Stock rotation can minimise waste, optimise storage space and ensure you deliver products to customers as quickly as possible. Several methods exist, but which one is best for your retail business?
In this article, you’ll learn the different stock rotation methods, why you need to use one, and how to implement it.
What is stock rotation?
Stock rotation is the practice of organising your inventory to prioritise the sale of specific items over others. In most cases, this will be selling older stock before newer stock in case it spoils or becomes obsolete.
Stock rotation is crucial for any retailer handling perishable items and brands with fast-moving product cycles like fashion. In both cases, you want to sell old stock before new stock. Rotating stock also keeps your inventory fresh and up-to-date, reducing the likelihood of losses from unsold products.
Why rotate stock?
Effective stock rotation provides several benefits for businesses, both financially and operationally. Here’s why it’s essential.
Minimise waste
You can use stock rotation to ensure old products are sold first, preventing them from going to waste. This is essential for perishable items, but you can also use it to facilitate a smooth transition when rebranding your product line or changing your recipe or ingredients.
If I change the branding on my products, for example, I’ll want to sell every product in the old brand colours before releasing the new branding to avoid confusing customers.
Optimise storage space
Efficient stock rotation prevents the accumulation of old inventory and helps your warehouse run at maximum capacity. You’ll free up space for new stock or hello to reduce overheads by cutting down on the space you need.
Improve cash flow
Good inventory management improves the flow of goods, minimising delays and enhancing cash flow. It also ensures that fewer products go to waste, driving profits up.
Boost customer satisfaction
When selling perishable items, stock rotation ensures customers get fresh, high-quality products every time. In other cases, it ensures they receive their goods quickly thanks to a lack of delays.
3 stock rotation methods
There are several stock rotation methods you can use, including First In, First Out (FIFO), Last In, First Out (LIFO), and First Expired, First Out (FEFO). Which you use will depend on the products you sell and the nature of your business.
1. FIFO (First n, First Out)
First in, first out is the most common stock rotation method — and a favourite for companies dealing in perishable goods. This method means the oldest stock is sold first, which reduces waste.
2. LIFO (Last In, First Out)
The last in first out method is the opposite of FIFO. The newest goods are sold first. It helps you optimise for fast-moving, high-demand items you frequently replenish, but it’s only suitable for industries with no expiration concerns.
3. FEFO (First Expired, First Out)
First expired, first out is an expiration-focused stock rotation method, in which items are sold in priority of their expiration date rather than the other in which you receive them. It’s used by businesses that sell goods with very strict expiration dates like grocery products or pharmaceuticals.
How to implement stock rotation
Implementing a stock rotation strategy requires careful planning, training and tracking. Here are the steps you need to follow:
- Choose the right rotation method: Start by selecting the best rotation method for your business and inventory. If you can’t decide, FIFO is a safe choice.
- Organise your inventory: Next, arrange products to facilitate your chosen rotation method. You’ll want to store newer products behind older or expiring products if using FIFO or FEFO. If you’re using LIFO, then just add new products in front of old ones.
- Implement tracking technology: Use inventory management software or a warehouse management system (WMS) to track expiration dates, stock levels, and stock movement. Real-time tracking provides increased visibility and enables faster decision-making to support your stock rotation strategy.
- Train your staff: Ensure your warehouse staff understand the importance of stock rotation and are handling inventory in accordance with your chosen method. Arrange regular training sessions to minimise mistakes.
- Set up regular audits: Schedule regular audits to check stock levels, expiration dates, and the general organisation of your warehouse. These audits will identify bottlenecks and inefficiencies in the stock rotation process, allowing you to make necessary adjustments.
- Monitor and adjust: Review the impact of your stock rotation method by tracking metrics like inventory turnover and waste. You can reevaluate stock levels if products are expiring or warehouse space is running out.
Stock rotation best practices
An effective stock rotation process doesn’t happen by chance. Follow these best practices to improve your efforts and give yourself the best chance of success:
- Label products clearly. Use labels to mark expiration and arrival dates. This simplifies the rotation process and allows for quick identification of items that need priority handling.
- Automate where possible. Invest in technology to automate aspects of stock rotation, such as alerts for expiring stock or inventory movement. Automated systems reduce human error and improve efficiency.
- Optimise shelf space: Arrange stock in a way that optimises shelf space, positioning high-priority or fast-moving products in easily accessible locations to streamline the picking process.
Improve your delivery service with Pro Carrier
Stock rotation is essential for any retailer wanting to maximise efficiency and minimise waste. Whether you’re selling perishable goods like food and medicine or consumer products like clothing and electronics, rotating stock can improve cash flow, maintain quality and keep customers happy.
Whatever stock rotation method you use, ensure your customers receive their products in time by working with a delivery expert like Pro Carrier. Our dedicated eCommerce service makes it easy for retailers to deliver at home and across borders.
Our custom-built shipping platform integrates with every eCommerce solution, allowing you to monitor sales, track delivery and edit shipments from a single dashboard. We also have a wide range of integrated tools and calculators that handle many other parts of the shipping process.
Find out more by speaking to one of our experts today.