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If you’ve spent any time with people in the vending business, you’ve likely heard them use the term FIFO (fee-foh) a lot. FIFO is an acronym for First to arrive and first out And the reason you hear it being used so often is that understanding and correctly using the FIFO principle is crucial to profitability in the vending business. But the correct method of using FIFO and the importance is often misunderstood. With that in mind, we will clearly define how FIFO should be used and why it is important.
What is FIFO?
In the broadest sense, FIFO means making sure the oldest still fresh product is the first product delivered when someone uses your vending machines. In practice, it’s not as simple as always to refuel from behind, but that’s a good place to start. When restocking your machine, add the new product to sell after the product already in the machine. In a standard cold drink machine, it is very easy to add the new drinks in the column on top of the drinks already in the machine. On a glass-fronted snack machine, add the new product deeper into the spiral behind the existing product. The methods may change for different machines, but the basic principle remains. Usually this is all you need to consider, but there are exceptions.
- Sometimes the product in a less active machine will be older than the product left in an active machine. Keep track of the age of all products, and as the expiration date approaches, you may have to move the product from one machine to another that is getting more customers. It is better to take a little more time to move the product than to end up discarding the expired product.
- FIFO starts as soon as you buy your product. Which means you also need to rotate the product you are storing before going out on your route to restock the machines. When charging your vehicle make sure you are taking the product that has been consumed the longest. Otherwise, you will end up throwing away a box of product that has been in your warehouse even though you’ve sold multiple boxes of that product since you bought that box.
Why is FIFO important?
- Proper product rotation reduces the amount of product you have to dispose of, saving you money.
- Proper rotation of your product reduces the amount of rebates you have to give to customers who receive outdated products from your machines. Refunds cost money and time.
- Proper product rotation reduces the number of dissatisfied customers. Even if they don’t ask for a refund, they may stop using your machine. If you consider that some people will be using the same vending machines multiple times a week, the potential loss of income over time can be enormous.
The goal is to always deliver fresh produce to keep customers and limit losses due to food spoilage. Using FIFO correctly is the safest method to achieve that goal.