FEFO in Practice: How to Avoid Throwing Money Away with Your Products
Food waste is rarely an isolated problem - it is a symptom of how the warehouse is managed. Every discarded product is a product you have paid to produce or purchase, store and handle, without it ever being sold.
What does food waste cost your business?
Most food companies know that food waste costs money - but few have a precise figure for how much. This is often because waste is recorded in a scattered way: discarded products in the warehouse, returned products from customers, and overproduction that never reaches the shelves. When these figures aren’t gathered in one place, it’s hard to see the full picture - and even harder to act on it.
FEFO vs. FIFO - why it matters
Most people know FIFO (First In, First Out): the product that arrived first should go out first. But in the food industry, it’s often more important to use FEFO (First Expired, First Out) - meaning the product that expires first should go out first, regardless of when it arrived at the warehouse. The difference is crucial when products with different shelf lives arrive at the same time, or when a new delivery has a shorter shelf life than the existing stock.
A system that only supports FIFO can, in practice, lead to products with shorter shelf lives sitting on the shelf while older - but longer-lasting - products are shipped out first.
Automatic expiry alerts and promotion management
The most direct benefit of a system with built-in FEFO is automatic alerts when a product is approaching its expiry date. Instead of discovering it only once the product already needs to be discarded, you can react in time - either by prioritising it in sales, putting it on offer, or moving it to another distribution channel where it can still be sold in time.
Some systems can even automatically suggest promotions on products with short remaining shelf life, based on historical sales data on how quickly similar products have typically sold at a given discount.
The link between inventory management and purchasing forecasts
Food waste often starts before the product even arrives at the warehouse - namely at the point of purchase. If purchasing is based on gut feeling rather than data, you easily end up ordering more than is actually needed. An ERP system that connects sales history with purchasing can help you hit the right level - and thereby reduce waste even before the product is received.
How to get started
- Map out where the waste actually occurs today - warehouse, production or returns.
- Check whether your current system supports FEFO, or only FIFO.
- Look at whether expiry alerts and promotion management can be automated, rather than being a manual task for warehouse staff.
- Link purchasing forecasts to actual sales data, so purchase quantities match real demand.
Food waste can rarely be eliminated entirely - but with the right tools it can be reduced significantly, and that shows directly on the bottom line.
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