What is the difference between a stockout and a backorder?

A stockout is the state of having no stock. A backorder is a customer or internal order that could not be filled because of it and waits for supply.

Is safety stock enough to prevent stockouts?

It helps with normal variability. It does not prevent stockouts caused by wrong lead times, missed orders or inaccurate stock.

How do I measure stockouts?

Count the items that reached zero usable stock while there was demand, per week or month, and note the cause of each one.

Glossary

What is a stockout? Causes, cost and how to see one coming

Stockout: A stockout happens when a part or product has no usable stock left while there is still demand for it.

By Roufaida Bouchamha, founder

The definition

A stockout (or out-of-stock) is the moment usable stock of an item reaches zero while someone still needs it: a production order waiting for a component, or a customer order waiting for a finished product. For a manufacturer, a component stockout usually means a line waits, a schedule is reshuffled, or an order is expedited at a premium.

The usual causes

A late supplier order for a part with little cover behind it.
A lead time that changed while the reorder point stayed the same (lead-time drift).
Demand above the average the reorder point was built on.
Inaccurate stock: the system shows units that are damaged, on hold or not where they should be.
No open order at all, because a reorder was missed.

What a stockout costs

The cost is rarely the missing part itself. It shows up as idle time, changeovers caused by resequencing, premium freight to recover, and orders that ship late. Most of these costs land in different budgets, which is why stockouts are often underestimated. Our insight on pricing a stockout walks through how to put a number on one with your own data.

How to see one coming

A stockout is visible days or weeks before it happens if you put three numbers side by side: usable stock, average usage and the date the next order really arrives.

Compute days of cover for every active part.
Compare cover with the arrival date of the next open order.
When cover runs out first, the part is a shortage risk: chase the order, look for alternative stock, or warn planning.

Illustrative example, not a customer result

A seal has 90 units on hand and is used at 30 a day: 3 days of cover. Its next order is promised in 9 days. Without action, the plant runs out on day 4 and waits 5 days. Seen today, there is time to call the supplier, ask for a partial shipment, or move work to products that do not use that seal.

How WERISCO uses it

WERISCO shows parts that will run short, ranked by days of cover, and the late or undated supplier orders behind them, from your ERP or your exports, with the evidence for each line. It does not predict supplier delays; your team decides what to do. Nothing is written back to your ERP.

Questions people ask

What is the difference between a stockout and a backorder?: A stockout is the state of having no stock. A backorder is a customer or internal order that could not be filled because of it and waits for supply.
Is safety stock enough to prevent stockouts?: It helps with normal variability. It does not prevent stockouts caused by wrong lead times, missed orders or inaccurate stock.
How do I measure stockouts?: Count the items that reached zero usable stock while there was demand, per week or month, and note the cause of each one.