Efficient warehouse management hinges on optimising space, protecting product quality, and enabling fast, accurate picking. However, many warehouses struggle with inventory challenges such as ageing stock, spoilage, inefficient picking routes, and products expiring before dispatch.
Adopting the right warehouse storage strategy is critical. Two foundational methods dominate inventory rotation: FIFO (First-In, First-Out) and LIFO (Last-In, First-Out). Each offers distinct advantages depending on the nature of the products stored.
Aligning the correct FIFO racking system or LIFO racking system with the chosen warehouse inventory rotation method is essential for optimising space, boosting efficiency, and reducing waste. The right pallet racking solutions can transform warehouse operations, ensuring inventory movement matches business needs.
What is FIFO (First-In, First-Out)?
FIFO, or First-In, First-Out, is a warehouse storage strategy where the first goods placed into storage are also the first to be dispatched. It prioritises stock rotation, ensuring that older stock is sold or used before newer arrivals.
FIFO is crucial in industries dealing with time-sensitive or perishable products. Common sectors include:
- Food and beverage.
- Pharmaceuticals.
- Cosmetics.
- Dairy and meat industries.
- E-commerce businesses with expiry-sensitive goods.
Implementing a first in first out racking approach helps:
- Minimise spoilage and wastage.
- Improve expiry date management.
- Ensure accurate stock rotation.
- Maintain customer satisfaction with fresher goods.
Best racking systems for FIFO implementation
Choosing the right racking solution is vital to successfully apply a FIFO racking system in a warehouse.
Pallet flow racking (gravity flow racking)
Pallet flow racking, also known as gravity flow racking, is a dynamic storage solution designed to automate warehouse inventory rotation. Pallets are loaded at the higher end and flow down rollers to the picking face as older stock is removed. It provides true first in first out racking with minimal labour.
Advantages include:
- High-density storage.
- Reduced handling times.
- Automatic inventory rotation.
- Ideal for high-volume, fast-moving products.
Push-back racking (single-lane backloading for FIFO)
Normally used as a LIFO system, push-back racking can be turned into a FIFO solution by limiting each lane to a single pallet/SKU. Because every pallet is placed and retrieved from the front of the rack, the pallet stored first is always the pallet picked first.
Benefits:
- Moderate-density storage.
- Suitable for medium-turnover products.
- Greater accessibility compared to static racking.
Selective pallet racking with disciplined stock handling
Selective pallet racking remains the most common pallet racking solution worldwide due to its flexibility. FIFO can be maintained if stock handlers strictly load new pallets behind older stock or designate specific lanes for different batches.
Advantages:
- Cost-effective.
- Full pallet accessibility.
- Scalable for small to medium operations.
Features:
- High-density storage.
- Suitable for cold storage and food distribution.
- Ideal for warehouses needing both volume and strict stock rotation.
What is LIFO (Last-In, First-Out)?
LIFO, or Last-In, First-Out, is a warehouse storage strategy where the most recently stored goods are the first to be retrieved. Last in first out storage suits goods that do not require strict expiry management and benefit from rapid access to the latest stock.
Typical industries using LIFO include:
- Building supplies.
- Construction materials.
- Automotive parts.
- Bulk retail.
- Industrial components.
Benefits of using a LIFO racking system include:
- Faster loading and unloading.
- Maximised storage density.
- Reduced handling requirements for low-turnover goods.
- Improved use of limited warehouse space.
Best racking systems for LIFO implementation
Selecting the right racking is crucial to leverage the benefits of a LIFO racking system.
Drive-in racking systems
Drive-in racking allows forklifts to enter storage lanes to place or retrieve pallets. Pallets are stored several positions deep, and entry is from only one side, following LIFO principles.
Key advantages:
- Very high storage density.
- Optimised floor space.
- Best for large volumes of similar products.
Push-back racking (multiple deep)
Push-back racking operates using carts and gravity-fed lanes. When a pallet is placed onto a lane, it pushes the previous pallets back. When the front pallet is retrieved, the others roll forward automatically.
Push-back racking offers:
- Efficient use of space.
- High selectivity with multiple SKU lanes.
- Faster retrieval times compared to drive-in systems.
- Versatility across industries.
This type of last in first out storage system is particularly suited to industries with larger quantities of slower-moving goods.
Cost-effectiveness for low-rotation goods
For warehouses dealing with heavy, bulky, or slow-moving inventory, pallet racking solutions based on LIFO principles can be a cost-effective way to boost storage capacity without the need for complex picking systems.
How to choose between FIFO and LIFO based on your warehouse needs
Selecting between a FIFO racking system and a LIFO racking system depends on several key factors:
- Product type: Perishables and regulated goods require FIFO, while bulk non-perishables often suit LIFO.
- Shelf life: Short shelf-life demands a first in first out racking strategy.
- Stock movement speed: Fast-moving goods favour FIFO to maintain freshness.
- Warehouse size and layout: High-density LIFO racking may optimise smaller spaces.
- Budget: LIFO systems like drive-in racking can offer savings for bulk storage.
- Operational model: Some operations benefit from combining both FIFO and LIFO strategies in different zones to match varying inventory types.
Final considerations for implementing FIFO or LIFO storage
Proper implementation is about more than installing the right warehouse storage strategy. Key considerations include:
- Staff training: Employees must understand correct loading and picking techniques to maintain warehouse inventory rotation integrity.
- Compliance with New Zealand safety standards: Racking must meet seismic design standards and be installed correctly.
- Regular inspections and maintenance: Periodic audits help identify damage, maximise efficiency, and uphold safety.
- Consulting with racking specialists: Tailored advice ensures the system matches your stock characteristics, space limitations, and operational needs.
FAQs: Frequently asked questions about FIFO racking systems and LIFO racking systems
A FIFO racking system ensures that the first goods stored are the first retrieved. It is ideal for industries dealing with perishables or products with expiry dates, such as food, beverage, and pharmaceuticals.
A LIFO racking system is best for non-perishable, bulky goods where expiry is not an issue. It is commonly used for building supplies, automotive parts, and slow-moving industrial inventory.
A warehouse storage strategy based on FIFO improves stock rotation, minimises spoilage, and ensures products are dispatched before their expiry dates, supporting customer satisfaction and regulatory compliance.
Yes, many warehouses adopt a combination of FIFO racking system and LIFO racking system approaches, using different zones to accommodate the storage requirements of various product types.
Maximise your warehouse potential with the right racking solution
Choosing the right racking solution is fundamental to warehouse success. Aligning your warehouse storage strategy with either a FIFO racking system or a LIFO racking system can transform operations, from reducing waste to improving space efficiency and optimising picking performance.
Investing in tailored pallet racking solutions ensures inventory moves the way your business demands, safeguarding profitability and customer satisfaction.
Need help choosing the right racking for your inventory strategy? Contact Storepro to speak with a storage expert today.