Glossary
LIFO
Last In, First Out
LIFO describes an issue rule where the last item into stock is the first one picked. It is the exact opposite of FIFO. In physical stock management, LIFO is rarely a deliberate choice: more often it is the consequence of storage that leaves no other option.
What separates LIFO from FIFO
The difference fits in one sentence: FIFO issues what came in first, LIFO issues what has just arrived. The consequence is direct. Under FIFO, every item spends the same time in stock and turnover is even. Under LIFO, the bottom of the pile never moves: it ages, deteriorates, becomes obsolete, and sometimes ends up scrapped without ever having been used. One detail matters here: LIFO and FIFO do not mean the same thing in accounting as in physical flow. In stock valuation they are calculation conventions, independent of what actually happens in the warehouse. On the floor, what is at stake is the real order of picking.
Where LIFO is acceptable
Such cases exist, but they are few. A material that does not deteriorate, has no expiry date, no obsolescence risk and no traceability requirement can be picked in any order: sand, aggregates, loose scrap. Some physical configurations legitimately impose it too, such as pit or silo storage discharged from the top, where the order of entry is structurally unreachable. Outside those situations physical LIFO should be ruled out — absolutely so as soon as there is an expiry date, a batch number, a traceability requirement or any risk of ageing.
The real subject: unintended LIFO
In most workshops nobody decided to run LIFO. It settles in on its own, because the storage layout leads to it. The signs are easy to spot. A stack of pallets where you take the top one. Racking accessible from one side only, reloaded through the same face it is picked from. Bins left on the floor one in front of another, the latest arrival at the front. A location refilled before the old stock is cleared. The fix is almost always physical rather than procedural. Posting a "respect FIFO" notice above a stack changes nothing, because it asks the operator for extra effort at every pick. A roller rack set on a slope, loaded on one side and picked from the other, makes FIFO automatic: doing it right becomes easier than doing it wrong. That is the only rule that holds over time.
Not to be confused with
- Accounting LIFO is a stock valuation method, unrelated to the real order of picking. It is in fact prohibited under IFRS, while physical LIFO exists in many warehouses without anyone having chosen it.
- LIFO is not FEFO. FEFO (First Expired, First Out) issues whatever expires soonest, which does not always match the order of entry.
- Drive-in storage is not necessarily LIFO: it all depends on which side you load from and which side you pick from.
Frequently asked questions
- LIFO or FIFO: which should you choose?
- For physical flow, FIFO in the vast majority of cases. LIFO is only justified on non-perishable materials with no traceability or dating requirement, and most often when the storage configuration leaves no choice.
- How do I know whether my workshop is running LIFO unintentionally?
- Look for locations reloaded through the picking face and for stacks taken from the top. A simple mark on a few items, checked a month later, is enough to tell whether the bottom ever moves.
- Is LIFO prohibited?
- No general rule forbids it in a warehouse. However, batch traceability and expiry regulations make it unworkable in food, pharmaceuticals, cosmetics and more broadly anywhere a batch recall must remain possible.
On the shop floor
Moving from unintended LIFO to FIFO almost never requires a new warehouse. It requires physically separating the loading face from the picking face — a roller rack, a double-sided trolley, sometimes simply turning the layout around is enough to settle it for good.