eStar senior project manager Patrick Gaskin discusses going beyond click and collect.
The evolution of eCommerce and its impact on physical stores continues at pace.
In the past year click and collect has evolved to include curbside collection and other contactless iterations on the theme.
But these customer facing changes hide a wider push by retailers to optimise and expand their order fulfillment services.
The pandemic has driven more retailers to invest in distributed order management systems and to leverage their stores in ways that go beyond click and collect.
The purpose of a distributed order management (DOM) system is to allow retailers to maximise order fulfillment while balancing two considerations:
• The customer’s expectations of receiving their order on-time and in-full; and
• The company’s desire to meet these customer expectations at the lowest possible cost
The DOM system looks to orchestrate and optimise the process of customer order fulfillment across a myriad of inventory-holding locations whilst managing these two key considerations.
Depending on the complexity of the retailer, inventory may be held across stores, distribution and fulfillment centres, dark stores, micro fulfillment centres, suppliers, and third-party providers holding inventory and managing fulfillment and dispatch (3PL).
At its core, the DOM provides a configurable order management rule engine that determines and orchestrates how orders can be fulfilled.
To manage fulfilment across these locations a DOM is fed transactional data, real-time inventory availability across the fulfilment locations and freight and fulfillment costs.
Orders are then seamlessly routed to the fulfilment location that can provide the best customer outcome at the lowest cost to the business.
Depending on the sophistication of the system it will also consider capacity, capability and order priority to ensure that orders are only routed in the correct priority to fulfillment locations that are setup to handle the order.
For example, a small store may not be able to process as many online orders as a larger store with more space and staff.
So the smaller store should be sent less orders.
Or a store that doesn’t have employees with the necessary training to fulfil a certain product should never be allocated orders containing those products.
When implemented correctly, DOM can unleash additional capacity and efficiency from the existing network.
The smarter the decision engine the better it is able to achieve this by accurately allocating orders to the perfect fulfilment location and improve DIFOT (delivery in full and on time).
The impact can be significant.
A large NZ retailer implemented DOM within their business and year on year growth increased from 20% year on year to 50% year on year growth in the first year of implementation.
The successful implementation of DOM allowed the retailer to utilise all available inventory across their network, which improved conversion and improve delivery times for customers, which improved customer satisfaction.
At the same time, they were also able to reduce freight costs.
The improved confidence that DOM provides to a retailer’s fulfillment operations, allows them to offer their customers a wider choice of order collection, delivery services and fulfillment speeds.
This can help them compete very effectively with pure play retailers that do not have such a wide network of fulfilment options and locations.
This was especially the case during the pandemic. Retailers with DOM already in place were able to accelerate growth more readily than those with more conventional order management systems.
COVID-19 has seen increased interest in DOM across the retail spectrum as retailers look to fully leverage the sharp growth in eCommerce.
Specifically, the shift to online has driven demand by consumers for a wider range of fulfillment options and a desire from retailers to better leverage the fulfilment options (i.e. store networks) they already have.
Are you looking for a technology solution that will drive improved efficiencies and competitive advantages across the online channel?
If so, perhaps it is worth finding out more about DOM and what it can do.