What does the term 'backordering' refer to?

The term 'backordering' refers specifically to an order that cannot be filled at the current time due to a lack of available supply. In inventory and supply chain management, backordering occurs when a customer places an order for a product that is out of stock, but the business takes the order with the intention of fulfilling it once the product becomes available again. This is a common practice in situations where demand exceeds supply, allowing businesses to retain customer orders despite temporary shortages. When the inventory balance is restored, the orders are fulfilled, ensuring that customer needs are eventually met.

This process helps companies manage customer expectations while navigating fluctuations in inventory levels effectively.