# Backorder

> Source: https://netray.co/glossary/backorder
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Glossary

## Short answer

A backorder is the unfulfilled portion of a customer order that cannot ship because stock is unavailable, which the supplier agrees to deliver later. ERPs keep it open and allocate incoming supply to it as receipts or production complete.

## Aliases

- back order
- backordered item
- back-order

## Category

erp-core

## Full Definition

When a sales order line asks for more than is available, the shipped quantity is less than the ordered quantity and the difference is the backorder. The customer may accept a partial shipment, ask for everything to ship together, or cancel the open balance. Which of those happens should be set by customer rules, not decided by whoever is picking that day.

ERPs treat backorders as open demand. In SAP, the order remains open for the unconfirmed quantity and backorder processing (the CO09 and V_V2 reports are typical entry points) reallocates new stock by priority. Business Central keeps the Outstanding Quantity on the sales line, Infor SyteLine tracks open quantities on customer order lines with a ship-complete option, and NetSuite has backordered quantity on sales order lines with a fulfilment workflow for partial shipments.

Backorders are a symptom, not a process. Their causes include forecast errors, long supplier lead times, quality holds and safety stock set too low. Tracking backorder rate and age by item tells you where planning parameters are wrong.

Do not confuse a backorder with a back-to-back order, which is a purchase created specifically to cover one sales order. A backorder simply sits open until any suitable supply arrives, and the allocation rule decides which customer receives it first.

## Why It Matters

- Backorders directly affect customer service levels and on-time-in-full metrics.
- Allocation rules decide which customers are served first when scarce stock arrives, which is a commercial decision that needs to be explicit.
- Aged backorders are a leading indicator of bad reorder points, safety stock or supplier performance.
- Partial shipments increase freight and handling cost, so ship-complete rules matter.

## In Practice

A customer orders 500 units; 320 are on hand. With partial shipments allowed, 320 ship and 180 are backordered. A receipt of 400 arrives; there are three open backorders for the same item totaling 600. The allocation rule (oldest promised date first) fills the earliest 400 and leaves 200 backordered. The backorder rate for the item is now a signal to raise safety stock or find a second supplier.

## Faq

### What is the difference between a backorder and a stockout?

**Answer:** A stockout means the item has no available inventory. A backorder is the customer demand that remains unfilled during a stockout, held open for later delivery.

### How do you reduce backorders?

**Answer:** Review safety stock and reorder points for the affected items, shorten or de-risk supplier lead times, and improve forecast accuracy for those lines.

### What is ship complete?

**Answer:** A customer or order setting that holds the whole order until every line can ship, avoiding partial deliveries and extra freight.

### Are backorders counted as demand in MRP?

**Answer:** Yes. Open sales order quantity is demand, so MRP will plan supply to cover it, subject to lead times and time fences.

## Search terms

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