The worst time to figure out how to handle a backorder is after the product is already unavailable. By then, someone is checking three distributors, another person is asking the doctors what they can substitute, and someone else is wondering how long the two boxes left on the shelf are actually going to last.
Practices that handle backorders well are prepared before the notice ever arrives. They know how quickly they use each product, which items have reliable substitutes, and where extra safety stock is justified. They’ve also agreed in advance on what to do when a critical product becomes unavailable.
That’s the whole idea behind this guide: backorder management is mostly good inventory management done earlier.
We’ll walk through it in three stages: what to have in place before a backorder, what to do the day the notice arrives, and how to close it out when the product comes back.
Why backorders happen
Most veterinary pharmaceuticals depend on a small number of manufacturing sites, and many active ingredients come from a single source. When one plant pauses for maintenance, fails an inspection, or reallocates capacity, the effect shows up on your shelf months later. Demand spikes do the same thing from the other direction: a regional outbreak, or a human-medicine shortage that pulls the same molecule out of the veterinary channel. Add manufacturer consolidation and allocation programs that ration limited supply across distributors, and you get a system where short-term gaps are routine.
None of this is your distributor’s doing. Your rep is usually finding out at the same time you are, and often the most useful thing they can offer is an honest estimate of when it’ll be back. Treat them as a source of information, not the cause.
Before the backorder: what resilience looks like
A good backorder response starts weeks before the backorder. Four things make the difference.
Know your velocity, per item
When a notice arrives, the first question is always the same: how long can we go? You can only answer that if you know how much of the product you use in a typical week. Not roughly. Actually. A product you dispense twice a week and a product you go through a case of every Tuesday call for completely different responses, and the only way to tell them apart quickly is to have the number already.
If you count on a regular cycle, you have this. If you count once a year, you’re guessing, and guessing tends to run in one direction: toward the panic order.
Know which products have no substitute
Backorders aren’t all the same size. Some products have a therapeutic equivalent sitting one shelf over. Some have a generic of the same molecule. And some have nothing: a single-source product with no clinical alternative for the cases you use it in.
Make that list now, when nothing is short. Go through your top hundred items by usage and mark the ones where a shortage would change patient care. It’s usually a short list, and it’s the list that deserves your attention.
Carry safety stock where it counts, not everywhere
Once you know the unsubstitutable items, you know where to hold extra. Safety stock across the whole shelf is expensive and mostly wasted; it ties up cash on products you could replace tomorrow. Safety stock on the short list is cheap insurance. A few extra weeks of a critical product costs a little cash flow. Running out costs a client conversation you’d rather not have.
Set the amount based on lead time variability rather than average lead time. A product that reliably ships in three days needs very little cushion. A product whose lead time swings from three days to three weeks depending on the month needs more, even if the average looks fine.
Decide the substitutions in advance
For the substitutable products on your list, pick the substitute now. Which generic, which alternative molecule, which dose adjustment if any. Get the doctors to agree before it’s urgent, when the conversation can be a five-minute item at a staff meeting rather than a hallway negotiation with a patient in the room. Write it down somewhere the whole team can find it.
This is the step most practices skip, and it’s the one that turns a stressful backorder into a routine one.
When the notice lands: a triage sequence
Now the email arrives. Here’s a sequence that works.
1. Check on-hand against weekly usage. Count what’s on the shelf, divide by what you use in a week, and you have your runway. This is the number that decides how urgent everything else is. Six weeks of supply with an estimated return in three is a note on a list. Two weeks of supply with no return date is a different afternoon.
2. Classify it. Every backorder falls into one of three buckets: critical and unsubstitutable, substitutable, or deferrable. Critical items get everything below. Substitutable items get the pre-decided switch. Deferrable items (the backup brand of ear cleaner you barely sell) get a note and nothing else.
| Category | What it looks like | What to do |
|---|---|---|
| Critical, no substitute | Single-source product with no clinical alternative | Check secondary sources, buy to cover the gap, alert doctors, consider smaller dispense quantities |
| Substitutable | A generic or therapeutic alternative is on your list | Switch to the pre-agreed substitute, confirm the PIMS code, tell clients at refill |
| Deferrable | Low-use item, like a backup brand | Add it to the backorder list and wait for the return |
3. Place the backorder and check a secondary source. Keep your place in line with your primary distributor. Then check a secondary distributor or the manufacturer directly; allocation often varies by channel, and a product that’s out at one may have limited stock at another.
4. Buy to cover the gap, not to fill the shelf. A shortage doesn’t make overstock free. When a secondary source suddenly has stock, it’s tempting to take everything they’ll sell you. Don’t. Order enough to cover the refills and orders already waiting on the product, plus enough to keep up with normal weekly usage through the likely shortage period. That’s your number. Anything past it is cash sitting on a shelf, bought to guard against a repeat that probably won’t come. Next time, it’ll most likely be a different product.
5. Mark the shelf. A backorder no one knows about is how three people end up placing three orders. Put something physical on the shelf: a tag, a sticky note, a colored label. Note the date, the expected return, and the substitute.
6. Tell the doctors before the empty shelf does. A short message with three facts: what’s short, what to use instead, and when it’s expected back. Doctors who learn about a backorder mid-appointment tend to remember it as an inventory failure. Doctors who learn about it in a morning huddle remember it as a normal week.
7. Adjust dispensing if you need to. For a critical product with limited supply, smaller dispense quantities stretch the stock across more patients. Move from a thirty-day supply to two weeks on refills. Prioritize current patients over new starts. These are clinical calls, so they belong to the doctors, but you can put the option in front of them.
Substitutions, done carefully
Substitution is where backorder management gets clinical, and where a few operational details make the difference between a clean switch and a messy one.
Generic versus therapeutic alternative. A generic containing the same active ingredient is usually the simpler case, although the veterinarian should still confirm the appropriate product, formulation, and dosing. A therapeutic alternative (a different drug in the same class) is a prescribing decision, with its own dosing, contraindications, and client counseling. Keep those two categories distinct on your substitution list.
Get the code right. Every substitute needs its own PIMS code with its own cost. If the team charges the substitute under the original product’s code, your margin is wrong, your usage data is wrong, and your count for both products is wrong. If they charge nothing because the code doesn’t exist yet, you’ve turned a backorder into a missed charge. Build the code the day you decide the substitute, not the day you dispense it.
Tell clients on refills. A client who’s picked up the same bottle for two years will notice a different label. A quick line at pickup (“The manufacturer is short on this, so your veterinarian has switched you to an equivalent product. We’ll go over how to give it before you leave.”) heads off the phone call.
Controlled substances. If the backordered product is a controlled substance, the substitute may fall under a different schedule or need a new prescription rather than a refill. Check with your DEA-registered veterinarian and your state rules before the switch. The paperwork is different, and it’s worth getting right the first time.
Communication that holds up
Internally, the backorder list needs a home. A whiteboard in the treatment area, a pinned note in your team chat, a shared sheet, a PIMS alert on the product code: it doesn’t matter which, as long as there’s exactly one and one person owns updating it. Include the product, the date it went short, the substitute, and the last update from the distributor. Review it at whatever regular meeting you already have.
Externally, the main touchpoint is refills. Clients who order through your online pharmacy will see the shortage as an out-of-stock message with no context, so it’s worth adding a line there and having the front desk ready with the substitute conversation. For chronic-medication patients on a critical product, a proactive call beats a surprised one.
When it resolves
The product comes back. This is where a lot of practices lose the ground they gained.
Don’t carry the panic order. If you bought aggressively from a secondary source at the height of the shortage, you may now have months of stock of a product that’s back to normal availability. Let it run down before reordering. The cushion you built for the emergency shouldn’t become your new par level by default.
Reset par levels using combined demand. During the backorder, usage of the original product dropped to zero and usage of the substitute went up. Look at each product’s history separately and both reorder points will be wrong. Instead, treat them as one line of demand. Convert both to a common unit of measure (tablets, mL, or doses at the same strength), add the usage together, and set your min and max from that total. Demand didn’t change during the shortage, only which product filled it, so combined usage is the most accurate picture of what you’ll need. Watch the first few weeks after the product returns to make sure the numbers hold.
Decide what to do with the substitute. Sometimes the substitute turns out to be fine, or cheaper, or preferred by a doctor, and it stays. Sometimes it goes. Either way, decide on purpose. Retire the code or keep it, and update the substitution list to match.
Review the log. Once or twice a year, look at which products went on backorder and how many times. Anything that’s been short three times in eighteen months belongs on your safety-stock list permanently, regardless of what the average lead time says. The log is how the before-the-backorder section keeps getting better.
The steady version
Backorders aren’t going away. What changes over time is how much of your response is already decided: whether you know your weekly usage, whether the substitute is already agreed, whether the shelf is marked and the doctors already know. Get those in place and a backorder is a note on a list instead of an afternoon lost to phone calls.
How Inventory Ally helps with backorders
Inventory Ally is built around the numbers this guide keeps coming back to. We use your order history to build a weekly cycle count schedule, prioritized by value and sales volume, so when a backorder notice arrives you already know how many weeks of supply are on the shelf. Our restock recommendations come from your actual usage, which makes it easier to spot the panic order before you place it.
Substitutes are built in, too. You can merge equivalent items into a product group, which combines the history of every item in it into a single min and max in equivalent units. Your reorder points reflect total demand, whichever product filled it, and swapping the preferred product for another item in the group is quick. When something goes on backorder, our alternative item listings let you swap it out of your shopping cart for an identified equivalent.
If you’d like to see how it works in your practice, book a demo.
