Warehousing Metrics Glossary

Backorder Rate

Definition, meaning, and explanation of

Backorder Rate

What is Backorder Rate?

Percentage of orders that cannot be fulfilled immediately due to stock unavailability.

How do we calculate Backorder Rate?

(Total Backorders / Total Orders) * 100 where Total backorders is the distinct count of all orders that cannot be fulfilled due to unavailability of inventory.

What is the business impact of Backorder Rate?

  • High Backorder Rate hampers the overall customer experience
  • It may lead to customer churn and lost sales
  • Backorders may also cause order cancellations leading to higher cost

Industry benchmark for Backorder Rate

  • Industry Benchmark: Below 2%

How to improve Backorder Rate?

  • Improved Demand forecasting for different sales channels and product categories.
  • Strengthen relationships with suppliers to navigate low-stock and stock-outs to minimize the Backorder Rate
  • Improve the visibility into supplier lead times
  • Improved visibility into inventory consumption and movement patterns
  • Implement automatic replenishment for certain products to avoid back-orders.

Attain near-zero back-orders using Hopstack's automated replenishment

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