How to cut expiry losses: FEFO and batch-wise stock for distributors

Short answer: to cut expiry losses, dispatch first-expiry-first-out (FEFO), keep stock by batch with its expiry date, check near-expiry stock every week, buy from real orders minus stock in hand, and record every write-off. Losses happen when new stock is picked first and expiry is noticed only when a shop returns goods.

Key takeaways

• FEFO sends out what expires first; FIFO sends out what arrived first. For dated goods, FEFO is the safer rule.
• Stock kept as one total per item hides old batches; keep a line per batch.
• A weekly near-expiry list at 14, 7 and 3 days gives time to sell before goods are wasted.
• Bagdor keeps stock batch by batch, dispatches the earliest-expiring batch first and lists near-expiry batches.

What is the difference between FIFO and FEFO?

FIFO (first in, first out) sends out the stock that arrived first. FEFO (first expiry, first out) sends out the stock that expires first. Most of the time they are the same. They differ when a later delivery carries an earlier expiry date, for example when a company sends older stock in a fresh lot. For anything with a printed expiry date, FEFO is the rule that actually protects you.

Why does stock expire in the godown?

• New stock goes in front. When a fresh lot arrives, it is unloaded wherever there is space, usually in front. The picker takes what is nearest.
• Expiry dates are small print. Nobody reads the date on every carton during a busy dispatch.
• Batches mix. Two lots of the same item with different dates sit on the same rack, and the stock register shows only one total.
• Buying by habit. “Order the same as last week” ignores what is already in the godown and what shops actually ordered.
• Extra stock to meet a target. When a company pushes more stock than your shops can sell in time, the extra ages on your racks.
• Returns arrive late. A shop returns near-expiry goods, and that is the first time anyone notices the batch was old.
• Write-offs leave no trace. Expired or damaged goods are thrown away without an entry, so the stock count never matches and the same mistake repeats.

Short-life goods such as milk, curd and bread punish mistakes within days. Beverages and packaged FMCG last longer, which makes the problem quieter but not smaller: a forgotten carton at the back of a rack can expire unnoticed.

What do expiry losses cost a distributor?

• Straight losses. Expired stock is purchase money written off.
• Returns and replacements. Shops send back near-expiry goods and expect fresh ones, often on credit notes you have to absorb or claim.
• Trust. A shop that receives short-dated stock once starts checking every delivery, and complains more often.
• Space and cash tied up. Slow, ageing stock occupies racks and money you need for stock that sells.

How to cut expiry losses, even without software

The routine in seven steps:

1. Rack stock so that new lots go behind or below old ones.
2. Write the expiry date in big letters on every lot.
3. Keep stock by batch, not one total per item.
4. Check near-expiry stock every week at 14, 7 and 3 days.
5. Buy from orders minus stock in hand, not from habit.
6. Record every write-off with batch and reason.
7. Check returns by batch and by shop.

1. Rack for FEFO

Arrange racks so that new stock goes behind or below the old stock, and pickers always take from the front. If space allows, load from the back and pick from the front.

2. Write the expiry date big

When a lot arrives, write its expiry date in thick marker on the carton side or a card on the pallet. A date you can read from two metres away gets used.

3. Keep stock by batch

In your stock register or sheet, keep a separate line for each batch with its expiry date and quantity, not one total per item.

4. A weekly near-expiry check

Once a week, list every batch by days left to expiry and act on it:

The right windows depend on the product: a few days matter for milk and bread, while for longer-life goods the 14-day list gives you time to act.

5. Buy from orders, not from habit

Before placing a purchase order, work it out: what shops have ordered or usually order, minus what you already hold in sellable batches, plus a small buffer you decide. Write the numbers down so the next order can be checked against them.

6. Record every write-off

Keep a register: date, item, batch, quantity and reason (expired, damaged, short, returned to vendor). Review it monthly. The items that keep appearing tell you where you over-buy.

7. Check returns by batch and by shop

When shops return goods, note the batch. If the same shop keeps returning near-expiry stock, send it smaller quantities more often.

How does Bagdor reduce expiry losses?

Bagdor is distributor management software (DMS) from Lucknow, India, for distributors of dairy, FMCG, bakery, beverages and more. It comes as four apps included in one price: the Distributor Panel (web), the Retailer App with WhatsApp ordering, the Driver App and Bagdor Sales. For stock and expiry, the Distributor Panel gives you:

• Batches with expiry dates. Goods received are entered batch by batch with their expiry dates.
• First expiry, first out. Dispatch takes the batch that expires first, so old stock leaves before new.
• Warnings at 14, 7 and 3 days. Near-expiry lists show which batches run out soon, while there is still time to sell them.
• Low stock and the buy list. A low-stock list, and a purchase list worked out from tomorrow’s orders and the stock you already hold.
• Write-offs on record. Stock adjustments for damage, expiry, shortage and vendor returns keep the stock ledger true, and stock checks catch the rest.
• Returns with a credit note. The driver records doorstep returns; the office posts them with a credit note and decides whether the stock goes back on the shelf.

What it does not do: Bagdor has no schemes or discounts today, so clearing near-expiry stock with an offer is still done your way, and the purchase list is built from orders and stock rather than a forecast. All four apps are included in one price.

See batches, FEFO and near-expiry lists with your own products: book a free demo, or read more on expiry management in Bagdor and Bagdor for bakery distributors. Related in this series: how to stop missing WhatsApp orders from retailers.