Negative incoming orders

With negative incoming orders , companies record more cancellations than new customer orders or orders .

General

The order intake is an important leading indicator for future production - and sales volume in a company. If incoming orders increase, sales will also increase. However, if orders placed or orders are canceled by the client , the production and, accordingly, the share of sales and the profit margin for this are canceled . A certain cancellation rate will always have to be planned in, and it is particularly high for long-term contracts such as in the construction or insurance industry . The insurance industry has the peculiarity of the industry that it has no incoming orders; Closed insurance contracts are immediately recognized in the balance sheet , so that cancellations have a direct impact on the insurance portfolio. In industry, negative incoming orders have the highest cancellation rate, because there are more cancellations than new orders.

detection

There can be a rare situation where the cancellations are greater than the new orders : ${\displaystyle S}$ ${\displaystyle A_{e}}$

${\displaystyle S>A_{e}}$,

that is the negative order intake. The cancellations only affect incoming orders, so that there cannot be more cancellations than the total number of orders. If there is no cancellation, an incoming order automatically becomes the order backlog for which production or processing has already started.

consequences

The negative incoming orders represent a critical situation for companies, because it is foreseeable that capacity utilization , production volume , sales and profit will be significantly reduced as a result. The causes can be the product quality , the long production time , the competition or customer behavior .

Individual evidence

1. ↑ Christian Schuh / Robert Kromoser / Michael Strohmer / Ramon Romero Pérez / Alenka Triplat, The agile shopping: guarantee of success in volatile times , 2011, p. 139