Inventory glossary

What is On order inventory?

On order inventory is the quantity of a SKU that you have ordered from a supplier but have not yet received into your store.

On order inventory tells you what is already in the pipeline before you decide to reorder. If you ignore it, you can end up ordering more stock than you need because you forget that a previous purchase order is still on the way.

Use on order inventory together with on hand inventory to see your true position for each SKU. Add the two together, then compare that to what you expect to sell before the next delivery arrives. This stops you from double ordering or running short while stock is already in transit.

Formula

Total position = On hand inventory + On order inventory

Example

A candle shop has 40 units of a lavender candle on hand. They placed a purchase order for 100 more units two weeks ago, still in transit, so on order inventory is 100. Total position is 140 units. If weekly sales average 20 units, that covers 7 weeks before the next reorder is needed.

Common mistakes

  • Forgetting to count on order inventory and placing a duplicate order for stock already coming.
  • Treating on order inventory as available to sell right now, when it has not arrived yet.
  • Not updating on order inventory when a supplier sends a partial shipment.

On order inventory and SteadyShelf

SteadyShelf tracks open purchase orders per SKU so your on order inventory is factored into its order-by dates and suggested reorder quantities.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Reorder point · Lead time · Purchase order · Incoming inventory · On hand inventory

Full inventory glossary

FAQ

Is on order inventory the same as on hand inventory?

No. On hand inventory is stock physically in your warehouse or store right now. On order inventory is stock you have ordered but not yet received.

Why does on order inventory matter for reordering?

It stops you from ordering too much. If you only look at on hand stock and ignore what is already on order, you risk duplicating an order that is already on its way.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

Get early access