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Concept And Implementation FIFO Method In The Warehouse

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FIFO Methode
image by flickr.com

How a concept and implementation of a FIFO method in the warehouse can be implemented properly? Please read the article below to be more understanding and understand.

The FIFO (First In First Out) method is one of the basic principles and methods of warehousing management. Literally, FIFO contains the notion that the material earlier in the received by the warehouse is the first material to be spent from the warehouse. In a simple way, FIFO means that incoming first must go out first. Apart from the principles of FIFO we also know the principles of other warehousing management, among others, LIFO (Last In First Out) and FEFO (First Expired First Out) methods. Principle of FEFO method applied to materials that have expired dates such as chemical fluid, paint, powder and so on.

The question is, why is the raw material warehouse to implement the concept and FIFO system? We need to know that there are many things in the company that relate to the basic principles of this warehouse. Below I will try to review why the FIFO method should be implemented properly and properly in the management of warehouse management. Please read the following:

1. FIFO RELATED TO QUALITY MATERIAL (RAW MATERIAL)

A product or material (raw material) received by the warehouse of the supplier, of course, will experience a decrease in quality and qualities during the storage period. The longer the material storage period will decrease and the quality and quality. For example, for example, wood packaging, carton box, sticker, plastic seed and so on. Packaging Wood If stored too long will be damaged, carton box if stored too long will cause the occurrence of discoloration on the Printingnya, the base color of carton box becomes faded, sticker if stored too long too will result in the adhesiveness of glue is reduced especially if the place of storage does not pay attention to the temperature and humidity required.

This is just an example because there are still many other examples of material that will decrease in quality if stored too long in the warehouse. With FIFO the process of movement of the material can be sequentially from the first entry then the next arrival, so onwards that the last material stored in the warehouse is the most recent material entered and received by Warehouse.

2. FIFO RELATED TO COST OF PRODUCTION

Each month the company will calculate how much profit is earned by the company. In the calculation, there are components that are called cost of production. And to get the value of cost of production need a calculation correctly and accurately, it is needed to calculate the material purchase price in the month correctly.

While we know that the price of material in each purchase is not necessarily the same because there could be a hike in the price of the supplier. This is where the importance of material purchased first must be used first. The goal is to have true cost of production value.

3. FIFO DEALS WITH DEADSTOCK

One of the efforts or methods that are applied to avoid the occurrence of dead stock in the warehouse is by the FIFO method. Every lot of material received from the supplier should be recorded correctly how much when the coming and lot number or the way letter in order starting from the one received earliest to the latest.

The method is to spend per a lot of goods before wearing the next lot of goods. The number of goods and the date of arrival of the goods is noted in a logbook every time the goods are expending from within the warehouse. From there we will know if the number of goods that come out is equal to the number of goods that we receive in the lot.

If not same, it means there is a possibility of the remaining stock-slip or can also be another possibility of mutation and errors It is necessary to browse thoroughly. Our job is to find it to see what is the cause of the difference of goods because if not found there is likely to be deadstock in the latter days.

So the conclusion is that at the time of the expenditure or shipment out of the warehouse each item must be recorded at what number, the origin of the letter of the road or Lotnnya. Spend the amount of material from the earliest coming, if it is exhausted then it can be taken from the next lot of arrival, and so on.

4. FIFO RELATED TO COMPLAINT SUPPLIER

If we make the order of the supplier routinely monthly and in the Do several times (partial), it is important to do FIFO at the time of shipment to production. If the delivery of a lot of material to production is randomly done it will be difficult to do a search of its origins in case of problems in production.

If the origin lot of the problematic material is difficult to know it will be difficult to do complaints to the supplier to make repairs or replacements. This is where the importance of FIFO, also in the use of production parties must also apply FIFO. The material received earlier than the warehouse is the material that will be used first in the production.

Picture below is an example of how to placed FIFO label.

FIFO label

With the implementation of a good and true FIFO method, we have also made efforts to prevent the impact and risk that could occur and harm the company as a whole.

So at first glance article on implementing FIFO method in the warehouse. In the next article, I will comment on how to do FIFO tagging on material or goods received by the warehouse along with examples and images.

Hopefully, this article is useful to you, and thank you for your visit to my blog.

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