Backorder Management

When do backorders occur?

Backorders typically arise at the intersection of demand, inventory levels, and delivery reliability. Even in well-organised companies, situations can occur where an order cannot be delivered in full because reality changes faster than planning.

Backorders can occur for several reasons, including:

• Temporarily out-of-stock items

• Delays from suppliers

• Unexpectedly high demand

• Errors in inventory data or forecasts

• Seasonal fluctuations or promotional campaigns

Companies with many SKUs, fluctuating demand, or long lead times will often experience backorders as a natural part of operations. Regardless of the cause, it is essential that backorders are handled systematically to avoid lack of overview, internal bottlenecks, and disappointed customers.

How does backorder management work in practice?

In practice, backorder management is about ensuring that outstanding items are not forgotten in the order flow, and that both internal teams and customers have a clear picture of what has been delivered and what is still missing. A structured process makes it possible to continue working with the order without creating unnecessary complexity in operations.

A typical backorder management process consists of several steps:

1. Registering the backorder

When an order is created, the items that cannot be delivered immediately are identified and marked as backordered. This creates a clear distinction between deliverable and non-deliverable items from the beginning and provides a stronger foundation for planning.

2. Partial delivery

The items that are in stock are picked and shipped, while the rest of the order remains open. This allows the customer to receive what is available without delaying the entire order unnecessarily.

3. Following up on missing items

An ongoing overview is maintained of when the missing items are expected back in stock. This often happens in close collaboration with purchasing and suppliers, so delivery dates can be updated realistically.

4. Closing the backorder

When the items are received into inventory, the order is completed and the remaining shipment is sent to the customer. The order can then be closed and removed from the list of open backorders.

Effective management requires clear procedures, defined responsibilities, and an up-to-date overview of both inventory status and open orders.

Why is correct backorder management important?

Backorders are not necessarily a problem in themselves, but without a clear structure they can quickly create disorder in both warehouse operations and order tracking. Poor handling can lead to forgotten deliveries, extra administrative work, and dissatisfied customers.

A structured approach provides several benefits:

Better customer communication

When backorders are clearly registered, customers can be informed accurately about delivery status and expected delivery times.

Fewer manual errors

Clear workflows reduce the risk of orders being overlooked, processed twice, or closed incorrectly.

Greater operational visibility

The company maintains control over open orders and outstanding deliveries—even when order volumes are high.

More efficient inventory and purchasing planning

Backorders provide valuable insight into demand and can serve as a signal for reordering or adjusting purchasing decisions.

That is why backorder management is closely linked to inventory management, order management, and purchasing management—where visibility and data quality are critical for stable operations.

Examples of backorders in practice

A wholesaler receives an order for 100 units but only has 70 in stock. The 70 are shipped immediately, while the remaining 30 are created as a backorder and delivered when the next stock receipt takes place.

In an online store, a backorder may mean that the customer receives their order in multiple shipments. In this case, clear information about delivery times and order status is often crucial for the customer experience.

How does backorder management relate to Rackbeat?

Backorder management is a natural part of daily warehouse operations and is closely connected to the use of a WMS.

By working in a structured way with inventory levels, open orders, and stock receipts, companies can gain a better overview of backorders and their status. This makes it easier to prioritise deliveries, follow up on missing items, and ensure alignment between inventory, purchasing, and order flow—even during periods of high activity.

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