Inventory Musts: First In, First Out (FIFO)

One of the first things I learned about when I entered the wireless industry nearly 10 years ago was: First In, First Out, or FIFO. Electronic products of any type age very quickly and the last thing you want on your shelves is outdated technology. Customers want the newest, latest and greatest technology on the market, not outdated products. In addition, a business could end up losing a lot of money if outdated equipment is sitting in the store and not selling.

Maintaining the right inventory level is critical to a businesses success because most businesses have a lot of their cash tied up in their inventory as the inventory is usually the largest piece of asset a business has. Replenishing your inventory in lean, frequent orders can help overcome the challenge of having too much inventory, or outdated inventory on your shelves. Also, if you wait too long to replenish inventory you may find yourself in a situation where you don’t have what your customers want to purchase, which leads to the loss of sales and additional money out of your pocket if you’re express shipping products for specific customer sales needs.

When ordering inventory you want to make sure you’re in-line with your competition. Find out what the competition is carrying and make sure you’re competitively priced for your industry and area. You want to ensure that the inventory you brought in first goes out first, and that you fully understand the return and warranty policies the companies you order from have on the products you purchase.

If you happen to receive DOA, or dead on arrival, products (especially when it comes to technology-based products that have specific tracking systems, such as ESNs or are serialized) you’ll usually have a specific timeframe that you can send that product back in to receive a full refund or replacement product at the same price. Using FIFO you’ll have a higher likelihood of finding any DOA products quicker than if you just randomly pick something off the shelf to sell to the customer.



When dealing with products that can expire, such as food products, FIFO can help keep products from expiring on your shelves by selling out items that will expire first. My first thought is of milk. Milk expires within a fairly short period, and if you sell out the newest product first, you’ll be left with a lot of rotten milk on your hands.

One of the best ways I’ve found to help ensure FIFO takes place in a retail setting is to use removable labels on the product boxes with the date of purchase, if it doesn’t already have an expiration date on it. This way, when a salesperson goes to grab one of those products they’ll know which one to sell out first.

The last big key here is to ensure all of your sales staff knows what your policies and procedures are on FIFO, how it works, and what will happen if they don’t follow them. The best way to make sure your staff knows how to follow any policy or procedure, especially FIFO, is to provide hands-on training. Many people learn best through hands-on training, so taking an employee to where the inventory is and physically showing them where the labels are located on the products and how to read the labels can increase employee compliance. Communication is key, at all levels of the organization.


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