Welcome, Guest Login

Support Center

Implement FIFO In Your System

Last Updated: Nov 10, 2017 06:36PM IST
The first in, first out (FIFO) method of inventory valuation is a cost flow assumption that the first goods purchased are also the first goods sold. In most companies, this assumption closely matches the actual flow of goods, and so is considered the most theoretically correct inventory valuation method.
To begin with this Feature, you need to define few parameters (like Shelf life, Expirable, Tolerance) in your system while some system configurations will be done by internal teams* themselves:

*Changes to be done internally i.e 

-Configure Item level traceability for the 
-Under General settings keep Allow multiple ageing dates on a single shelf as NO {in this case client will need to change the shelf code each time while doing putaway}

Please note: If you mark a product “Expirable”, you have to mandatorily mention its “Shelf Life”

Shelf Life: It is the total time for which an item is consumable or saleable. It is defined in 
number of days.

To update Shelf Life in the system follow the given steps:

Under Products:

1- Open Products Tab> Any (Expirable) SKU for which you want to define shelf life

Under Category

1- Open Categories Tab> Any (Expirable) SKU for which you want to define shelf life

Note: If Shelf life is defined on both Product and Category then priority will be given to the shelf life defined on Product by the system.

Tolerance: The remaining life of a product is calculated with the help of the tolerance (which is given in percentage) as defined while creating the product sub-category

Refer above image for reference.

While inwarding an expirable product during GRN, you have to mandatorily record its “Manufacturing Date”

On the basis of Manufacturing date the system will calculate its remaining shelf life and if it is below the defined tolerance or freshness, then the system prompts the user and moves the item to QC Rejected state. (How to set the Tolerance or Freshness is discussed in the next topic.)

When is the Freshness of an Expirable product checked?

There are many events when the Product freshness is validated and the system takes required actions. These are while receiving the goods against a PO, Invoicing the goods of an order and while receiving the Returned Items.

Before going there, Let’s take an example to understand this-

Product “ABC” has below details-

Grn Expiry Tolerance- 50 (%)
Dispatch Expiry Tolerance- 80 (%)
Return Expiry Tolerance- 85 (%)
Shelf Life- 100 (Days)
While in-warding the item on 2nd
Oct, 2017 (say), the system will ask you for its manufacturing date. Let the manufacturing date is 30th Sep, 2017 and will be marked as “Expired” on 8th Jan, 2018. Now the system will check and take actions while-

1. GRN- The item can be inward only during the first 50 days after the manufacturing date i.e. till 19th
Nov, 2017 after which system will mark it as “QC rejected”.

2. Invoicing- The item can be invoiced only during the first 80 days after the manufacturing date i.e. till 19th
Dec, 2017 beyond which the system will reject the item and not allow to process.

3. Return- The return putaway of the item can be done with good inventory if it returns within the first 85 days i.e. till 24th
Dec, 2017 beyond which the system will mark it as bad inventory.

Now, the Freshness Percentage or tolerance for any product can be set at its category level.

On the Path Products > Categories, click any category name.

Let us focus on each event in detail separately now:

1. At GRN While in-warding a product item, if the product is found to be Expired/About to expire, the system will prompt you and move it to QC Rejected state.

2. At Invoice If the Order contains one item which is Expired/About to Expire, then

• The Item status is marked as “Bad-Expired” or “Bad-About to Expire”.
• The Product Inventory type is marked to Bad.
• The Sale Order item returns to “Created” state and is open for re-allocation of inventory. This item can now be included in a fresh pick list.
The Inventory count of bad inventory increases by 1, while the Blocked Inventory count decreases by 1

If the Order contains more than one items, and only one of the items is found to be Expired/About to Expire, then
• Split the order for expired/About to Expire product items and good items.
• The same process for a single Expired/About to Expire item as explained above will be followed.

3. At receiving Returns While receiving the Returned items, the system will check the item shelf life, and if it is found to be Expired/ About to Expire, then

 • The Item status is marked “Expired” or “About to Expire”
• The item inventory type and Inventory Status is set to “Bad”.
• The count of Bad inventory is increased by 1.

Auto- Ageing Mode

The Expired/About to Expire Items must be made non-saleable. Apart from the events discussed in this document, there can be items which are lying in the warehouse, under “Good inventory” while their shelf life has been completed, in other words, the shelf life/ freshness percentage is below the defined value. The system will check all such items on a recurrent basis every 24-hours. All such items will be marked as Bad-Expired or Bad- About to Expire. (Expired means that the shelf life of the item has been exhausted. About to Expire means that the Shelf life of the item is remaining but the Freshness tolerance has been reached.)

The specifics are:

• All the items whose Life at Invoice or Freshness tolerance at Invoicing is completed will be 
marked Bad-About to Expire.
• Those items whose shelf life has exhausted will be marked Bad-Expired.
• The inventory type for all the Expired or To be Expired items is marked as “Bad”
• For all the items which are set “Bad - About to Expire” an RTV (Return To Vendor) has to be initiated.
• The Bad-Expired items are the own 

For 100% use of FIFO and accuracy, it suggested to keep Shelf level accuracy turned on and one shelf with 1
ageing of SKU

Contact Us

seconds ago
a minute ago
minutes ago
an hour ago
hours ago
a day ago
days ago
Invalid characters found