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8Stock WMS - inventory management

Understanding FIFO Inventory Method

In the world of inventory management, FIFO (First-In, First-Out) is a crucial method for ensuring goods are sold in the order they are received, helping businesses maintain accurate stock levels and reduce waste. This article explores what FIFO is, its importance, and how using a robust warehouse management system (WMS) can optimize your inventory management process.

What is FIFO?

FIFO, or First-In, First-Out, is an inventory management method where the first goods purchased or produced are the first to be used or sold. This means older stock is used or sold before newer stock, ensuring that goods do not expire or become obsolete before they are used or sold. FIFO is particularly important for products with a limited shelf life or those prone to becoming outdated, such as perishable goods or technology products. An example of perishable goods is vegetables and livestock used in fast food production. An example of technology products is IDD calling cards.

Importance of FIFO

Implementing the FIFO method offers several benefits for Malaysian businesses:

1. Reduction of Spoilage and Obsolescence

By selling older stock first, FIFO reduces the risk of products expiring or becoming obsolete. This is crucial for businesses dealing with perishable items, seasonal products, or goods that can quickly become outdated due to technological advancements especially for fast moving products.

2. Accurate Valuation of Inventory

FIFO also ensures that the cost of goods sold (COGS) accurately reflects current market prices. This is important for financial reporting and helps businesses make informed decisions about pricing and profitability.

3. Compliance and Accountability

Using FIFO can help Malaysian businesses comply with accounting standards and tax regulations, as it provides a transparent method for tracking inventory costs and sales with current COGS.

8Stock WMS - warehouse management

Implementing FIFO with WMS

Now, let’s look at how a WMS can facilitate the implementation of FIFO in Malaysian businesses:

1. Inventory Tracking and Management

WMS allows you to track your inventory in real-time, ensuring that older stock is identified and sold first with tracking of batch via expiry dates, among other options. This prevents the accumulation of obsolete inventory and minimizes the risk of waste.

2. Automated Stock Rotation

You can automate the rotation of stock based on FIFO principles. The system will automatically prioritize older stock for picking and fulfillment, ensuring that goods are shipped to customers in the correct order.

3. Integration with Sales Channels

WMS integrates seamlessly with various sales channels, including e-commerce platforms and marketplaces, like Shopee and Lazada. This integration ensures that FIFO is maintained across all sales channels, preventing discrepancies and ensuring accurate inventory management.

Benefits of Using WMS for FIFO

1. Enhanced Efficiency

By automating the FIFO process, it reduces the need for manual intervention, saving time and minimizing errors. This allows your team to focus on other aspects of business operations especially when there are shortage of staffs.

2. Improved Inventory Accuracy

It provides real-time visibility into your inventory levels, ensuring that you always have an accurate view of stock on hand. This prevents stockouts and overstocking, optimizing your inventory levels and reducing carrying costs.

3. Scalability and Flexibility

As your business grows, a WMS can scale with you, handling increased transaction volumes and inventory complexity. This scalability ensures that FIFO principles are maintained even as your business expands.


In summary, implementing the FIFO inventory method with a robust WMS like 8Stock offers numerous benefits for Malaysian businesses, including reduced waste, improved inventory accuracy, and enhanced efficiency. By prioritizing older stock for sale, FIFO helps businesses maintain profitability and comply with regulatory requirements. Consider integrating a WMS into your operations to streamline your inventory management process and achieve sustainable growth.

By optimizing your inventory management with 8Stock, you can ensure that your business operates efficiently and effectively, maximizing profitability and customer satisfaction. Request for a demo today!

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