FEFO vs FIFO: batch and expiry tracking for food manufacturers

FEFO, or first expiry, first out, is a stock rotation rule: when you dispatch an item, you take it from the batch that expires soonest. It's the standard for food, beverages, pharmaceuticals, chemicals and anything else with a shelf life, because it keeps stock from expiring on the shelf.

What is the difference between FEFO and FIFO?

A worked example

You receive batch A of 500 kg of paneer on 1 October, expiring 15 October. On 3 October, batch B arrives, 500 kg expiring 10 October, because that supplier ships closer to expiry. On 4 October you dispatch 400 kg.

• FIFO takes 400 kg from batch A. Batch B, which expires first, waits, and you risk writing off up to 500 kg on 10 October.
• FEFO takes 400 kg from batch B. Only 100 kg of B is left to clear by 10 October, and A still has eleven days.

Note: FEFO is about stock, not valuation

FEFO decides which physical batch leaves. It's separate from how you value inventory in the books, where Indian standards allow FIFO or weighted average cost. You can dispatch by FEFO and still value at moving weighted average.

What does batch and expiry tracking need?

1. A batch per receipt. Each goods receipt line becomes a batch with its own quantity and expiry date. Keep one row per receipt, not per supplier lot number, because the same lot can arrive twice.
2. Received and issued quantities per batch. The balance is received minus issued, so it can never drift from the transactions.
3. A batch on every dispatch line. Every delivery note line names the batch it came from. That gives you traceability for a recall.
4. Guard rails. Suggest the FEFO batch, warn when someone overrides it, and refuse to ship more than a batch holds or to edit a receipt below what has already shipped.

What does FSSAI require on the label?

Under the FSS (Labelling and Display) Regulations, 2020, pre-packaged food must carry its date of manufacture or packing and a best-before or use-by date. "Best before" marks the end of the period during which the food stays fully marketable and keeps its stated qualities under the stated storage conditions. Record the date printed on the pack as the batch's expiry when you receive it, and FEFO follows from it.

Common mistakes

• Tracking expiry in a spreadsheet beside the stock system, so the two drift apart.
• Recording batches at receipt but not at dispatch, which breaks traceability.
• Letting pickers choose the batch by convenience, with no suggestion or warning.
• Merging receipts of the same lot number, which loses the separate quantities.

How Dravyaa handles FEFO

With batch tracking on, every direct GRN line in Dravyaa becomes a batch with its expiry date and the party it came from. On a goods delivery note, the batch picker pre-selects the batch that expires first, warns if you choose a batch that came from a different party, and refuses to ship more than a batch holds. The inventory board shows stock by batch and expiry. See the food and beverage page or the cold storage case study.