First In First Out (FIFO)

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There are many different inventory management techniques, and one of the most common is First In First Out (FIFO). FIFO is a system that dictates that you use the oldest items in stock first. Most businesses prefer this system because it minimizes the waste of perishable goods. Let’s take a closer look at what FIFO is and how you can implement it, particularly in the lube room.

What is the First In First Out Inventory Method?

The goal of first in first out is to ensure that you use the oldest items first and that you replace them with new items as they become available. This helps minimize waste and ensure that products are always fresh. Though there may be some exceptions, most businesses adhere strictly to the FIFO principle when managing their inventory.

Why is FIFO Crucial to Lubrication Management?

In most cases, the lube room of a facility has at least one out-of-date lubricant. Like many other things, lubricants have an expiration date. The manufacturer’s information should be used as a starting point when determining a lubricant’s shelf life. It’s crucial to keep in mind that the manufacturer doesn’t set this date based on your lubricant storage practices. When they decide on a lubricant’s shelf life, they do so with the assumption that you store the lubricant according to best practices, keeping it in a dry, clean, and temperature-controlled environment.

First In First Out Starts with Lubricant Reception

One of the essential elements of lubricant reception is inventory management. Setting the standard for lubricant handling procedures across your facility starts with the foundation in receiving. When it comes to lubricant inventory management, you must consider various factors, including:

  • Shelf Life
  • Minimum and Maximum Levels
  • First In First Out Policies
  • Reception Dating
  • Quality Assurance and Control
  • Filtering

You lay the basis for your first in first out procedure with a uniform labeling system beginning at lubricant delivery. Furthermore, this is an opportunity to audit your lubricant supplier. Checking for issues before the lubricants reach your equipment or lube room allows you to ensure only lubricants meeting your standards go into operation. Incoming lubricants should be tested and handled according to standardized processes. Also, you should include documentation describing any packing damage or other issues with incoming lubricants, together with the batch date and the date of receipt.

Benefits of FIFO

A lubricant’s performance can be affected if you use it after the specified shelf life. Because not all lubricants have the same shelf life, it is crucial to know this detail. If you are unsure, get in touch with your lubricant supplier. Once you know the expiration date, you can employ FIFO to ensure that you use older lubricants before more recently purchased lubricants. Using first in first out for your inventory management can help ease shelf-life difficulties. This can result in lower maintenance, downtime, and lubricant inventory costs.

How to Implement First In First Out

Understanding the first in first out principle is important and quite simple. However, implementation means you also need to have a convenient storage plan that supports FIFO. For example, if your technicians have to move several oil drums to get the oldest one out first, they will waste a lot of time and may not adhere to the FIFO policy. Additionally, the right labeling and tagging procedure will help ensure that first in first out procedures are easy to follow.

Track Inventory Management Metrics

Tracking inventory management metrics will help determine whether FIFO and other inventory methods are functioning correctly. It’s crucial to make sure that you keep both the minimum and maximum quantities of lubricants on hand. However, you don’t want to over-purchase either. If you do, you will end up with a stockpile of lubricants that may expire before you can use them. But, if there aren’t enough lubricants stored and you have to constantly order lubricants on demand and wait for them to arrive, that’s also a problem.

You can monitor this by comparing the amount of a specific lubricant being stored to the amount being poured into machines each month. The maximum amount held may need to be changed if only 200 gallons go into equipment each month while 1,000 gallons are being stored. The length of time it takes the supplier to deliver lubricants or whether a high-volume machine requires a change in lubricant during an impending shutdown are a few additional factors to take into account when deciding how much lubricant to store.

An Easy-to-Apply Inventory Management Best Practice

While your lube room space determines what containers and volumes you can store, you must do your best to arrange it for FIFO. The best way to store lubricants is horizontally on suitable storage racks, which allows the containers to be rotated and used on a first in first out basis. Any anomalies in stock rotation for inventory levels should be noted during routine audits of the lube room and the lubricants that are stored there. The data will then allow you to pinpoint areas that need improvement.

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