Search Dictionary

Definition of 'Backorder'

A backorder is a customer order for a product that is not immediately available from the supplier. The product may be out of stock, or it may be in production but not yet finished. Backorders can occur for a variety of reasons, such as:

* The supplier is experiencing a high demand for the product.
* The supplier is experiencing production delays.
* The supplier is experiencing supply chain disruptions.

When a customer places an order for a product that is on backorder, the supplier will typically provide an estimated lead time for when the product will be available. The customer may choose to wait for the product to be backordered, or they may cancel the order and choose a different product.

Backorders can have a number of implications for businesses. On the one hand, backorders can help businesses to meet demand for products that are in high demand. On the other hand, backorders can also lead to lost sales if customers choose to cancel their orders or purchase products from a competitor.

Businesses can take a number of steps to manage backorders, such as:

* Working with suppliers to ensure that there is adequate supply of products.
* Using forecasting to predict demand for products.
* Having a contingency plan in place for dealing with supply chain disruptions.

By taking these steps, businesses can help to minimize the impact of backorders on their operations.

In addition to the above, there are a few other things to keep in mind about backorders:

* Backorders can be a sign of a healthy business. If a business is experiencing a high demand for its products, it may not be able to keep up with demand without placing some orders on backorder.
* Backorders can also be a sign of a problem. If a business is experiencing a high number of backorders, it may need to take steps to improve its supply chain or production processes.
* Backorders can have a number of financial implications for businesses. They can increase costs, reduce sales, and damage customer relationships.

Overall, backorders are a common occurrence in business. By understanding the causes of backorders and taking steps to manage them, businesses can minimize their impact.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.