What is First In, Still Here?

The first in, still here term refers to very slow-moving inventory. The acronym (FISH) is a take-off on the FIFO and LIFO acronyms that describe inventory cost layering systems. When a business has a large amount of FISH inventory, this means there is a high risk of obsolete inventory that must be written off. A large amount of FISH also indicates that there is an excessive working capital investment in inventory.

Causes of FISH Inventory

FISH inventory can have many causes, including the following:

Unexpectedly low sales. For example, a business builds up its stocks substantially in advance of the Christmas selling season, and then finds that customers are not purchasing at the expected levels.
Excessive inventory purchases. This is a common occurrence, where the purchasing staff takes advantage of a volume purchase deal offered by a supplier, and ends up purchasing more inventory than the company can reasonably expect to use in the near term.
Poor product transitions. A business can end up with excess inventory when it transitions to the production of a new product without completely using up the components that it had in stock for the prior product. These excess parts may remain in inventory forever.

How to Minimize FISH Inventory

The best way to minimize FISH inventory is to continually examine on-hand inventory balances to determine whether any items are unlikely to be sold in the near term. If so, the purchasing department should sell these items off for whatever price can be obtained. This may result in the short-term recognition of a loss, but also converts the inventory into cash while it still has some value.