The backorder rate is the share of what customers ordered that you couldn't ship when it was due, and now owe them. Like fill rate, it comes three ways. Order backorder rate = orders with anything on backorder ÷ orders. Line backorder rate = order lines with anything on backorder ÷ lines. Unit backorder rate = units on backorder ÷ units ordered. One short item can put a whole order on backorder, so the order rate always looks worst; the unit rate shows how much stock was missing. Count only what you owe and intend to ship: an item the customer cancelled instead of waiting is a lost sale, not a backorder. Pair the rate with days late, how long each backorder took past the date you promised, because a backorder shipped a day late and one shipped three weeks late aren't the same problem. In the example below, a candle maker works out its October backorder rate.
The short version
- Order backorder rate = orders with any backorder ÷ orders.
- Line backorder rate = lines with any backorder ÷ lines.
- Unit backorder rate = units on backorder ÷ units ordered.
- Count what you still owe and will ship, not cancelled lines.
- Track days late against the promised date as well as the rate.
- Most backorders start upstream: a late supply, a short batch, a reorder point set too low.
- TaroStack shows what's owed on part-shipped orders and puts what's short on the reorder list. More below.
The formulas
| Backorder rate | Formula | What it says |
|---|---|---|
| Order | Orders with any backorder ÷ orders | How many customers are waiting for something |
| Line | Lines with any backorder ÷ lines | How many items weren't there |
| Unit | Units on backorder ÷ units ordered | How much stock was missing |
| Days late | Date shipped − date promised, for each backorder | How long customers waited past your word |
The other side of the same numbers is in fill rate formula, and the log of what's owed in backorder template.
An example: a candle maker's October
Lehua Glow, the made-up soy candle maker on Oʻahu I use in these examples, shipped 12 wholesale orders in October, 31 lines and 520 candles. The plumeria fragrance oil went on backorder at its supplier, and four orders had something owed:
| Order | Item | Ordered | Shipped at first | Owed | Promised | Shipped | Days late |
|---|---|---|---|---|---|---|---|
| W-1041 | Plumeria jar | 24 | 12 | 12 | Oct 24 | Oct 24 | 0 |
| W-1044 | Plumeria jar | 18 | 0 | 18 | Oct 24 | Oct 24 | 0 |
| W-1047 | Plumeria jar | 12 | 6 | 6 | Oct 14 | Oct 24 | 10 |
| W-1049 | Coconut lime two-wick | 6 | 4 | 2 | Oct 21 | Oct 22 | 1 |
| Backorder rate | Calculation | Result |
|---|---|---|
| Order | 4 ÷ 12 orders | 33.3% |
| Line | 4 ÷ 31 lines | 12.9% |
| Unit | 38 ÷ 520 candles | 7.3% |
| Average days late | (0 + 0 + 10 + 1) ÷ 4 | 2.75 |
A third of the shops waited for something, though only 7% of the candles were missing, almost all of them one scent. The ten days late on W-1047 came from a promise nobody updated when the oil slipped. Plumeria's oil now has a higher reorder point before the holidays, and every backorder gets a new promised date the day it's created. The candle prices behind the orders are in how to sell candles wholesale.
What a good backorder rate is
There's no standard number for a small maker. Buyers who track it care most about the order rate, because every order with a backorder means a gap on their shelf and a second delivery. Set your own target for the unit rate, check it monthly, and look at which items cause it: it's often the same two or three.
Get the calculator
Download the backorder rate calculator. Two sheets: the order lines, where you type each line's order, item, quantity ordered, quantity shipped at first, the promised date and the date the rest shipped, with what's owed and days late worked out; and the month, with the order, line and unit backorder rates and average days late. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The calculator counts backorders after the month is over. The useful moment is earlier: the day an order is taken for plumeria jars that aren't on the shelf, and the week the oil should have been ordered.
How TaroStack does it
TaroStack shows what's owed while there's still time to do something about it.
Part-shipped orders. An order shipped in part shows as partly shipped until the rest goes, so what's owed is a list, not a search.
Stock that's really there. Shipping can't take stock below zero: the app says what's there and asks for a count first, so a shortage shows at the packing table, not in the shop's email.
Reorders in days of cover. The reorder list shows each item and ingredient in days of cover, with each supplier's lead time, and reorder points are suggested from how stock actually moves.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| What's owed to whom | A log kept by hand | Orders shown as partly shipped |
| A shortage before packing | Found in the box | What's on hand, before you ship |
| Fragrance oil running low | Noticed too late | Reorder list in days of cover |
| A reorder point that's too low | Fixed after the holidays | Suggested from real use |
Sales orders and the reorder list are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.