backorder

Backorder: An unfilled customer order. A backorder is demand (immediate or past due) against an item whose current stock level is insufficient to satisfy demand.
This calculation can vary. Some companies count items that are not confirmed (not allocated) and past the Requested Delivery Date (or Requested Ship Date). Other companies may also count those items with stock confirmed, but past due

Other considerations:
1. Partials - what if a customer orders 100 pieces of an item. You currently have 90 pieces. Should the 100 pieces be considered a backorder or should the backorder be considered 10 pieces (100 ordered - 90 available)? The answer is it depends. If the customer accepts a shipment of a partial quantity, then the 90 pieces will ship out and the backorder is 10 pieces. If the customer only accepts only full quantities, then the backorder is 100 pieces. This is because, in the customers eyes, they ordered 100, but you did not ship them anything.
2. Multi Line Orders - what is a customer places an order for 3 different items and they request you hold the order until you can ship it completely. You have inventory to fill the first two items, but not the third. Are all 3 items then on backorder? While there is no specific standard, generally you would only consider the third item as on backorder.

Backorders may be expressed in "pieces", "SKU's" or in "value". Backorder calculations are often tracked at a variety of levels. Example: Customer, Division, Total Company

Aged Backorder: Reports on backorders in past-due time buckets based on the Requested Delivery Date/Requested Ship Date.

Our goal is to guide companies that are looking to optimize their Supply Chain. Originally, we intended on answering questions about Inventory Control, Sourcing, Manufacturing, Distribution and Supply Chain Metrics. However, we currently do not have the resources to answer individual questions.
If you want to contact me, email me at: john@supplychainmetric.com

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For information on Inventory Turns, Fill Rate Measurement, Backorder Reporting or any other Supply Chain Metric, click on the links to the left. The text that appears on this website is the opinion of the webmaster. Metrics may or may not be uniform across all industries. All data listed here may be used as a general guide, but it's accuracy is not guaranteed. Please consult a qualified Supply Chain professional for more details on Supply Chain Measurements. Other Supply Chain Websites
This site is owned and maintained by Michelle Taras & John Taras CPIM, PMP

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VendorManagedInventory.com - information on Vendor Managed Inventory
InventoryTurns.com - additional information on how to calculate inventory turns or inventory turnover.
SupplyChainManagementNews.com - News stories about Supply Chain Management
SupplyChainDefinitions.com - various definitions of supply chain terms
SupplyChian.com - various supply chain info (yes, i know it's mis-spelled)
SupplyChainPurchasing - a new site Michelle is developing. All about Supply Chain Purchasing.
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