What Is Distributed Order Management (DOM)?
Posted by Julia Morrissey on Jan 27, 2024
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Brands are quickly recognizing that their current systems aren’t equipped to handle modern retail. It’s critical to their vitality to unify physical and digital experiences.
An omnichannel approach––one that provides a seamless shopping experience across channels––requires robust systems, and in particular, a flexible order management system. That’s where distributed order management comes in.
Distributed order management can greatly enhance the efficiency of an omnichannel retail brand in ways a legacy order management system simply cannot. In order to stay competitive, you need a modern, flexible order management system with DOM capabilities.
In this article, we explain distributed order management and its many operational and customer-centric benefits.
Distributed order management (DOM) optimizes order processing and fulfillment. It’s an advanced component of an order management system (OMS). With DOM, an OMS can support multiple channels and use routing logic to fulfill customer orders from the ideal location. This helps retail brands minimize costs and reduce shipping times.
Distributed order management supports a retail brand’s omnichannel approach by optimizing their ability to sell, fulfill, and process returns from anywhere. Replacing legacy systems with flexible OMSs that include DOM ensures inventory visibility. This makes it such that you can process orders from multiple channels and offer various fulfillment options to customers.
With a legacy OMS, you won’t be able to ensure that your physical and digital presences are integrated, and therefore, will likely run into operational and fulfillment challenges. And we all know if you fail to offer quick and convenient fulfillment options, you’ll most certainly lose customers to competitors.
The ultimate aim of distributed order management is to improve the fulfillment process. With omnichannel retail, there are multiple touchpoints, and you need an order management system that can work across each and every one. A legacy OMS simply won’t cut it. Below, we outline the benefits of distributed order management.
Distributed order management provides real-time visibility into your inventory across all channels. This means you have up-to-date and accurate information about stock levels, locations, and product availability.
This visibility allows for efficient order processing, as you can fulfill orders from any channel with confidence, knowing the exact status of the inventory.
With DOM a retail business can incorporate advanced forecasting tools, allowing you to predict demand more accurately. This helps in managing inventory levels efficiently to meet both current and future demands.
By analyzing historical data and current trends, inventory management becomes a proactive process, reducing the risk of overstocking or stockouts.
Enable intelligent order routing to the nearest fulfillment center or store. This not only reduces transit time but also minimizes shipping costs, enhancing overall operational efficiency and customer satisfaction.
Order splitting allows fulfillment from multiple locations, optimizing the shipping process and reducing costs. Merging orders, on the other hand, ensures efficient handling of items that can be shipped together, further minimizing expenses.
By leveraging inventory visibility, retailers can implement an endless aisle strategy. This ensures that even if a product is not physically present in-store, customers can still purchase it, enhancing customer satisfaction and preventing lost sales.
DOM facilitates diverse fulfillment options, such as “buy online pickup in-store” (BOPIS) or ship-from-store. This flexibility caters to various customer preferences, providing a seamless and convenient shopping experience.
Retail brands can swiftly adapt to changes in orders, shifts in demand, or disruptions in supplier availability with distributed order management. This agility ensures that your business can respond promptly to market dynamics, maintaining customer satisfaction.
Eliminate data silos by providing a centralized platform for comprehensive visibility across all channels. This integration enhances data accuracy, streamlines operations, and eliminates inefficiencies caused by fragmented information.
DOM systems function to address the fundamental principle that orders should be fulfilled from the most strategically optimized location. This approach provides the agility to navigate changes or challenges associated with orders, fluctuating demand, and the availability of suppliers, while ensuring the product gets to the customer as quickly and seamlessly as possible.
A DOM system acts as a central hub, receiving and processing orders from all channels, while providing real-time visibility into inventory levels across the entire supply chain. This includes various storage facilities, warehouses, and retail locations.
Using intelligent algorithms and predefined business rules, the DOM system determines the most optimized location to fulfill each order. Factors considered may include proximity to the customer, inventory availability, and cost-effectiveness. The system may split orders to fulfill them from multiple locations efficiently, minimizing shipping costs. Conversely, it may merge orders when items can be shipped together to optimize the fulfillment process.
DOM also enables retailers to offer diverse fulfillment options such as “buy online pickup in-store” (BOPIS), ship-from-store, or other methods based on customer preferences.
Imagine a customer places an order through her favorite shoe retailer’s website for two pairs of shoes. The dressy pair, which she wants to wear to an event tomorrow, is available at a nearby retail store, and the limited edition pair is at several warehouses scattered across the country.
The Distributed Order Management (DOM) system seamlessly processes the customer’s order, intelligently splitting the order to optimize fulfillment speed. The system alerts the store that there is an order for in-store pickup, while simultaneously identifying which warehouse to ship the other pair from so it reaches the customer as efficiently as possible.
If you’re a brand that has multiple warehouses, a large number of SKUs, several storefronts, or a growing number of suppliers, then when evaluating order management systems, you’ll certainly want to look for one that has distributed order management capabilities.
When choosing a solution, make sure you also consider your brand’s specific needs. For example, if you want to be able to enable stock pickup, you’ll want a solution that has configurable safety stock and threshold rules to prevent in-store stock-outs.
Retail brands need to be able to connect the channels they sell across and have accurate, real-time visibility into inventory and orders. You also need to be able to deliver a great customer experience, one that includes multiple options for fulfillment.
Ideally, distributed order management capabilities will reduce operational pain points by prioritizing data connectivity and automation and make it easy to meet customers’ growing expectations. Afterall, getting customers what they want, when they want, and how they want it is the name of the game.
Distributed order management plays a crucial role in managing inventory and fulfillment. By reducing shipping time and costs, you can increase customer satisfaction and elevate your business above less forward-looking competitors.
Replacing your legacy OMS with an omnichannel one that includes distributed order management is key for any brand looking to succeed in the modern world of retail. Learn more about NewStore’s Order Management.
