How a Distributed Order Management System Improves eCommerce Fulfillment
By Anthony Hockaday, Director of Omnichannel Services, Radial
To compete in today’s market, retailers must provide seamless, unified omnichannel shopping experiences that deliver customers’ orders to them in the fastest possible way and at the lowest cost. This requires retailers to move from a legacy order management system (OMS) built for traditional eCommerce fulfillment to a cloud-based distributed order management (DOM) system that is built for complex omnichannel fulfillment.
What is a Distributed Order Management System?
A DOM system is cloud-based software that integrates into existing systems across the supply chain to provide a single viewpoint into all inventory. It sources product from the best available supplier and dynamically routes fulfillment based on best location, fastest fulfillment, and lowest shipping cost. It merges multiple orders by a single customer to consolidate shipping, provide real-time inventory visibility and demand forecasting, and ensure that retailers can always see all their inventory across all sources and stages of the order fulfillment process. In short, a DOM is a window into omnichannel order management and fulfillment that intelligently chooses the best options based on the parameters a retailer defines. It is essential to a successful modern omnichannel retail operation.
What’s the Difference Between an OMS and DOM?
A traditional OMS was built for on-premises architectures before omnichannel shopping became status quo. It was designed to manage inventory from one primary source and for routine order cadences. Newer OMS platforms have been upgraded to be cloud-based, but still lack the extensive omnichannel capabilities that DOM systems are designed to deliver.
A DOM system is purpose-built for omnichannel order management and fulfillment. It provides connectivity among all the various components of omnichannel and enables eCommerce retailers to meet customer expectations while keeping costs low.
How Does a Distributed Order Management System Improve eCommerce Fulfillment?
DOM systems provide numerous benefits that extend across inventory management, warehouse management, and supply chain management. All of these benefits serve to improve the eCommerce fulfillment process and, ultimately, lead to a better customer experience.
Some of the ways DOM improves fulfillment include:
- Multi-node distribution. Omnichannel retail now involves dozens, if not hundreds, of suppliers, manufacturers, dropship partners, third-party logistics, and diverse fulfillment locations. Multiple fulfillment options are also standard, including traditional doorstep delivery and store fulfillment options like buy online, pickup in-store (BOPIS); buy online, pickup curbside (BOPAC); ship-to-store; ship-from-store; and buy online, return in-store (BORIS).
Every single node has to be tracked, aligned, communicated, and orchestrated. A distributed order management system automates this tracking for retailers, provides intelligent order routing to select the best distribution center for an order, and uses the best shipping carrier and rate to get products to customers quickly and at the lowest cost.
- Scalability. Many legacy order management systems can’t scale to serve high volumes of SKUs being sold on multiple channels through the various fulfillment options. As eCommerce continues to grow and as retailers continue to optimize brick-and-mortar stores for eCommerce order fulfillment, having a modern DOM system that offers automation, dynamic order orchestration, and configurable fulfillment logic is central to success.
- Inventory optimization. Retailers need real-time inventory visibility to see all available-to-promise inventory levels, current inventory availability, and order status from one single platform. A DOM system provides this and integrates into eCommerce platforms, supplier platforms, enterprise resource planning (ERP) systems, customer relationship management (CRM) systems, and shipper platforms to ensure that everyone is on the same page for every order.
Distributed order management systems also optimize reverse logistics for returns and refunds, helping retailers determine the most profitable way to manage returned inventory. When omnichannel retailers can optimize their inventory, they reduce costs, are more accurate with forecasting and stocking, and elevate customer satisfaction and loyalty by making sure inventory availability is accurately reflected to customers.
- Compete with two-day/same-day delivery. Years ago, Amazon set customer expectations for two-day free delivery. Traditional order processing and manual processes in fulfillment centers have hindered retailers from competing with this eCommerce giant. A DOM system can level the playing field by automatically selecting inventory from locations closest to the customer, splitting shipments, and choosing the fastest and most cost-effective shipping option.
- Ensure business continuity. Recent supply chain disruptions have made it clear that retailers must have multiple sources or risk out-of-stocks and losing customers to competitors. A distributed order management system provides visibility into available inventory to give retailers an early heads-up on potential bottlenecks and alternate solutions from which to choose. This ensures business continuity when the unexpected happens and protects the customer experience by giving retailers more lead time to correct issues before customers are impacted.
- Deploy sustainable eCommerce fulfillment practices. The pace and growth of eCommerce demands that retailers pursue automation to not only stay competitive, but to lead in their markets. A DOM system provides a single lens into sales channels, marketplaces, workflows, every fulfillment center, and real-time information on pricing, profitability, and customer preferences.
The data gathered from a DOM system can provide accurate information about which fulfillment practices are sustainable and have the biggest impact on revenue and customer satisfaction. Gone are the days when spreadsheets were sufficient to track orders—today’s retailers need cloud-based apps that give everyone access to the data needed to make wise decisions. A DOM system offers an incredible wealth of data that will inform the best way to prioritize sustainable fulfillment practices.
What to Look for in Distributed Order Management Solution Providers
Choosing a DOM provider requires retailers to know their goals for the solution and to vet vendors for alignment on values, KPIs, and fit. Here are some key questions to ask DOM solution providers:
- Is it purpose-built for retail? Retail has unique needs and nuances. The best DOM system built for retail will take these into account and incorporate them into the user experience.
- Does it integrate everywhere it needs to? A DOM system requires integration into a retailer’s existing software systems and into the systems of its suppliers, manufacturers, shippers, and third-party logistics or eCommerce fulfillment center partners. Integrations should be pre-built and utilize APIs.
- Is it configurable? Retail supply chain employees are not coders. A distributed order management system should be configurable with easy-to apply-rules and logic that does not require coding changes.
- Is it user-friendly? Reporting and analytics dashboards and user interfaces should be clear, simple, and easy to navigate and interpret.
- Does the vendor provide great customer support? When an issue arises, retailers need to be able to get customer care when and on whatever channel they want it to get a quick resolution and keep business moving.
- How reliable is it? When a DOM system goes down, the rest of the fulfillment process comes to a crashing halt. Check the provider’s uptime and availability statistics.
- Is it built to grow with the business? While technology changes fast, a DOM system built on modern cloud architecture should be able to update and upgrade as technology changes. Talk to providers about how they scale and support future growth.
A distributed order management system is critical to the success of today’s eCommerce enterprises. It facilitates the speed, cost-effectiveness, and fulfillment optimization that helps ensure customer satisfaction and loyalty.
Learn how Radial Order Management can optimize your eCommerce fulfillment operations and always deliver an exceptional customer experience.