What Is a Backlog?

The term backlog refers to all incomplete processes or tasks of an individual or a company. These could be all the orders waiting to be dispatched in a company, any financial dues or delayed paperwork. In simpler terms, any task which is marked as pending adds to a company’s backlog. A longer backlog gives investors the impression that the company is lagging in its work and has incompetent management.

A backlog may be perceived as an advantage or disadvantage based on the circumstances it is arising from. If a company has more demand than supply for its product line, it implies healthy revenue generation - but it may also imply that the production and supply chain management are not working efficiently. Similarly, suppose a company observes a decline in backorders. In that case, it may imply that all teams are working diligently, but it may also mean that the company is experiencing reduced sales. 

Example of a Backlog

A sneaker company manufactures 10,000 sneakers per day. They release a new line of sneakers in collaboration with a celebrity. The new line instantly becomes famous, and the company experiences a huge rise in orders. With the number of orders coming in, the company needs to be producing 20,000 sneakers per day. Hence, the company experiences a backlog. This is an example of a positive backlog, but if the company does not increase its production efficiently, it will lean towards a negative backlog.

What Is a Product Backlog?

In project management, a product backlog is used by a company to keep track of all tasks that have been completed and all those which are remaining on the to-do list. The company can then prioritize the list and complete the crucial tasks first. This keeps the team focused and determined to complete the required tasks. It also increases communication between groups, hence increasing collaboration.

All companies in the world face the backlog issue, but every entity has its own way of dealing with it. Overall, a backlog may be beneficial when it indicates a rise in sales, but it can very quickly fall too. Therefore, it is important to deal with backlogs properly to keep the reputation of an organization intact.