3rd Shift Harry and the Tale of FEFO vs. FIFO

3rd Shift Harry and the Tale of FEFO vs. FIFO

In this second installment of our series of 3rd Shift Harry stories, we take a look at a devastating issue that can arise when your inventory management rules are bypassed.

Picture this… It’s early in the morning and the 3rd shift is coming to a close. After a long and tiring night, Harry is counting the minutes before he can get home and take a snooze. Unfortunately, this daydreaming is clouding his focus on the job.

Tasked with collecting raw materials outlined in a pick list for a new batch of soup, Harry is eager to finish his last job of the day. He grabs a pallet of cubed beef and delivers it to the assigned area. There’s no problem with that, right?

Well, he didn’t pick the soon-to-expire, $10,000 pallet of cubed beef that was included on the list. Instead, he selected one that was sitting right next to where his forklift was parked. This pallet was just delivered yesterday and not planned to be issued to a job for another few days. Now, that expiring beef is about to eat away at your bottom line.

The method of FEFO (First to Expire, First Out) is a typical inventory management technique practiced by many of our food and beverage customers where products are handled based on their expiration dates. Those that will be expiring first, will be used first, and so on.

FIFO on the other hand (First in, First Out), is a different method, implying that the products or materials brought into the warehouse first will in turn be the first to move out. What method used in your warehouse will depend on your specific operations, but without the right process controls in place, a worker can inadvertently choose the wrong inventory and cost you money.

Within DEACOM’s warehouse management system (WMS) options for inventory controls, there is a flag labeled “Suggest lots for lot controlled items in WMS.” If set, the system will suggest the FEFO lot for lot controlled items when reserving, issuing, and staging.

When 3rd Shift Harry is getting ready to issue materials to a production order, his scanner will tell him exactly what raw materials he needs and where to pick them up. By requiring a barcode scan when picked, the system will only allow him to get those specific items. If the scanned code does not match what is predetermined in the pick list, the system will prohibit him from using it.

In some cases, those items may very well be located close to where 3rd Shift Harry is. But the process controls are in place for a reason and will prevent him from taking the easy way out if it’s not in the best interest of the business.

With a properly implemented WMS system, the opportunities to accidentally or purposely bypass procedures without being caught, are brought down to almost none. Both you and 3rd Shift Harry can be rest assured that your next batch of soup will be a profitable one.

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