FEFO Explained: First Expiry, First Out for Pharmacies

If you have worked in any shop, you know FIFO: first in, first out. The stock that arrived first is the stock you sell first. It is the right rule for almost everything, and the wrong rule for a pharmacy.

Medicines expire, and the delivery that arrived first is not always the one that expires first. A distributor can send you a batch with nine months left today and a batch with four months left next week. Sell by arrival date and the four-month batch waits at the back. Sell by expiry date and it goes first. That second rule is FEFO, first expiry, first out, and it is the rotation rule every pharmacy and drug shop should run on.

What FEFO means in practice

FEFO says: of all the stock you hold of a product, sell the batch that expires soonest, and never sell a batch that has expired.

It sounds obvious, and the principle is. The practice depends on one thing: knowing which batch is which. If your stock is “40 boxes of amoxicillin,” FEFO is impossible, because there is nothing to choose between. If your stock is “12 boxes of batch A, expiring March, and 28 of batch B, expiring November,” FEFO is a simple rule: sell batch A.

So FEFO is really two habits. Record the batch and expiry date of everything you receive. Then, at every sale, take from the earliest-expiring batch.

Why it matters more than it looks

Pharmacies lose money to expiry quietly, a box at a time, and most of the loss is not from products nobody wanted. It is from products that sold perfectly well, while the older batch sat behind the newer one until it was too late. That is a rotation failure, not a demand failure, and FEFO is the fix.

There is a compliance side too. An expired product on the shelf is a finding at an NDA inspection whether or not it was sold. FEFO keeps expired stock off the shelf as a matter of routine, because the oldest batch is always the one leaving. Our compliance guide covers what else an inspection looks at.

How FEFO fails by hand

Most pharmacies try to run FEFO on the shelf. New stock goes at the back, old stock at the front, and dispensers take from the front. It works until it does not, and it stops working in predictable ways:

The rushed delivery. A delivery arrives at the busy hour, boxes get put wherever there is space, and the new batch ends up in front.

The mixed batch. Two batches of the same product with similar packaging. Nobody reads the small print at the counter, and the newer one goes first.

The relief staff. A new or part-time dispenser who was never told about the front-and-back rule.

The short-dated delivery. The distributor sends a batch with less time left than what is already on the shelf. Putting it at the back, as the rule says, is exactly wrong.

Each failure is small and human, and none of them is anyone’s fault. The rule fails because it lives in people’s memory and in the physical order of boxes, and both are fragile.

Making FEFO automatic

The fix is to move the rule out of the shelf and into the till. When every sale is recorded against a specific batch, the software can pick the batch, and it picks the earliest-expiring one every time.

For the dispenser nothing changes. Scan the product, sell it. Behind the screen the sale is taken from batch A rather than batch B, the stock on hand for batch A goes down, and the printed receipt is the same as ever. The shelf order stops mattering, the relief staff need no briefing, and the short-dated delivery goes first because the software looked at the date, not at when the boxes arrived.

The other half of the rule, never sell an expired batch, becomes a hard stop rather than a check. The till does not offer an expired batch at all. It cannot be sold by accident on a busy afternoon, because it is not there to pick.

This is how the till works in SmartPharm. Stock is held by batch and expiry from receiving; every sale takes from the earliest-expiring batch; an expired batch can never be sold; and an expiry report lists what is due in the next 90 days with its value at cost, so the batches FEFO cannot save in time are the ones you act on early.

FEFO and the expiry report are partners

FEFO alone does not stop every loss. If you hold more of a product than you can sell before it expires, selling the oldest first only delays the write-off. The partner to FEFO is looking ahead: a list of what expires in the next 90 days, so you can discount, transfer or return the stock while there is still time. We describe that report in how smart pharmacies track expiry dates automatically.

Run both, and expiry losses fall to the small residue of genuinely slow products, which is where your reordering should be looking.

A checklist to adopt FEFO this month

You can start FEFO without new software, and improve it with software. Either way, the steps are the same:

1. Receive by batch. From the next delivery, record the batch number and expiry of every product line. If the invoice lists them, copy them; if not, read them off the box once.
2. Label the shelf. Until the till does the choosing, mark the earliest-expiring batch with a coloured sticker so anyone can see what goes first.
3. Pull expired stock weekly. Walk the shelves once a week with the expiry list and remove anything past its date. Record what you removed and its cost.
4. Review the 90-day list. Once a week, look at what is coming up and decide: promote, transfer, return or reorder less.
5. Move the rule into the till. When you are ready, use software that sells by batch, so steps two and three mostly disappear.

FEFO is not complicated. It is a single rule that is easy to state and hard to keep by hand, and the pharmacies that keep it are the ones that stopped relying on hands. Record the batch at the door, let the till choose it at the counter, and the oldest stock leaves first, every time.