From time to time, an order you place might not be filled immediately due to a lack of available supply. This is known as a 'backorder'. Fundamentally, backorders occur due to a demand-supply mismatch. Various scenarios can cause this mismatch to occur, including but not limited to:
- Warehouse restock delays.
- Surge in demand for the item(s) ordered.
- Vendor does not own the inventory (drop-ship model).
- When ordering from a large, national distributor, the warehouse nearest to you might be out-of-stock and although other warehouses in their network could fill your order, their system prevents automatic rerouting.
- Inaccurate forecasting of demand when planning inventory replenishment.
- Weather disruptions interrupting timeliness of supply chain.
Every provider of goods faces a delicate tradeoff between inventory turnover and order fulfillment. The importance of this tradeoff is influenced by the nature and necessity of the goods being sold. For example, a juice shop will not be understanding if its fruits are not delivered in a timely manner. Similarly, a hospital will be disappointed if it runs out of gloves and has to scramble to find an alternate source.
The COVID-19 pandemic shocked the just-in-time inventory model that a great percentage of retailers and distributors had adopted leading up to it. While profits are assisted in the short-run by constantly turning inventory, a minor disruption to the supply chain can quickly lead to unhappy customers. In turn, priorities and objectives must be decided upon: 100% customer satisfaction, 100% profit maximization, or somewhere in between? Where your vendor sits on this spectrum, and the resulting manner in which they manage their inventory, are telling signs of where their priorities lie.
At Mersi, we are obsessed with 100% customer satisfaction. We are proud of our 100% fill rate, which means that we can fulfill 100% of our orders at any point in time without running out of stock. Now, of course, we supply everyday necessities to our customers, so we believe conservative planning is essential. Healthcare workers, for instance, work tirelessly in order to care for their patients and residents. We believe they deserve a friend in their corner that is always there for them, without fail. If your facility would like to wave goodbye to backorders, give us a call at (800) 654-0186 or shoot us an email at info@mersidistribution.com. We'll get you set up with us within minutes!
