Every year, manufacturers lose millions to expired inventory that could have been prevented with better rotation practices. When products have expiration dates, the traditional “first in, first out” approach isn’t enough. You need a FEFO system that prioritises shelf life over arrival order.
What is FEFO?
First Expired, First Out (FEFO) is an inventory management method that prioritises using products and perishable goods with the earliest expiration dates first, regardless of when they arrived in inventory. This approach flips the script on traditional inventory thinking. Instead of asking “what came in first,” you’re asking “what’s going to expire first?”
Chemical manufacturing faces unique risks where some compounds don’t just lose effectiveness. They become dangerous. Expired chemicals can become unstable, change composition, or develop toxic byproducts. OSHA takes chemical storage violations very seriously. We’ve seen situations where expired adhesive materials had deteriorated so badly that routine repairs became major problems because someone didn’t check dates on supplies sitting too long in vendor warehouse storage.
How does FEFO work in practice?
FEFO goes beyond just tracking when things arrive. You’re fundamentally changing how production gets planned and executed. First, you identify which materials expire soonest. Then, you match those materials to compatible products or orders. Finally, you reorganize your production schedule to use expiring materials before they become waste.
This means customer Order #1 might get bumped behind Order #3, not because of priority, but because Order #3 uses ingredients that expire in 5 days while Order #1’s materials are good for 20 days.
The key is building this thinking into your daily operations. Your warehouse team needs to know that the batch number isn’t just a tracking code. It’s their roadmap for what moves first.
The benefits of FEFO inventory management
FEFO benefits go way beyond just preventing expired inventory.
- Waste reduction boosts your bottom line immediately. Every product that expires on your shelf is money thrown away. Purchase cost, storage cost, disposal cost, and opportunity cost of the space it occupies.
- Quality control becomes more predictable. When you’re consistently moving older stock first, your customers get fresher products. This means fewer complaints and returns.
- Cash flow improves because you’re converting inventory to finished goods faster instead of letting materials sit until they’re worthless. Your accountant will notice the difference in inventory turnarounds.
- Regulatory compliance stops being a constant worry. Inspections become routine events instead of panic-inducing crises when you can demonstrate proper shelf life management. Worldwide, global standards like ISO 4500 are adhered to for worker and workplace safety and health.
- Production planning gets easier when you have accurate visibility into what needs to move and when. No more emergency production runs because someone discovered a batch of ingredients is on the verge of expiring.
- Supplier relationships improve when you can provide better demand forecasting based on actual usage rather than emergency replacement orders.
FEFO in inventory and manufacturing software
Here’s the truth: FEFO only works if your systems actually support it. Manually checking dates and shuffling pallets around might fly when you’ve got a single storeroom and a handful of SKUs. But once you’re dealing with dozens of suppliers, hundreds of products, or multiple production runs at once, trying to “wing it” with spreadsheets is a fast track to wasted inventory. That’s why software built with expiration tracking baked in makes all the difference.
Your chosen inventory or manufacturing software should automatically handle batch tracking, highlighting which lots are nearing expiration, and guiding your warehouse team to pick the right stock without the daily guessing game. That way, you’ve got a clear, automated process that connects expiration control with purchasing, production, and shipping instead of hoping people remember which items need to move first.
Look for these features in MRP software to make FEFO work smoothly:
- Lot and batch tracking with expiration dates, so every material can be traced from supplier to customer.
- FEFO-based picking rules that show warehouse workers what to grab first, no second-guessing required.
- Expiry alerts that notify people when expired goods are at risk of getting into an order.
- Production scheduling tied to shelf life, so first expiring materials get used in the first jobs.
- Full audit trails to keep regulators happy and your quality standards airtight.
Instead of fighting against your own warehouse, MRPeasy turns expiration management into just another part of the flow — efficient, reliable, and easy to explain to both the shop floor and the C-suite.
