FIFO & FEFO: What Are They and Why Are They Crucial for Your Business Efficiency?
In the business world, particularly in the distribution, manufacturing, and FMCG (Fast-Moving Consumer Goods) sectors, stock management is the essential foundation for maintaining a smooth supply chain. A small mistake in arranging the sequence of goods moving in and out can lead to significant losses, whether in the form of damaged or expired goods, or operational inefficiencies.
This is where the concepts of FIFO (First-In, First-Out) and FEFO (First-Expired, First-Out) become extremely important to implement—especially if you are already using or plan to implement an ERP (Enterprise Resource Planning) system for business operational management.
Understanding FIFO and FEFO
FIFO (First In, First Out)
FIFO means that the goods that first enter the warehouse must be the first to leave. This principle is commonly used across various industries because it helps maintain stock rotation so that no product is stored for too long. For example, in a food distribution business, the goods that arrive first will be sold first, thereby preventing old stock from expiring or decreasing in quality.
FEFO (First Expired, First Out)
In contrast to FIFO, FEFO focuses on the product’s expiration date, not its arrival date. This means that the goods with the closest expiration date must leave first, even if they arrived later.
FEFO is crucial for industries such as:
- F&B (Food & Beverage)
- Pharmaceuticals and medicines
- Cosmetics and personal care
Both of these methods are not just logistical concepts but are business efficiency strategies to ensure the timely flow of goods and minimize losses due to dead stock.
Challenges of Implementing FIFO & FEFO Manually
Many businesses still rely on manual record-keeping or spreadsheets to manage stock based on FIFO or FEFO.
However, this method has several drawbacks:
- It is difficult to track batches and serial numbers.
- It cannot automatically determine which items to release first.
- Human input errors (human error) frequently occur.
- The stock audit process slow and inaccurate.
For this reason, a system is required that can automatically detect, record, and manage the flow of stock—and this is where SAP Business One (SAP B1) plays a role.
SAP Business One and Distribution Solutions from PT Inti Data Utama
SAP Business One (SAP B1) is an integrated ERP software that helps companies manage all aspects of the business—from finance, inventory, sales, and production.
However, for the distribution industry, standard systems sometimes still require specific customization to be more effective in the field.
Therefore, PT Inti Data Utama offers an additional solution called SAP B1 Velodist—a custom SAP B1 solution specifically designed for distribution companies.
Key Features of SAP B1 Velodist
1️⃣ Save on SAP User Licenses
Velodist utilizes a single SAP license for more users. This means you can optimize your investment with a more efficient cost structure without reducing team productivity.
2️⃣ Web-Based – Multi-Platform & Multi-Device
Users can access Velodist via a web browser, whether from a computer, tablet, or smartphone. This greatly assists field teams or sales staff in monitoring stock and transactions anytime, anywhere.
3️⃣ Integrated via SAP Service Layer
Velodist’s integration utilizes the official SAP Service Layer, which ensures:
- It does not damage the core functions of SAP.
- It guarantees data security and consistency.
- It remains compatible with SAP Business One version updates.
4️⃣ Flexible and Customizable
Every distribution business has unique needs. Velodist can be customized to fit your company’s specific business flow, including features for FIFO, FEFO, barcode scanning, and automatic batch management.
FIFO & FEFO with SAP B1 Velodist: Real-Time and Accurate
With the integration of SAP B1 + Velodist, companies can:
- Automatically track the incoming and outgoing dates of goods.
- Monitor product expiration dates with early notifications.
- Determine which batch number should be released first.
- Utilize barcode scanners to ensure the sequence of item picking in the field remains accurate according to the system.
The Result?
Warehouse operations become more efficient, the risk of expired goods is reduced, and stock reports are always real-time and reliable. Implementing the FIFO and FEFO system is not just a set of warehouse rules—it is a strategy for maintaining business efficiency and profitability. With the support of SAP Business One and the specialized Velodist solution from Veris Solution, your company can have a distribution system that is smart, efficient, and fully controlled.
About Us
Veris Solution is a trusted implementer of SAP Business One solutions for small and medium-sized businesses in Southeast Asia. We have over 20 years of experience implementing SAP Business One and offer a comprehensive range of services, including implementation, support, customization, and integration. We are committed to helping businesses streamline their operations, improve efficiency, and achieve their goals through the power of SAP Business One. Our team of certified professionals provides tailored solutions to meet the specific needs of each client, ensuring a smooth and successful digitalization journey.
