A warehouse is not “a room where goods are kept.” It’s a system that either helps a business earn money—or quietly eats margin through mis-picks, write-offs, downtime, and the eternal “we can’t find it.” While volumes are small, you can survive on the warehouse guy’s memory and pure heroics. But once the assortment grows, batches and expiration dates appear, returns come in, and you have multiple people per shift—memory turns into a lottery.
Location-based storage and FIFO/FEFO picking rules are not bureaucracy for the sake of bureaucracy. They make the warehouse predictable: find items faster, pick correctly, write off less, train new staff easier, and calmly survive sales peaks. Let’s break down the terms in plain language, approaches, checklists, and a step-by-step implementation plan.
1) Location-based storage (location management)
This is when every place in the warehouse has an “address”: zone → aisle → rack → shelf/bin. The product is linked to the address in the system—not in someone’s head. It’s measured by the share of inventory tracked by locations and the accuracy of on-hand stock by bins. It matters because it’s the foundation of speed and control: without locations, you will always be searching “somewhere over there.”
2) SKU, batch/lot, and expiration date
SKU is a specific product item (article/variant). A batch/lot is a specific inbound receipt (often tied to a production date). Expiration date is the date after which the product can’t/shouldn’t be sold. It’s measured by SKU and batch-level tracking and correct date data. It matters because FIFO/FEFO only work if you know which goods are which and where they came from.
3) FIFO (First In, First Out)
“First in—first out”: pick stock in order of oldest receipt. Measured by compliance with batch-based picking. It matters because it reduces dead stock and the risk of “old inventory,” especially when there’s no strict expiry date, but there is aging/quality degradation.
4) FEFO (First Expired, First Out)
“First to expire—first out”: pick the stock with the nearest expiration date. Measured by the share of picks where the nearest expiry was selected. It matters for food, pharma, cosmetics—basically anything that can spoil or become “undesirable to sell.”
5) Inventory turnover and warehouse service level
Turnover is how quickly inventory moves through the warehouse (days of supply, turnover). Service level is picking speed, accuracy, and absence of mis-sorts. Measured by days of supply, % of errors, and order picking time. It matters because the warehouse directly affects money: frozen inventory, write-offs, and returns are real costs.
6) Stock counts: full and cycle counting
Full count is “close the warehouse and count everything.” Cycle counting is regular checks by zones/items without stopping operations. Measured by frequency and discrepancy rate. It matters because location-based storage only stays alive with regular verification: a system without control can fantasize too.
| Tool | What it delivers | Typical effect |
|---|---|---|
| Location-based storage | Fast search and stock control | Less “lost” inventory and downtime |
| FIFO | Less stock aging | Fewer write-offs “due to old age” |
| FEFO | Expiration-date control | Less expired stock and fewer returns |
| Cycle counting | Maintains inventory accuracy | Fewer discrepancies and mis-sorts |
Basic location-based storage + FIFO (for “non-perishable” goods)
When it fits: goods without strict expiration dates (or with long shelf life); the priority is faster picking and fewer mis-sorts; the assortment is growing.
Pros: quick to implement; brings order and predictability; easier to train new staff.
Limitations: if you have expiration dates, FIFO alone may not be enough.
Risks: if you don’t track batches, FIFO turns into “whatever happened,” not a rule.
Location-based storage + batch and expiry tracking + FEFO
When it fits: food, pharma, cosmetics, any goods with expiration dates/seasonality, high cost of write-offs.
Pros: less expired stock; higher service quality; easier to meet customer and regulatory requirements.
Limitations: more discipline and data; you must clearly label batches and expiration dates.
Risks: a wrong expiry date at receiving or missing physical labels “kills” FEFO—the system will pick the wrong stock.
Scenario 1: starting point — an e-commerce warehouse with 3,000 SKUs; searching takes a long time and picking errors are growing. Actions — introduced zone-based locations and ABC placement, labeled bins, enforced the rule “receiving → location.” Result — picking time dropped, new employees ramped faster, and “lost” items became rarer.
Scenario 2: starting point — cosmetics and dietary supplements with expiry dates; periodic write-offs due to expiration. Actions — implemented batch and expiry tracking, FEFO picking, a quarantine zone for questionable lots, and cycle counts focused on expiry items. Result — less expired stock, and “near-expiry” sales became manageable. We’ve worked in this field for over 13 years, and almost always the reason for expired stock isn’t “bad product,” but lack of discipline at receiving and during picking.
1) Are FIFO and FEFO mutually exclusive?
No. FEFO is usually more important for goods with expiration dates. FIFO is convenient as a baseline rule for many categories. In practice, FEFO is used for “expiry-sensitive” items and FIFO/ABC for everything else.
2) Can you implement location-based storage without an expensive WMS?
Yes—start simple: a tracking spreadsheet, clear locations, labels, receiving discipline, and pick lists. But the bigger the warehouse gets, the faster you’ll hit the need for automation.
3) Where to start if the warehouse is already chaos?
Start with zoning and locations, then enforce receiving discipline (SKU/batch/expiry), then implement picking rules and cycle counts. Chaos is defeated not by one heroic day, but by a series of boring, regular actions.