What is a significant factor in managing inventory effectively?

Using FIFO (First in-First out) is a crucial inventory management strategy, particularly in contexts like produce management where perishability is a significant concern. This approach ensures that the oldest stock is sold first, thereby minimizing the risk of spoilage and waste. By rotating inventory in this manner, businesses can maintain quality, ensure customer satisfaction, and maximize profitability by reducing losses associated with expired or unsold products.

Implementing FIFO also streamlines inventory tracking and provides an accurate reflection of product turnover and freshness. This systematic handling of inventory can significantly enhance the efficiency of operations and help maintain a responsive supply chain that meets customer demand effectively.