What Is FEFO Inventory?
FEFO (first expired, first out) is an inventory picking method in which the stock with the earliest expiration date is shipped or used first, regardless of when it was received.
How FEFO Works
A FEFO process depends on four pieces working together:
Expiration Date on Every Lot
Each delivery is received as a lot with its own expiration, best-before, or use-by date.
Expiration-Sorted Picking
Pick lists direct staff to the lot that expires soonest, then the next, until the order is filled.
Shelf-Life Rules
Lots with too few days left for a customer's minimum remaining shelf life are skipped for that order.
Near-Expiry Alerts
Stock approaching its date is flagged early so it can be sold, discounted, or donated before it expires.
FEFO Picking Example
On October 1, a dairy distributor picks a grocery order for 120 cases of Greek yogurt. The grocer requires at least 14 days of remaining shelf life. Four lots are on hand.
| Lot | Received | Expires | Days Left | On Hand | Picked | Result |
|---|---|---|---|---|---|---|
| L-0917 | Sep 17 | Oct 9 | 8 | 30 | 0 | Skipped: under 14 days |
| L-0925 | Sep 25 | Oct 18 | 17 | 40 | 40 | Pick 1st |
| L-0922 | Sep 22 | Oct 24 | 23 | 60 | 60 | Pick 2nd |
| L-0929 | Sep 29 | Oct 29 | 28 | 80 | 20 | Pick 3rd |
| Total | 210 | 120 |
Lot L-0925 arrived after L-0922 but expires six days sooner, so FEFO picks it first. Lot L-0917 has only 8 days left, which is below the grocer's 14-day minimum, so it is held for a customer with a shorter requirement or sent to a discount or donation channel. Under FIFO, the picker would have started with L-0917 and the order would have been rejected at the dock.
FEFO vs. FIFO
Both methods ship older stock before newer stock in most cases. They differ when shelf life varies between deliveries.
| FEFO | FIFO | |
|---|---|---|
| Picks By | Earliest expiration date | Earliest received date |
| Data Needed | Lot and expiration date | Receipt date |
| Used For | Picking only | Picking and inventory costing |
| Best For | Food, medicines, cosmetics, chemicals | Non-perishable goods, or perishables with uniform shelf life |
| Spoilage Risk | Lowest | Higher when shelf life varies |
Many warehouses combine the two: pick by FEFO, and use FIFO as the tiebreaker and costing method.
Benefits of FEFO
Less Waste
Stock is shipped before it expires, which cuts spoilage and inventory write-offs.
Fewer Rejected Deliveries
Orders meet each customer's minimum shelf-life rules, so shipments aren't refused on arrival.
Safer Products
Expired food and medicine stays out of customers' hands, which supports food safety and good distribution practices.
Faster Recalls
The same lot records used for FEFO support inventory traceability, so affected lots can be found quickly.
How to Use FEFO in Your Warehouse
- 1Capture expiration dates at receiving. Record the lot number and expiration date for every delivery before it is put away.
- 2Track stock by lot. Use lot tracking so each lot's quantity and location are known at all times.
- 3Set shelf-life rules. Record each customer's minimum remaining shelf life so ineligible lots are skipped automatically.
- 4Generate lot-specific pick lists. Pick lists should name the exact lot and bin, sorted by expiration date.
- 5Review near-expiry stock weekly. Run a report of lots expiring soon and decide whether to promote, discount, donate, or return them.
- 6Quarantine expired stock and count regularly. Move expired lots to a hold location, and use cycle counts to confirm lot quantities match the system.
Common FEFO Mistakes to Avoid
FEFO is only as reliable as the expiration data behind it.
Skipping Dates at Receiving
A lot without an expiration date can't be sorted, so it gets picked at random.
Mixing Lots in One Bin
When lots share a bin, pickers can't easily find the one the system asked for.
Ignoring Customer Shelf-Life Rules
Shipping the soonest-expiring lot to a customer with a longer minimum leads to refused deliveries.
Letting Pickers Choose
Pickers grab what is closest. Pick lists should specify the lot and bin.
Which Industries Use FEFO?
FEFO is standard for any business that stocks dated products, including:
Food Services
Dairy, produce, meat, and packaged foods with short shelf lives.
Healthcare
Medicines, test kits, and sterile supplies with use-by dates.
Health & Beauty
Cosmetics, skincare, and supplements that lose potency over time.
Distribution
Wholesalers serving retailers with strict shelf-life requirements.
Manufacturing
Ingredients, adhesives, and chemicals issued to production before they expire.
Nonprofit
Food banks and meal programs distributing donated and purchased food.
FEFO in Kechie ERP
Kechie Inventory Management records the lot number and expiration date for each receipt, so stock can be picked in expiration order and near-expiry lots are easy to find. Because order management, procurement, and accounting share the same data, every shipment carries its lot history and write-offs post to the general ledger automatically.
Frequently Asked Questions
What does FEFO stand for?
FEFO stands for first expired, first out. Stock with the earliest expiration date is picked and shipped first.
What is the difference between FEFO and FIFO?
FIFO picks stock in the order it was received. FEFO picks stock in order of expiration date. If a later delivery expires sooner, FEFO ships it first and FIFO does not.
Is FEFO a costing method?
No. FEFO decides which physical stock is picked. Inventory can still be valued using FIFO, weighted average, or another costing method.
When should a business use FEFO?
Use FEFO for any product with an expiration, best-before, or use-by date, especially when shelf life varies between deliveries. Common examples are food, beverages, medicines, cosmetics, and chemicals.
What is minimum remaining shelf life?
Minimum remaining shelf life is the number of days a product must have left before expiration when it is delivered. Many retailers and distributors set this in their supplier agreements.
What happens to stock that is close to expiring?
Stock that no longer meets customer shelf-life rules is usually held, sold through a discount channel, donated, or used internally. Expired stock is quarantined and disposed of or returned.
Can FEFO and FIFO be used together?
Yes. Many warehouses pick by FEFO and use FIFO as the tiebreaker when two lots have the same expiration date.
Do you need lot tracking for FEFO?
In practice, yes. Each lot needs its own expiration date and location in the system so pick lists can direct staff to the right stock.
Related Guides
See FEFO Picking in Kechie ERP
Track expiration dates by lot, ship the right stock first, and cut spoilage.