LIFO vs. FIFO Warehouse Storage – The Pros & Cons

The type of storage system you choose for your warehouse can have a far reaching impact, affecting storage capacity, inventory management, and productivity. Choosing the right type of storage system for your warehouse, whether LIFO or FIFO, depends on the types of products you store as well as your warehouse processes.

Macrack offers a wide range of warehouse storage solutions, with both LIFO and FIFO racking systems available. As our pallet racking is manufactured locally in Australia, we are able to produce customised racking systems, designed for your warehouse and inventory, with short lead times. Call us today on 1800 048 821 for expert advice on choosing the right storage system for your needs and a free quote.

LIFO vs. FIFO Warehouse Storage - The Pros & Cons

So LIFO vs. FIFO warehouse storage what are the pros & cons?

What Is LIFO Storage?

LIFO or “last in, first out” storage, refers to a system where the last pallet to be loaded into the rack is also the first to be picked. This means that any pallets loaded into a LIFO pallet racking system will stay there until there is no other load in front of them.

Due to the nature of LIFO storage systems, they are ideally used to store products which will not expire or lose value overtime, and can also be useful for storing bulk amounts of the same products.

What Is FIFO Storage?

FIFO or “first in, first out” storage, is a storage system where products are picked in order of arrival. This means that the pallet that has been stored in the rack for the longest period of time will be the first to be picked.

This makes FIFO pallet racking ideal for the storage of perishable goods and other products with a limited shelf life, negating the need for manual product rotation within the racking system.

The Advantages Of LIFO Storage

Increase Productivity

Using a high density LIFO storage system in your warehouse can help to increase productivity. This is because pallets can be loaded and unloaded from the same aisle, rather than having to travel to the back of the storage system to load pallets, and then to the front to retrieve them.

Additionally, a well organised LIFO system, such as a drive in racking system, can be set up for delivery and dispatch storage with products stored in ‘daily runs’ or ‘intake’ to streamline your warehouse processes and maximise productivity.

Increase Storage Capacity

LIFO pallet racking systems are also ideal for increasing storage capacity in a warehouse. This is because many high density LIFO racking systems require only one aisle for loading and unloading products. This means that the majority of floor space available can be used as product storage, while the amount of space needed for aisles is minimised.

Additionally, Macrack manufactures quality LIFO pallet racking systems that can be customised to maximise the storage capacity of any warehouse. In fact, many of our pallet racking systems can be customised in height, length, and depth to suit your warehouse and inventory.

More Accurate Revenue Tracking

Finally, LIFO storage provides the added benefit of more accurate revenue tracking, particularly in warehouses that manufacture their own product. This is because, if the cost of manufacturing increases, your most recent costs will be matched against your current revenue, for a more reliable and quality representation of your earnings.

This also means that if there is a drop in the market price of your products, your business will be less impacted as you are selling the products that cost the most to make first. Conversely, in a FIFO storage system, old costs are matched against current revenues, resulting in an underestimation of production costs and overestimation of profits, for less accurate revenue tracking.

Common LIFO Storage Systems

Some commonly used LIFO storage systems include:

The Advantages Of FIFO Storage

The Advantages Of FIFO Storage

Reduce Labour Hours & Shrinkage

One of the key advantages of a FIFO pallet racking system is that it facilitates automated stock rotation. This will help to reduce costs in your warehouse in two ways: firstly, no manual product rotation is required, which will help to increase productivity while reducing labour hours.

Secondly, products stored in a FIFO racking system are less likely to expire or reach the end of their useful lifecycle while in storage as the oldest pallets in the rack are picked first. This is particularly useful in warehouses that deal in time sensitive inventories such as foods, beverages, pharmaceuticals, and even apparel. The automated product rotation of a FIFO storage system means that shrinkage as a result of out of date stock will be significantly reduced without having to increase labour hours for manual product rotation, increasing your bottom line.

Maximise Warehouse Space

The most commonly used FIFO pallet racking system, pallet flow racking, can also be used to maximise storage space in your warehouse. This is because, rather than having rows and rows of a given racking system, pallet flow racking requires only two aisles, one at the back for loading and one at the front for unloading. This means that the majority of your floor space can be used for pallet storage, rather than having to set aside more aisle space.

Additionally, as a FIFO racking system provides automated product rotation, you will not need to leave room for products to be manually rotated in the aisles, leaving more room for product storage.

Improve Customer Experience

Utilising a FIFO storage system can also help to provide an improved customer experience, particularly if you’re supplying a warehouse that also uses a FIFO system. This is because using the oldest products in the racking system first ensures that products shipped remain consistent.

A FIFO system also reduces the number of goods that may be sent past their expiration date or after their useful life cycle due to incorrect manual product rotation.

Warranty Guarantee

In a warehouse where the goods stored are covered by a warranty provided by the manufacturer, a FIFO storage system can be invaluable. As the products stored in your FIFO racking system will be shipped in order of arrival to your warehouse, you will be ensuring that the warranty on each product is still valid long after the customer receives it.

Conversely, in a LIFO storage system, pallets may sit at the back of the racking system for an extended period of time. As a result, by the time the oldest pallets are distributed, the warranty on each product will be much shorter or potentially already expired.

FIFO Storage Systems

The most popularly used FIFO pallet racking system is pallet flow racking.

Pallet Flow Racking Brisbane

Quality Pallet Racking Australia Wide

Macrack is Australia’s leading pallet racking manufacturer, providing Australian businesses with quality made warehouse storage solutions for over 35 years. We offer a wide range of LIFO and FIFO storage systems including drive in racking, push back racking, pallet flow racking, and more!

Plus, we are so confident in the quality and durability of our products that each Macrack pallet racking system comes with its own lifetime guarantee. Call us today on 1800 048 821 for a free quote and warehouse design.