A backorder is a customer order or order line accepted for an item that is temporarily unavailable for immediate fulfillment. The seller commits to fulfill it when inventory becomes available, subject to the stated timing, cancellation and allocation rules.
What causes backorders?
- Demand exceeding forecast or safety stock
- Supplier or production delays
- Inbound freight or customs disruption
- Inventory-record errors
- Quality holds or allocation decisions
How is backorder rate calculated?
A useful order-line measure is backordered lines ÷ total order lines × 100. If 120 of 4,000 order lines are backordered, the illustrative rate is 120 ÷ 4,000 × 100 = 3%. The denominator and measurement point must remain consistent.
Backorder vs. stockout
A stockout describes unavailable inventory. A backorder exists when the seller accepts demand despite that unavailability. A seller can show an item as out of stock without accepting backorders.
What should the operating record show?
Record the affected SKU and quantity, promised or estimated date, supply source, customer communication, allocation priority and cancellation rights. Update the commitment when supply changes rather than leaving an expired estimate in place.
