Definition
A capacity-limited lane that guarantees whatever entered first is handled first and forbids adding more once it is full; it is both a queue rule and a way to connect two operations without a supermarket.
In detail
The point of FIFO is not the order but the cap: when the lane is full the upstream operation must stop, and that stop is the signal that exposes the problem. A FIFO without a cap is just a long queue, and no amount of order discipline will keep WIP from piling up. It sits between continuous flow and a supermarket — when operations cannot be linked directly and the product mix is too wide, or too customized, to justify a supermarket, a FIFO lane costs the least inventory (for example custom parts, short shelf life, or expensive low-frequency parts). It applies to transactional flows too: handling mail, applications and work orders first in first out removes the long tail of waiting caused by queue jumping.
Example in practice
A chute holding ten pieces sits between two operations; when the eleventh has nowhere to go the upstream operation must stop and light the andon. After it is installed, parts are no longer jumped in the queue and the longest wait falls from two days to half a day.