Backlog V/S Backorder

The term backlog is used to refer to the total number of products that have been ordered but have not been supplied by the supplier. It is a measure of how many customers have placed orders but are still waiting for them.
In contrast, back order refers to the number of items that are requested by customers and not available with the vendor.
A back log or backlog can be defined as “the total number of products that require suppliers but have not been supplied.” However, there is a difference between a back log and a back order. A back-order entails “items that are requested by customers and not available with the vendor.”
There is a common misconception about the term back log. It does not necessarily refer to the amount of work that is waiting for completion on something. In reality, backlog can also be used to describe the amount of goods that need to be sold in current inventory but are not being moved from stock due to various logistical problems.
Back orders occur for various reasons, including:

When the inventory level of a particular product runs low and there are no more products in stock on hand.

When the suppliers do not have enough capacity to produce more of a given product at the current time, or when demand exceeds supply.

When customers place orders for items which can only be produced periodically (e.g., clothing) or which take some time to manufacture (e.g., furniture).

To maintain price and quantity discounts offered by suppliers in high demand seasons (e.g., Christmas).

Back order is specific and it has different effect on market. On one hand, back order affects consumer choice as customer may switch to other products if their backorders are too long like Coca-Cola’s loyalty program where there was no back order allowed which caused abandonment of Coke Zero. On another hand, the lack of back orders led to low inventory levels which increases cost. To moderate, a back order will lead to higher inventory levels with lower cost but also less making money due to waste in administration area.
Back order is a customer purchase made for a periodic arrangement that is not originally fulfilled. Back logged definitions are often short-term delays.
Missing out on an order in the supply chain might have severe and far reaching consequences for businesses. These effects may accumulate and result in losses for the organizations reaching close to 85%.

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