A backorder is an order, or part of an order, that a supplier has accepted but cannot ship yet because the item is not currently in stock. The sale still stands. The goods follow once stock arrives.
A backorder is an order state rather than an inventory event. It describes what happens to the customer’s order after the supplier decides to keep the line open instead of cancelling it or swapping it for something else.
Backorder vs the alternatives
When an item cannot be supplied, a distributor has four choices:
| Option | What the customer gets | When it suits them |
|---|---|---|
| Backorder | The exact item, later | The product is specific and the delay is acceptable |
| Substitution | A comparable item, now | The shelf needs filling this week |
| Partial shipment | What is available, with the rest cancelled | They can reorder elsewhere |
| Cancellation | Nothing on that line | The need has passed |
The right choice depends on the customer, not the item. A deli that promised a specific brand to its regulars may prefer to wait. A convenience store with an empty shelf usually wants whatever fills it today.
How backorders are handled
- Flag the shortfall during order validation, before the order is confirmed.
- Offer the options to the buyer, including a substitute and the likely backorder date.
- Record the decision against the order so the warehouse ships what is available now.
- Keep the backordered line open in the ERP with an expected date.
- Update the customer if the date moves.
- Release and ship the line when stock lands.
Step two is where most of the value sits. A buyer who is told about a shortfall at the point of ordering can plan around it. A buyer who finds out when the delivery arrives short cannot.
Backorder terms worth knowing
Backorder rate. The share of order lines that go on backorder. A rising rate usually points at forecasting or supplier problems rather than order desk problems.
Backorder ageing. How long open backorders have been waiting. Old backorders are often dead orders the customer has already filled elsewhere.
Standing backorder. A customer instruction to keep lines open automatically rather than asking each time.
Partial ship and backorder. Shipping what is available immediately and holding the balance, which most ERPs handle as a split line.
Why backorders cause friction
Silence. The most common complaint is not the delay but hearing nothing about it.
Late notice. Telling the buyer at delivery removes every option they had.
Stale dates. An expected date that was never updated stops being useful.
Forgotten lines. Open backorders with no follow-up turn into cancellations and credits.
Manual tracking. On a busy desk, chasing open backorders competes with processing today’s orders, and today’s orders usually win. Keeping open lines visible is one of the jobs an order management system is meant to handle.
Measuring backorder performance
- Backorder rate by product and by customer
- Average age of open backorders
- Share of backorders cancelled before fulfilment
- Time between stock arriving and the backorder shipping
- Share of backorders where the customer was notified at order time
How Ordana helps
Ordana raises the shortfall while the order is still being placed rather than after it ships. The Ordana Desk Agent checks each line against live inventory during validation, so an unavailable item is identified before the order is confirmed.
The agent then contacts the retailer with the choice: wait for the item, take a comparable substitute now, or drop the line. Whatever they decide is recorded against the order and stated in the confirmation, so the delivery holds no surprises. Because the agent handles this at the moment the order arrives, including evenings and weekends, buyers get the decision while they are still planning their week.
Schedule a demo to see how Ordana handles shortfalls on your orders.
Frequently asked questions
What is the difference between a backorder and an out-of-stock item?
Out of stock describes the inventory position. A backorder is what happens to the customer’s order when the supplier keeps the line open and ships it later.
Does a backorder mean the order is cancelled?
No. The order stands and ships once stock arrives, unless the customer cancels it.
How long should a backorder stay open?
Long enough to be useful to the customer. Many distributors review backorders that pass a set age and confirm whether the buyer still wants them.
Should you backorder or substitute?
Ask the customer. Both are valid, and the answer depends on how quickly they need the shelf filled.
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