Inventory Control Tips For Backorder Management

To have effective inventory control, you need to create a balance between minimizing the cost of holding a lot of inventory stock while maintaining adequate stocks for your customers‘ demand. In most cases, out-of-stock orders can lead to customer dissatisfaction and lost sales. However, imagine having a customer order that can be filled later? What if the customer is willing to wait for the order?

What is inventory backorder?

A backorder occurs when a customer places an order or buys a product for inventory stock that is unavailable. An inventory backorder may arise when a product is sold out because of unforeseen high demand.

Assuming you have a product with seven items in stock, three different customers decide to order the same product, with each desiring to buy four each. In a normal situation, you cannot fulfill one’s order and tell others to go. However, backorder makes it easier for you to sell two items to each and assuring them to receive the remaining items on a future date.

Tips for inventory control 

When your online store is experiencing a surge in demand, there is every possibility you might have backorders. However, stock management is an essential aspect of increasing your conversion rate. Here are important tips for backorder management if you run an online business.

Open communication with suppliers and customers

Encourage open communication with your customers and suppliers. You can do this through email, chat, phone, or social media. When faced with a backorder, you can provide honest answers to ease the pressure. Ensure you display your contact information correctly on your website and reinforce the importance of customer satisfaction.

Data-driven inventory control

You need a data-driven inventory control such that orders won’t be placed if the distributor or wholesaler cannot fulfill the demand. When you have frequent backorders for several products in different locations, it involves a lot of data. Additionally, there must be accurate delivery within the stipulated timeframe.

However, without a proper data-driven inventory management tool, backordering can become a significant issue. Once you face this situation, it will cause problems such as loss of business, customer trust, and brand credibility.

data driven inventory control

Accurate warehouse inventory

To avoid any backorder mishap, you need to keep an accurate inventory of your items in the warehouse. It can be hard to know the number of items available manually, but automation has made everything easier. Therefore, to avoid having backorder or out-of-stock orders frequently, ensure to keep accurate warehouse inventory.

Review inventory frequently

Here, you need to review your inventory frequently to ascertain what you have. It is important to look at your processing for ordering and stocking inventory if you experience backorder regularly. If you have historical data, it will help you when to reorder stocks before they get low. Furthermore, it can also use the auto-schedule reorders.

Assign automated reorder point

Peradventure your distributor or wholesaler cannot fulfill your order or think there will be a delay, you can assign an automated reorder point. You can also provide the option of refunding payment if the customer cannot wait for the order. You need to know when you are running short of inventory. Assign reorder dates; this can be weekly, monthly, or increments. With this, the system can keep track of items in stock.


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