Measures the percentage of orders that cannot be fulfilled due to stock shortages.

What it Measures ?

How often orders get delayed.

Relevant StakeHolders 

Inventory Teams, Supply Chain

In-depth Use Case / Real-world Example

Backorder Rate tracks how often customer orders are delayed due to inventory shortages. For example, if a manufacturer receives 1,000 orders and 50 of them cannot be fulfilled on time due to lack of stock, the backorder rate is 5%. A high backorder rate indicates issues in inventory management and forecasting. In manufacturing, where production schedules depend heavily on material availability, reducing backorder rates is essential for maintaining customer satisfaction and ensuring smooth operations. Monitoring this KPI helps improve demand forecasting and inventory management practices.