Making the most of Distributed Order Management (DOM)

Distributed Order Management (DOM) can have a big business impact for companies with direct-to-consumer businesses across e-commerce and retail channels. It has the promise of increasing sales, lowering markdowns, and decreasing excess inventory through better fulfillment and customer service. Yet, deploying DOM may be quite challenging due to business and system constraints. Let's look at why.

We need to first understand what DOM is. Imagine a company with multiple retail stores and e-commerce sites that are being fulfilled by a set of warehouses. Product is stored at your retail stores and DCs. As you sell more of a product in retail stores, it is replenished from the warehouses. E-commerce orders are being shipped out of your DCs. If everything goes according to the plan and you sell as much as you supplied, then you don't need any additional solution. In fact, the better your forecasting and soft allocation processes are, the less you need DOM. Yet, real life is not that easy. There are always imbalances. 

DOM comes into play when you run out of inventory at the selling point. For example, a customer is at the store and you don't have the product they are looking for in that location. Or a customer is trying to place an order on e-commerce, and you run out of the goods in the warehouse. In such cases, you would like to reach out and grab the inventory from other locations to fulfill the customer's order. Since you have multiple fulfillment locations, you need to have a set of rules that maximizes your sales while minimizing your cost. DOM helps you manage these rules and find the best fulfillment option for your order at that moment in time. You will be able to collect the payment and either ship the order or schedule a pickup. 

There are technical challenges with DOM. You need to have full inventory visibility across your supply chain at once - but that inventory is likely to reside in multiple systems such as WMS, ERP, Retail, e-commerce. Somehow, you need to take perfect inventory snapshots across multiple systems and pull them quickly into a central place to make real-time fulfillment decisions. 

There are also functional challenges. You need to consider minimum inventory levels at each location, whether you can fulfill an order from multiple locations or not, how to account for distance (thus freight cost), time schedule for each location, fulfillment prioritization, minimum order quantity, the maximum number of shipments, etc. These are the business rules that your organization needs to decide. Since there are multiple departments involved (retail store management, e-commerce management, warehouse management), reaching a consensus can take some time.

I believe that DOM should be part of your core business application platform where you keep track of all your inventory points. If your application can run your warehouse, retail store, and e-commerce operations, that's the best scenario. You will avoid a lot of technical headaches.

On the functional side, DOM should have enough parameters to model the business rules - and you can start small. Configure a few fulfillment points first. Deploy simple rules. Experiment. Learn. Expand your fulfillment network. Deploy more complex rules. With each step, you will realize the value of DOM more.

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My name is Cem and this has been another gem.