In this guide 6 sections
Use FEFO, first expired first out, wherever a batch carries an expiry date, because two deliveries of one item rarely expire in the order they arrived. FIFO suits undated goods. A buyer’s own shelf life rule can override both, so the system must check it before any pick is released, and warn the picker when a batch fails.
Arrival order misleads on dated stock
FIFO sends out the oldest receipt. That suits goods that never spoil. On dated stock it fails the moment a company ships a short-dated lot in a later delivery, because the April receipt now expires before the March one.
Take two batches of one cough syrup. Batch B2217 arrived in March and expires in November, while batch B2301 arrived a month later in April but expires in September, two months earlier. FIFO picks B2217, and B2301 ages on the rack until a pharmacy sends it back or the stock is written off. Nobody notices until the return arrives.
A picker working from a bill with no batch and no expiry has nothing to choose by and takes whatever sits at the front of the rack. So the bill must carry the batch.
Where FIFO is still the right rule
Not every line is dated. Digital thermometers, steel forceps, mop buckets and shelf stands share the warehouse with dated goods but never expire, so picking the oldest receipt keeps them rotating. Left at the back, they gather dust.
Keep two questions apart. Picking decides which unit leaves the rack. Costing decides what value that unit carries. A warehouse can pick by expiry and still value stock at weighted average cost, so choosing FEFO does not rewrite the accounts.
- Dated items: FEFO, by batch expiry
- Undated items: FIFO, by receipt date
- Items with a manufacture date only: FIFO, with a review date
- Items under a buyer’s fixed shelf life rule: filter first, then FEFO
Short-dated batches, near-expiry returns and claim windows
Brands take back expired or near-expiry stock only inside a window, and the window differs by company, by division and sometimes by the size of the claim. Some count from the expiry date. Others count from the date they billed you. FEFO moves the earliest-dated stock to buyers first, so fewer cartons end up waiting for a claim that may already be closed.
Run a near-expiry list for each company every month, sorted by days left, and mark every batch with the last date that company will accept it back. Stock that cannot sell before that date should be claimed early, because a claim raised after the window is a write-off.
Returns from buyers follow the rule in reverse. A returned carton goes back under its own batch and expiry, never into a mixed bin where an old date hides behind a fresh one. Mixed bins defeat FEFO within a week.
- Batch number and expiry on every pick line
- Days left shown beside each batch
- Last date the company accepts a return
- Buyers who accept short-dated stock
When the buyer’s shelf life rule overrides both
Hospital pharmacies, supermarket chains and tender contracts often set a minimum remaining life, and a delivery with too few months left is refused at the dock.
Plain FEFO makes this worse. It sends the earliest batch to the buyer who will reject it, so the van drives out, waits at the dock and returns with the same carton. The better rule is to pick the earliest batch that still passes the buyer’s minimum, then offer shorter-dated batches to buyers who accept them.
That needs the minimum stored on the buyer or the contract and checked when the order is entered, not at the dock door. A handheld scanner should stop the picker the moment a scanned batch fails the rule, and show the next batch that passes. Catch it at entry.
Choose the rule line by line, then test it on two batches
Start with the item master. Mark each line dated or undated, write the rule beside it and list the buyers who set a minimum shelf life of their own.
Load two batches of one item with different expiry dates, then raise one order for a strict buyer and another for a relaxed one. The picks should differ. The pick list should say why. Otherwise the rule lives in the picker’s head.
Picking rule sheet
One page, one line per item group. Its columns are item code, dated or undated, picking rule, buyer minimum shelf life, return window and review date, plus a note for any item needing a manual call. Below it, a separate block names the buyers who accept short-dated stock, with the shortest remaining life each will take.
Open a blank worksheet to printQuestions owners ask
Does FEFO change how stock is valued?
No. FEFO only decides which batch is picked. Valuation can stay on weighted average or FIFO cost, and the cost of the batch picked flows into the sale with no change to the books.
Can one warehouse run both rules at once?
Yes. The rule belongs to the item, not to the building. Dated lines pick by expiry and undated lines pick by receipt date, from the same racks, in the same wave, on the same handheld.
What happens if a picker takes the wrong batch?
A scanner check catches it at the rack. Without scanners, a second look at dispatch compares the batch on the carton with the batch on the bill, and the picker initials the fix. Log each fix so repeat slips show by picker.
How early should near-expiry stock be flagged?
Early enough to sell it or claim it. Work backwards from the last date the company takes returns, then subtract transport time and the days its inspector needs to visit the warehouse.