Inventory Systems

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Inventory Systems

The "First In, First Out" or FIFO approach is considered better than the "Last In, First Out" or LIFO method for typical sequential business process management tasks as this approach is seen to be more disciplined and organized. Meanwhile, the LIFO strategy appears to yield better results if used in the sales follow-up process as newer client leads are considered to have more conversion potential compared to older client call tasks.


In order to address the request, we first checked the parameters of the request with regard to the application of the "First In, First Out" or FIFO and "Last In, First Out" or LIFO inventory valuation methods. Based on the specified criteria, the LIFO and FIFO applications required pertain more to business process management task scheduling rather than the typical application of these valuation methods in retail, inventory, and accounting. We then searched for directly available information on which inventory valuation methods as related to process management is considered the best, and the reasons why. We searched for this information in relevant industry sources such as Appian, Integrify, Search CIO, Management Mania, and similar sites; business publications such as Forbes, Business Insider, and others; press releases such as those found in Cision, Business Wire, and similar sites; financial sites such as Financial Times, The Wall Street Journal, and others; consulting sites such as PWC, Deloitte, and other relevant sources. Based on this search approach, we were not able to find reports or articles that directly state the advantage of FIFO or LIFO over one another as related to process management. What we found are general best practices on process management and articles that detail the advantages of LIFO over FIFO, and vice versa, as applied to retail, accounting, and inventory valuations processes.
Given the limited information on LIFO and FIFO applications in the process management area, we then looked for the various business process management tools and solutions available. We hoped to find any techniques that are related to LIFO and FIFO on how the tasks within these processes are scheduled. We then found several solutions from solutions review and compilations sites such as Capterra, G2Crowd, Finances Online, and other sources. We then visited the websites of the top process management solutions to determine if they have outlined the best practices that are being used in process management scheduling. However, there was no specific mention of the application of the FIFO or LIFO strategies in their process scheduling best practices.
We then tried to look for case studies or examples of companies that are using either LIFO or FIFO, or some related techniques in the sources mentioned above and in similar sites. We then found some articles that describe the strategies that some companies used to manage their task workflows. Based on this limited information, we have pieced together the strategies that they have outlined as related to the FIFO and LIFO process management task scheduling techniques to determine the best method.


"First In, First Out" or FIFO and "Last In, First Out" or LIFO typically refer to the cost layering techniques that are used to assess the cost of goods sold value and ending inventory. In the case of FIFO, this method normally pertains to the process where the products that are first added to the inventory should be the first ones to be sold. As for LIFO, this method involves selling first the goods that are the most recent addition to the inventory.

However, these methods can also be applied in process management as ways to schedule, prioritize, and complete the work. As an example in a machine shop setting, FIFO and LIFO can be applied to the order of when workloads tasks enter and leave the shop. However, due to several unforeseen factors, many machine shops or service shops typically tend to use LIFO more as they try to complete the newer tasks first before tackling the older ones.
LIFO in process task management work usually gets applied because the customer of the task will strongly insist on its immediate completion. When this happens, the person doing this task will have to put down first the older tasks that he or she is currently handling. While this is acceptable in certain cases, LIFO is not considered as a good practice due to prioritization concerns.

FIFO is considered to be the better method in process management task scheduling. Putting all incoming work at the back of the queue will enable those who manage the entire process to better forecast the completion dates. At the same time, this can help provide time allowances to account for unexpected issues. The right goal is to align a reasonable completion date for most of the tasks in the process and completing them as scheduled.
As per the standard project or process scheduling process, it is important to align reasonable completion dates for the tasks involved in a process chain. This will ensure the right resource and time allocation and prioritization. If there will be new tasks that will suddenly jump into the line, it will be better to complete them once the existing scheduled tasks are done.
Organizing processes inside companies such as in machine service businesses to implement the FIFO method can also help in process workflow visualization. This can also strengthen the implementation of this method among those who will perform the tasks. This way, the right priorities can be followed for all the tasks involved even with strong interference.
The LIFO method is not a popular one in the process management domain as it signifies a lack of organization and prioritization for the tasks that were already scheduled beforehand. In reality though, LIFO still happens within processes due to several common circumstances. One is when a customer of a new task is highly persistent and demanding. In these times when instant gratification and fast results rule, people are not fully aware of the background and the circumstances that go into the task scheduling process. These customers will typically employ all means necessary to get what they want to be delivered when they need it. Businesses typically give in to these customers just to get them off their backs. However, if the companies will keep on accommodating every request of out-of-line customers, this will just encourage them to keep this behavior.
LIFO also happens if the assigned resources are not motivated or disciplined enough to complete the scheduled tasks. In order to keep themselves busy or to avoid doing difficult pre-scheduled tasks, these resources typically start with relatively more fun or enticing tasks. In doing so, their time becomes allotted in non-priority work. This will then post a risk to the entire schedule as the required time allocation was not spent on the right tasks to prioritize.
Businesses also go for LIFO in those times when a job promises quick and convenient money. When this happens, the time allotted for the previously scheduled tasks will be taken away by the new tasks. This will then have a ripple effect throughout the process management schedule as dependent tasks might be impacted.
Process management processes are usually considered as assembly lines that need to follow the FIFO process and move within the committed schedule. Typically, each task in the chain needs to be done first before accomplishing the next one in order to maintain an organized schedule. There are challenges also that might revert businesses to the LIFO method. However, a disciplined approach to scheduling management might address this and keep the company to stick to the FIFO way.


For the Maids by Trade cleaning services company, they also use the FIFO method to perform their housecleaning process. For the company, they also seek to complete first the tasks that they already started doing without interference from newer tasks. Through the method, they were able to avoid time wastage that usually happens if there will be multi-tasking or frequent shifting between the old and the new tasks.


As for LIFO, there are also some types of companies that rely on the latest tasks to be done first. Based on the experience of a real estate company client of Twilio, they often perform newer client follow-up call tasks as they follow their sales process. The reason why they sometimes use the LIFO method is due to the nature of their sales calls. For them, sales leads are typically the most promising at the moment that they came about. Older sales leads tend to be "cold trails" that might have lower customer conversion rates.