What Is The LIFO System

The LIFO (Last In – First Out) method is a stock management system governed by the following rule: the last thing in is the first thing out. In other words, the latest batches manufactured or purchased have priority over those that were already there and must be the first to leave the warehouse.  The main objective of the LIFO method is to reduce the distance traveled by goods, either on foot or with forklifts, so operators must load and unload products at the same end of the aisle. 

It should be mentioned that not all storage systems are suitable for implementing LIFO, since it must be possible to operate in this way.  On the other hand, the LIFO method should not be confused with the FIFO (First In – First Out) method, which gives output priority to the first thing that enters the store.

What Products Can Be Managed In The Warehouse Through The LIFO Method

Since the LIFO method moves batches that have later entered the warehouse out of the warehouse, it is often used for the storage of non-perishable products that have long-term expiration dates or change little in value.  It is also ideal in cases of goods in which stock rotation is not decisive.

Benefits Of Using The LIFO Method For Warehouse Management

As we have already mentioned, the LIFO method serves to shorten the distances that the goods must travel in the warehouse; in this way work, and times are optimized. But, in addition, the LIFO method has many advantages, which is why it is one of the most widely used warehouse management systems. These advantages are the following: 

• In the first place, the occupancy ratio is higher by using only one loading aisle.
• Secondly, much less movement is generated in the warehouse, with which there is a greater order in the workspace. 
• In addition, it is possible to better compare income and expenses because the data on the cost of the merchandise that has been sold is closer in time. 
• Finally, in periods of high inflation such as the current one, the first products to leave the warehouse are those with the highest cost, which reduces margins and, therefore, the tax on profits. 

In conclusion, although the LIFO method is not as widely used as the FIFO, it is ideal for managing the stock of certain products, so it is worth knowing about it. 

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What Is Stock Control

Stock or inventory control is part of a company’s logistics and consists of organizing, planning, and controlling the set of merchandise in the warehouse. Therefore, its objective is to guarantee that whenever a client requests a product, we can provide it in the expected time and manner.

But finding this balance between outputs ( sales ) and inputs (orders to suppliers) is not easy. The first is unpredictable and depends exclusively on consumers. Although it depends on us, the second involves regulating the frequency and size of the orders that are made without falling short or going too far.

It would be desirable for the input stream to be similar to the output stream, but this is practically impossible. Therefore, it is necessary to ensure that the level of stocks is sufficient without causing breaks. This management requires an excellent knowledge of the operation of the warehouse and of the business itself. If we can control it correctly, we will be able to offer a quality service to our clients.

Advantages Of Proper Stock Management And Control

Among the many advantages that stock control brings us in a company, the following stand out:

• Money savings: The expense associated with the merchandise space is reduced since we will have less obsolete merchandise that is not sold and a lower dedication of time and human capital. The effectiveness and efficiency in the warehouse will be felt in our economy with business owners insurance.
• Better customer service: A well-functioning warehouse can handle all incoming orders quickly and efficiently. This makes us more competitive and generates a more significant number of sales in the medium term.
• Reduced warehouse costs: If the products are better distributed and the space is optimized and avoid losses or damage, the price will be much lower. 
• More excellent sales: If you offer a quality service to your clients and are always prepared to make the sale, we will be able to sell more.
• Reduction of administrative tasks: Warehouse inventories and other associated tasks are time-consuming. However, proper warehouse management reduces the workload.
• Increased cash flow: We need to sell our product in the shortest time possible to recover the money we invested in your suppliers. If we can balance sales and spending, we will have greater liquidity.

As we have seen, stock control management directly impacts the operation of our company and its profitability. It is essential to consider and put the necessary means, such as the appropriate digital tools, to ensure that everything works correctly. In this way, your management will be much more efficient, reduce errors, and have greater control over your business.

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