In logistics, what does "FIFO" stand for and its significance?

"FIFO" stands for "First In, First Out," which is a crucial inventory management method primarily used for handling perishable goods and materials. The significance of this approach lies in its ability to minimize waste by ensuring that the oldest items are used or sold first. This is particularly vital in logistics for items such as food products, pharmaceuticals, and any goods that have a limited shelf life. By adhering to the FIFO principle, organizations can effectively manage stock rotation, which helps in reducing spoilage and ensuring that customers receive fresh products. This practice not only supports the efficiency of the supply chain but also meets health and safety standards by preventing the processing or sale of outdated inventory.