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LIFO, FIFO, and Order Within the Workplace

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You might have seen the four letters LIFO or FIFO before. These may sound like obscure industry acronyms, but they actually describe a fundamental aspect of everyday workplace productivity: order.

These two terms are based on the following abbreviations:

  • F for “first” as in the “first in line”
  • I for “in”, meaning “entering” or “going inside”
  • L for “last”, or simply “final”
  • O for “out”, which means to “leave” or “finish”

We’re most familiar with LIFO and FIFO when we’re in environments with lots of other people. The line at the grocery store, for example, is FIFO. Who ever is at the front of the queue is also the person who gets to leave the store earliest. Hence, a grocery store checkout is first-in-first-out.

If you get on board a bus, however, it’s almost always a case of LIFO. If you wait until everyone else has taken their seats and then enter the vehicle, you’ll get a spot near the front. When you reach your destination, you’ll get to exit first. Most public transportation is LIFO: last-in, first-out.

You probably have already noticed the primary difference between LIFO and FIFO. A first-in, first-out system is one that seems much more fair. People who were early get served first; those who were late get served last. A LIFO design, however, can be pretty frustrating. You go to all the trouble to show up early, and people who arrive just in the nick of time get to leave the bus sooner than you. LIFO usually seems unfair.

business process consultants discuss LIFO and FIFO

© Flickr user SalFalko

LIFO and FIFO aren’t just about equity, however. These terms can also shed light on our perspective. A FIFO (first-in, first-out) system is also a LILO (last-in, last-out). A LIFO process, likewise,  is also a FILO (first-in, last-out). If you enjoy an activity, you might prefer to stay longer. The first person to make a reservation at a popular hotel gets their choice of rooms and they can stay as long as they want. But the last person experiences LIFO—they don’t have many choices and are forced to leave probably sooner than they want.

Most of the time these processes are dictated by the organization. If a grocery store tried to do LIFO with their eggs, the majority would go bad before they were sold. That would be wasted inventory and would lead to a decrease in profits. The same can be said for the example with the checkout line. Doing LIFO for that would be chaos. It’s a no-brainer to go with FIFO. But not every situation is as cut and dry. The important thing isn’t necessarily whether you operate in a LIFO or FIFO structure. The important thing is that you’re mindful of why your operation does what it does.

There’s one more important point about LIFO and FIFO: many processes only give an advantage on one side of the experience. A bus is usually LIFO, but the assigned seats on an airplane mean that you will depart by row number, not by the order in which you arrived. In fact, if you’re sitting in a terminal, you might as well wait until the very last second before taking your seat! There’s no advantage to being first. Commercial airliner boarding procedures are neither LIFO or FIFO. They are simply, always, time-consuming and frustrating.

Does your organization have processes that could be characterized as LIFO or FIFO? Or have you experienced systems out in the world that remind you of these terms? Let us know. We’d love to hear from you in the comments or have you contact our small business consultants today!

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