What is the FEFO Method, and Why is It Important for Your Business?

Inventory management of raw materials is a crucial aspect of food factory operations, given that consumers desire fresh consumable items. Obviously, the larger the factory, the more raw materials it produces. The high quantity of raw materials makes managing these materials challenging. You must ensure that the raw material has a lengthy expiration date and is fresh. Therefore, you must apply the FEFO method to managing production materials.

The FEFO method focuses on managing raw materials that are approaching their expiration date. Thus, these items will be utilized first. This is useful for preventing the occurrence of unused food ingredients because they have already rotted or expired. Managing the FEFO method without ERP software will undoubtedly be challenging. Hence, you can employ a Food Production System to make material management easier while applying the FEFO method.

First Expire First Out Method

There are four well-known inventory management techniques named FIFO (First In, First Out), FEFO (First Expired, First Out), LIFO (Last In, First Out), and average. In this context, we will emphasize FEFO explanations. As stated previously, FEFO concentrated on the product’s expiration date management to avoid purchasing expired goods. This strategy aims to use the stocked product with the earliest expiration date. The FEFO method guarantees that every item on the shelves or warehouse is used before its expiration date. Furthermore, the customer can determine whether the product is fresh and safe for consumption. This strategy minimizes the efforts, time, and labor expenses associated with product inspection, stock opname, and expiration date verification.

Benefits of Using the FEFO Method

Here are the advantages of applying the FEFO method to your food production inventory:

Increase your buyers’ trust

Before conducting a transaction with a cashier, most consumers examine the product’s freshness. When people discover that the expiration date is coming, they may return the item to the shelves. In every business, especially food production, product freshness is a key factor for buyers to consider before purchasing, particularly for products with a short shelf life. Applying the FEFO method to your shelves and the warehouse inventory can increase the possibility of displaying the product with the longest lead time on the expiration date. Customers get confidence in your store due to your store’s fresh products, and they purchase the product without hesitation.

Reduce expired waste

You are responsible for reducing food waste and expired products as an owner. The more products you have that have reached their expiration date, the more disadvantages you will suffer. By deploying FEFO, you can prevent the occurrence of the event. This strategy helps lower the risk of food waste, unsold goods, and expired products on the shelves and the warehouse, which impacts the dead stock and irregular cash flow, by automatically ensuring that the materials are picked and shipped according to their expiration dates.

Manage the physical layout of warehouses

Food production software enables you to concentrate on warehouse layout management in order to expedite the process of picking products that are approaching their expiration date. The physical layout of the warehouse is ordered depending on the closest expiration date, and then the product will be placed on the front and used first. Thus, picking up products becomes faster, and food material management becomes more organized.

Streamline item flow

The staff must be aware of all food raw materials expiration dates and have an estimate of the duration of all floor processes. If the staff does not care about the product flow, especially the expiration date, they will probably pick up the materials on the shelves or warehouse without concern for the expiration date. Thus, they can acquire products that have passed the expiration date. The performance of your store will also disappoint customers. By using the FEFO method, it ensures the items flow smoothly and guarantees excellent results. 

Also read: What is Food Production Automation? and How It Changes The Food Industry?

How to Set Up the FEFO Method

Here are the steps to establish the FEFO method for your warehouse inventory:

Organize

The initial step is to organize the things you possess. Classify products according to their types. For example, put vegetable products, meat, and canned food on separate shelves. If you have many types of raw materials, sorting them manually could be time-consuming. Utilizing food production software facilitates the deployment of the FEFO method. The system will arrange the product categories automatically. Simply, you must arrange them on the shelves according to the system-generated categories. Consequently, organize the products become more organized over time.

Label

Use this procedure if you are transferring your raw materials into jars or boxes such as sugar, flavor, etc. You can simplify the process by cutting the packaging that indicates the name and expiration date and taping them into the jar. This is useful to identify the materials and their expiration date in a jar or box. Regarding fresh products, such as fruits and vegetables, that lack an expiration date, you should set a preliminary “use by” date based on how long they typically last. 

Arrange

After organizing and labeling the products, you must place them in the proper sequence. Place the product with the longest expiration date at the back and the one with the shortest date at the front. The product with the closest expiration date is obtained first. Therefore, you can avoid dead stock owing to expired raw materials.

Repeat

Currently, the FEFO method is running. Simply repeat these steps every time you resupply the materials to ensure the FEFO method continues operation. When you buy or restock the materials, check the expiration dates of the items before placing them in the back. Sometimes, the product you recently purchased or restocked will have a shorter expiration date than the products on the back of the shelves.

Also read: 7 Benefits of Using Food Production System for Your Business

Conclusion 

Inventory management of raw materials is a critical part of food factory operations since consumers prefer fresh products. You must verify that the raw material is fresh and has a long expiration date. Therefore, the management of production materials must adhere to the FEFO technique. This strategy is highly significant for your business and has numerous benefits, such as increasing buyers’ trust, reducing expired waste, managing your warehouse’s physical layout, and streamlining item flow. This strategy will take a lot of work to implement manually. To make it easier, Food Production Software can be utilized to facilitate the process. Utilizing FEFO methods, this system offers simple and automated material management. If you are interested in this system, please contact us for a free demo and in-depth consultation regarding Food Production Software or other ERP Systems with our business expert.