Why “Distributed Order Management” is a Top Retail Trend and Why You Should Care

The purpose of a Distributed Order Management (DOM) system is to intelligently broker orders across the various systems and processes utilized by the multiple parties involved in replenishing an order.

The best way to achieve this is to provide a single, global view of all inventory available in order to intelligently source the line item components of that order, ensuring that the business can meet both current and future customer demand while optimizing inventory, logistics, and asset utilization.

However delivering a seamless customer experience is a challenge for most retailers. Legacy infrastructures were designed to be static rather than dynamic, supporting individual sales channels with single threaded supply schema and segmenting groups of customers by channel, rather than as individuals.

While companies may focus on transforming the customer-facing experience, they are constantly challenged on the back end to optimize inventory management and their supply chains, thereby enabling real-time, enterprise-wide insight into inventory, as well as a flexible supply chain that supports dynamic inventory movement across channels.

Legacy infrastructures were designed to be static rather than dynamic, supporting individual sales channels with single threaded supply schema and segmenting groups of customers by channel, rather than as individuals.

The traditional order management systems that most retailers use were basically configured to link to a discrete number of specific plants or warehouses. This of course limits inventory visibility as well as the options companies have in fulfilling their items. It also fails to account for deliveries and associated services that are increasingly part of the customer order and fulfillment process. Without comprehensive visibility to internal and external inventory locations, including delivery and service requirements, it is nearly impossible to provide an accurate promise date to the customer, or schedule orders to alternative fulfillment locations.

Customer service levels can only be maintained with accurate and timely information. Given the increase in order capture channels that are most likely supported by different systems, accurate order information is often unavailable when needed. Because companies maintain multiple databases of order information, they are forced to manage by individual channel, rather than across channels. A modern cloud-based DOM system aggregates orders from multiple order capture channels and provides a single source of information across these channels. All information and activity related to that order is contained in a central control tower, basically providing a single version of the truth in order to source upstream in the supply network.

According to the 2013 RIS News/Gartner Retail Technology Study, just 20% of retailer respondents are using up-to-date technology for real-time inventory visibility, 24% for distributed order management and 16% for multi-channel fulfillment. The majority agree that the ultimate goal is to migrate to a single, flexible platform capable of managing the overall business.

From a technology perspective, cloud-based DOM provides retailers a platform backbone capability, enabling the selling, replenishment, and logistics processes for multi-party business transactions across multiple echelons in a supply network. In other words it is an ecommerce engine, providing a network based solution for managing information, executing processes, and monitoring performance to ensure customer orders are fulfilled accurately and cost efficiently across a complex network of sourcing and fulfillment processes. Key capabilities include intelligent order forecast sourcing, global inventory visibility, real time order execution, and demand sensing in order to be responsive to shifting customer demands. Process robots provide the ability to automate order execution based on predefined sets of rules and performance measurement targets.

According to the 2013 RIS News/Gartner Retail Technology Study, just 20% of retailer respondents are using up-to-date technology for real-time inventory visibility, 24% for distributed order management and 16% for multi-channel fulfillment. The majority agree that the ultimate goal is to migrate to a single, flexible platform capable of managing the overall business.

In addition, the best cloud-based DOM applications combine multi-channel order aggregation with global visibility to inventory, including delivery and service availability, enabling the “complete” order promise (available-to-promise, available-to-deliver and available-to-service). Essentially these systems also offer the ability to “order from anywhere, fulfill from anywhere, and return to anywhere”, including optimized, rules-based order promising and scheduling, inventory and resource allocation from any internal or external source to meet both the conditions of the order and the requirements of your business.

Outside of these core replenishment aspects, DOM also plays an important role in the overall customer experience by providing an environment to broker and manage orders from multiple sales channels in order to ensure that customer orders are executed to meet or exceed customer expectations. The order and shipment visibility across the supply network is a key driver related to the overall customer experience.

By providing a centralized order orchestration hub, a DOM system has the capability to provide a real time view of all of a customer’s purchases across all of the seller’s channels. In this way, distributed order management becomes a key enabler of increased supply chain efficiency in addition to an improved customer experience.

Finally, from an industry perspective, distributed order management applications can be used to solve different types of business problems from one vertical to another. In my next post, I’ll consider a couple of examples from the retail and communications sectors.