Procurement Glossary
Backorder rate: key figure for delivery bottlenecks and inventory management
November 19, 2025
The backorder rate is a key figure in inventory management that measures the proportion of orders that cannot be delivered immediately in relation to the total number of orders. It shows how often items are not available due to stock shortages and provides important information on the efficiency of warehousing and scheduling. Find out below what exactly the backorder rate means, how it is calculated and what strategic impact it has on procurement management.
Key Facts
- Measures the percentage of orders that are not immediately available
- Important indicator for service level and customer satisfaction
- Has a direct impact on capital commitment and storage costs
- Enables optimization of safety stocks and ordering strategies
- Key performance indicator for supply chain management
Contents
Definition: Backorder rate
The backorder rate is defined as the ratio between orders that cannot be fulfilled immediately and the total number of all orders received in a given period.
Basic components of the backorder rate
The key figure is made up of several components:
- Number of back orders (items that cannot be delivered immediately)
- Total number of orders in the period under review
- Time reference of the measurement (daily, weekly, monthly)
- Article-specific or overall view
Backorder rate vs. degree of readiness to deliver
While the backorder rate measures bottlenecks, the delivery service level shows the positive fulfillment rate. Both key figures complement each other and should be used together to analyze the current situation.
Importance of the backorder rate in Procurement
In procurement management, the backorder rate serves as an early warning system for supply bottlenecks and supports strategic planning. It influences decisions on inventory optimization and helps to evaluate supplier performance.
Methods and procedure for backorder quotes
The systematic recording and evaluation of the backorder rate requires structured methods and clear processes for data collection and analysis.
Calculation and data acquisition
The backorder ratio is calculated using the formula (number of backorders / total number of orders) × 100. This requires precise recording of all order transactions and their status.
- Automated data acquisition from ERP systems
- Categorization according to article groups and suppliers
- Period-specific evaluations
Monitoring and reporting
An effective inventory health dashboard visualizes backorder trends and enables quick reactions. Key inventory figures should be analyzed regularly.
Preventive measures
Predictive consumption forecasts and optimized safety stocks allow backorders to be reduced. Automatic replenishment supports timely reordering.
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Important KPIs for backorder quotes
Managing the backorder quota requires a system of key figures that reflect various aspects of delivery capability and inventory efficiency.
Primary performance indicators
Central KPIs include the absolute backorder rate, item-specific default rates and time-related developments. These key figures form the basis for operational decisions.
- Total backorder rate in percent
- Average backorder duration in days
- Backorder value in euros or other currencies
Supplementary control variables
The average stock level and stock range complete the backorder analysis. These key figures help to optimize the relationship between service level and capital commitment.
Strategic performance measurement
Long-term KPIs such as the development of customer satisfaction and the reduction of obsolete stock show the strategic effectiveness of backorder management. The ABC-XYZ analysis supports the targeted management of critical items.
Risks, dependencies and countermeasures
A high backorder ratio entails various business risks that can be minimized through targeted measures and strategic planning.
Customer satisfaction and loss of sales
Frequent delivery bottlenecks lead to customer dissatisfaction and potential loss of sales. Customers switch to competitors if items are regularly unavailable.
- Loss of regular customers due to poor service
- Negative impact on brand image
- Lost sales due to lost sales
Operational inefficiencies
Backorders cause additional administrative work and put a strain on resources. Maintaining scheduling parameters becomes more complex if frequent reorders are required.
Supply chain dependencies
External factors such as delivery time variability and supplier failures increase backorder risks. A diversified supplier base and robust replenishment times reduce these dependencies.
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Practical example
An automotive supplier analyzes its backorder rate of 8% and identifies critical spare parts as the main culprit. By implementing a min-max control and adjusting the minimum order quantities, the company reduces the quota to 3%. The measures include:
- Detailed analysis of the causes of backorders by article group
- Optimization of safety stocks for A-items
- Introduction of automated order triggering for critical stocks
- Quarterly review and adjustment of parameters
Trends & developments around backorder quotes
Modern technologies and changing market requirements are shaping the development of backorder management systems and their strategic importance.
AI-supported forecasting models
Artificial intelligence is revolutionizing the prediction of demand fluctuations and optimizing preventive inventory strategies. Machine learning algorithms analyze historical backorder patterns and identify risk factors at an early stage.
Real-Time Supply Chain Visibility
Real-time data from the entire supply chain enables proactive backorder management. IoT sensors and digital twins create transparency about stock levels and delivery times.
- Automatic notifications for critical stock levels
- Integration of supplier data in real time
- Predictive analytics for fluctuations in demand
Omnichannel integration
The networking of different sales channels requires a holistic view of the backorder rate. Inventory management is increasingly being optimized across channels in order to improve the customer experience.
Conclusion
The backorder rate is an indispensable control parameter in modern inventory management that has a direct influence on customer satisfaction and company success. Systematic recording, analysis and targeted optimization measures can reduce supply bottlenecks and sustainably improve service quality. The integration of modern technologies such as AI-supported forecasts and real-time data opens up new possibilities for proactive backorder management. Companies that strategically manage their backorder quota create an important competitive advantage in the supply chain.
FAQ
What is an acceptable backorder rate?
An acceptable backorder rate varies depending on the industry and business model. In retail, values below 5% are considered good, while in industry 10-15% can also be tolerable, depending on item criticality and customer segmentation.
How does the backorder rate differ from the service level?
The backorder rate measures the proportion of undeliverable orders, while the service level indicates the proportion of successfully fulfilled orders. Both key figures complement each other: service level + backorder rate = 100% of orders.
Which factors have the greatest influence on the backorder rate?
The main influencing factors are forecast quality, delivery times, safety stocks and fluctuations in demand. External factors such as supplier failures or transportation problems can also have a significant impact on the quota and require appropriate risk management strategies.
How can the backorder rate be systematically reduced?
Systematic reduction is achieved through improved demand forecasts, optimized ordering strategies, adjusted safety stocks and closer supplier cooperation. Regular analyses and continuous parameter adjustments are crucial for sustainable success.
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