock items ensures good food quality.
- Customer Satisfaction: When stock is used in a timely manner, it results in high quality food being made available to customers.
- Prevents Cross-Contamination: The potential for cross contamination is reduced when storage time is reduced and rotation practices are maintained.
- Compliance with Regulations: Following FIFO aligns with food safety regulations and standards, ensuring products are safe for consumption.
- Increased Staff Efficiency: Staff are trained and following a streamlined inventory management system with no guess work.
What does a well-designed FIFO system look like?
- Storage areas must be well-designed and organized in an efficient manner. For example, fridges and dry storage areas must have designated areas, this reduces the risk of cross-contamination as well.
- All items must be clearly labelled with the “use by dates”, “best before dates”, “expiry dates”. Any pre-prepared or pre-prepped items must also be clearly labelled and date-marked.
- Shelving must facilitate ease of rotation and accessibility.
- Stock rotation must be carried out frequently and inventory must be checked regular rotation schedule.
- Staff must be trained on the FIFO system and the rules and regulations around the FIFO principles.
FIFO principles managed consistently and correctly, result in a well-maintained, reliable and food safe environment.
