Why Distributed Order Management is Important to Your Success
We’ve already covered what distributed order management is in one of our earlier posts. What we haven’t talked about, however, is how implementing it in your current logistics infrastructure is essential to success in the 21st century marketplace. And of course, like most innovation, the sooner you hop on this train before your competitors, the better off you’re likely to fare.
In case you’ve forgotten what distributed order management (otherwise known as DOM) is, it’s a system that manages inventory and orders across multiple companies in a single supply chain. This includes manufacturers, distributors, and the retailers at the end that finally sell the products off to everyday customers. As Supply Chain Beyond asserts, DOM is “the best way to achieve… 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.”
Prior to the rise of DOM, most businesses adhered to traditional order management which limits visibility to each company on its own. Without the overview DOM provides, a lot of guesswork is involved between each link of the supply chain, resulting in retailers going out of stock due to inaccurate sales predictions and suppliers not knowing when to drop off more product or how much. This, in turn, leads to unhappy customers who have a set expectation that they product they’re looking for is in stock, costing retailers in lost business — both in the moment and potentially in the future.
Though technology is often helpful in solving the world’s problems, a recent technology study done by RIS News and Gartner had only 20 percent of their retail respondents using up-to-date technology for inventory visibility. 24 percent of them utilized any sort of distributed order management suite, and only 16 percent had technology for multi-channel (or omnichannel) fulfillment. Despite these low numbers, the majority of respondents agreed “that the ultimate goal is to migrate to a single, flexible platform capable of managing the overall business.”
With that in mind, here are a few reasons highlighting the benefits of distributed order management.
Flexibility to Keep Up with Physical and Digital Customer Demands
There’s no hiding from the Internet and the boon it provides to the economy. As ecommerce grows, so too do the ways businesses interact with their customers through omnichannel retailing, reaching in- and outside the Web. Luckily for you, DOM is a 21st century solution for your 21st century inventory problems. By granting you global visibility across your supply chain, you can give your customers a true “complete” order promise, watching a product move from manufacturer to your customer’s door every step of the way.
If you don’t have it in stock in your own warehouses, your supplier is pinged with a notification to ship more product to refill for you automatically, a model called vendor-managed inventory. If a package gets stuck somewhere in the chain, you need not phone each link to find where the problem arose; the software manages that all for you. Think of all the time, stress, and money you can save just with more information.
Even if technology scares you or you find DOM suites too costly, that doesn’t change the fact that these innovative solutions are sought after by your competition. As the competition begins to hop on the DOM wagon, the longer it takes you to join in, the more it might cost you in the end. nChannel sums up the current logistics reality pretty well:
“You need to understand how distributed order management will be a part of your business, whether you like it or not. But I have good news for you. So few organizations, relative to the enormous pool of merchants out there, are doing this correctly — or at all. That means figuring out how to implement distributed order management practices and technology can be an enormous competitive advantage for you. Imagine if you could deliver twice as fast as your competition, but offer the same (or lower) prices. What if you could offer options like ‘buy online, pickup in store’ while none of them can? What if your online store always has items in stock, when your competitors constantly run out? You would corner your market!”
Indeed, in a world that’s run on sustainability and corporate efficiency, the smart business owner remains ahead of the pack. DOM will help speed things up and, provided you remain on top of the new system, you’ll remain on top of your competition too.
A Tech-Friendly Model That Promotes Automation
With all of its fancy algorithms and software, distributed order management streamlines your supply chain information so you can get back to focusing on your business and keeping your customers happy. A Gartner report in 2015 defines a true DOM system as having four main components:
- A central view of inventory that lets you orders in each link of the chain, as well as in-transit. This is different from traditional order management that has you pigeon-holed to what’s only in your warehouse;
- Complete customer information such as their address, payment information, and other data necessary to provide the best product delivery service possible;
- A rule engine that acts as a “brain” for the DOM suite, setting rules for automatic order fulfillment and restocking based on your business’ needs;
- And, most importantly, the capability to instruct logistics personnel across distribution centers, suppliers, and stores with how to most effectively carry out the physical aspects of the fulfillment process.
Keep these four factors in mind when weighing out options for your own DOM solution since software isn’t created equal. With that said and your narrowed-down choices are equipped with these components, it becomes a matter of preference, such as user interface, additional support and services the software developer provides (like free updates), and other features.
After you choose which solution you want, it’ll be important to re-train your logistics people on how to use it effectively. Doubly so, make sure they know how to troubleshoot any issues that arise in the software. While machines and automation are both very useful tools, they’re only as effective as their operators and what they know at the end of the day.
Strengthen the Supply Chain From a Global Perspective
Since we’re on the topic of IT concepts, the term global as it’s used here isn’t a reference to the entire world. Obviously that wouldn’t be good for business if you gave all of your competitors a list of your inventory and where it’s all going, but that’s not what we mean. Global, from a software standpoint, refers to the most open access tier in a program that affects the entire application. In other words, it’s public to all users on that system.
It goes without saying that any applications you use — whether it’s accounting software, digital timesheets, or the back-end of your company’s website — should be handled in a secure fashion. What DOM does, however, is elevate inventory information access globally across your supply network, meaning your suppliers and distributors will have access to your inventory numbers and vice versa.
This is vastly different from the traditional order management method where each company kept their books to themselves, only sharing information ad-hoc with one another, though often to the detriment to the other links. By making inventory visible throughout the chain, the other links can better communicate shortages or overstock, track orders in-transit, and better account for products moving from location to location. This gives you and the other logistics managers in your chain ways to troubleshoot problems as they arise in real-time; think of DOM as a central command hub of sorts that gives you a bird’s eye view of the supply line.
As Supply Chain Beyond words it:
“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-effectively] across a complex network of sourcing and fulfillment processes.”
With this new top-down perspective of your business’ supply chain, you have all the information you need to make accurate and efficient logistics decisions.
Allow Everyone to Do What They Do Best
It shouldn’t come as a surprise that if you’re going to be sharing information with third-party companies, there’s going to be a bit of teamwork involved. Unless your business is big enough to handle everything between initial manufacturing to last-mile delivery to your customers, willing inter-company cooperation will be key to your success with DOM.
Since each company has its own ways of doing things, as well as its own culture and mission statement, it’s crucial to make sure you and each party that represents a link in the chain are all on the same page. If a link in the chain is broken — if a supplier doesn’t (or can’t) fill an order, if you aren’t getting accurate information, if numbers aren’t matching up — the whole system falls apart. Moreover, if everyone does things differently and uses different software that don’t play nicely together, you get the same result on a digital level.
When coming up with your distributed order management model, make sure that everyone in the chain — your suppliers, your distributors, and your own warehouse staff and delivery drivers — understand their role within it. The difficulties mentioned above are easily circumvented by allowing everyone (that is, your experts) focus on what they do best. Let your vendors help manage inventory levels. Let your drivers load your vehicles with the most effective configurations on the smartest routes. And most importantly, let yourself focus on keeping your company afloat, making sure your employees, business associates, and customers are happy.
Which brings us to our last point…
Everything Equates to Happier Customers
Though arguably your supply chain might be the veins of your organization, the customers (and their money) are the lifeblood that keeps the whole thing going. Without happy customers that want to come back and continue doing business with you, your business will atrophy and die. As customers interact with businesses through multiple channels, both on- and offline, having a DOM system to help manage it from all fronts will make the whole process more efficient. If we keep equating your business to a living organism, think of DOM as one of those sci-fi nano robots that cleans cholesterol deposits (that is, inefficient inventory management processes) from its veins.
In turn, the more efficient your business and logistics systems, the quicker you can serve your customers what they’re asking for. Less money is wasted on inefficiencies handled by DOM, meaning you can afford to lower shipping costs and out-compete other providers in your market. Better top-down views of your inventory, where everything’s going, when, and how quickly mean you can better diagnose shipping problems faster and guarantee accurate, speedy deliveries. All of this equates to customer satisfaction and there’s no better marketing team than a pleased patron who’ll in turn tell all their friends about the services you provided. The same also holds true though: upset your customers long enough and they’ll stop coming back, encouraging others to follow suit.
By using distributed order management and remaining on the cutting edge of the latest logistics trends (and implementing them effectively), you can avoid this fate. Instead, let DOM technology do all the heavy lifting for you. Your legs, back, company, customers, and pocketbook will thank you for it.