What is Distributed Order Management (DOM)?
Distributed Order Management (DOM) is a term that you should know if your company sells online. Omnichannel retail will continue to grow in popularity as the eCommerce industry becomes more customer-centric.
What is Distributed Order Management (DOM)?
Distributed Order Management (DOM) is a system that optimizes fulfillment to make sure orders arrive on time and are at the lowest possible cost. DOM systems are software programs that automate order routing, splitting, shipping, forecasting inventory levels for reordering purposes, and inventory management.
When consumers want to buy a product, they bounce between channels and platforms to find the best offer for them without sacrificing quality or service. Blending multiple platforms (physical stores and eCommerce platforms) without impacting customer experience is essential.
The retail industry is shifting towards a more omnichannel approach, which means retailers need to streamline their distribution channels. A distributed order management system helps companies meet the demand for products.
As eCommerce technology evolves, brands are being forced to accommodate just as quickly. This can make managing inventory increasingly challenging and complex because of the need for backend technology that provides a backbone for brand fulfillment. A DOM system helps meet customer service needs while boosting brand trust and satisfaction.
What are the Characteristics of a Retail DOM system?
The goal for these systems is twofold: to quickly replenish stock while also fulfilling customers’ needs.
A distributed order management system allows you to view every item in your inventory from a single platform. This means that modern business can better control their inventory and keep track of what they have on hand, so future consumer demand is met.
You can ensure that your customers get their orders on time with a single view of inventory. The last thing you want is negative customer feedback because they don’t get what they ordered in the right amount of time.
Legacy infrastructures are old and not built for the new era of retail. Distributed order management systems can make your business more efficient. They provide access to several different fulfillment methods through integrations, making it easier to optimize all process stages without adding too much complexity.
Distributed order systems include:
- Integrations to third-party logistics providers (including Amazon FBA)
- Order splitting and merging
- Order routing automation
- Inventory visibility at all stages of the buying and selling process
- Dropshipping features that help facilitate fulfillment by vendors
- Fully customizable workflows and integrations
A distributed order management system is valuable and necessary to maximize your business’s success. Implementing this type of system into an existing process can be difficult, but it will provide improved visibility and inventory accuracy that are worth the effort.
How Does Distributed Order Management Work?
Retailers use distributed order management systems to manage inventory and orders better. These systems have a variety of benefits, including:
- Syncing e-commerce platforms and storefront locations to allow customers to buy online and pickup in-store
- Searching for shipping partners to get the best rates
- Merging orders that were placed by the same customer and consolidating shipping
- More efficient order processing
- Improved customer experience
These features are helpful because they allow your customers to control when and where they purchase while also tracking their engagement with the product. This way, you can better connect the dots if a customer decides to buy from another channel each time.
With a distributed order management system, companies can have more visibility and flexibility with wholesale partners. These systems also offer more excellent synchronization of product orders from distributors to retailers.
Do You Need Distributed Order Management?
Nowadays, retailers need to use a distributed order management system. This is the new normal in terms of retailing.
When should you use a DOM? It depends on your business’s stage and where the most friction points are. Retailers that benefit from implementing these changes will be those who have:
- Multiple product suppliers: Working with many suppliers is both time-consuming and frustrating. The more you work with them, the harder it will be to track your data or know how much product to order from them.
- Multi-warehouse structure: It can be hard to track your inventory if your company has more than two warehouses. This becomes harder when there are 3PL warehouses because they are slightly removed from directly managing their inventory. A DOM will consolidate this data, giving a bird’s eye view of all inventories and access to information about other companies’
- A growing SKU portfolio: Distributed order management is the process of breaking up your product line into manageable categories. When you have hundreds or thousands of SKUs, keeping track without a system in place can be challenging.
- Existing customer solutions or centrally connected software: If you don’t have a connected system, your customer experience will be negatively impacted.
- Growth potential but lack a single data hub: The more fragmented your business, the harder it will grow. If you feel like growth is being stifled because of a lack of data organization and management, then maybe it’s time for distributed order management solutions.
Distributed Order Management vs. Traditional Order Management
Distributed order management is a new system developed in response to the traditional order management methods. It offers more integrations, connectivity, and automation than older systems.
Distributed order management is no longer a trend, but it has become an essential part of the retail industry. It’s also why merging both systems can be difficult.
How does DOM Differ from Other Types of Order Management?
Legacy order management systems, designed long before the omnichannel revolution, cannot provide retailers with the flexibility they need in their distribution channels. They also lack the speed and efficiency that many modern retailers require because these older systems operate as a single process without considering where inventory is located.
Distributing your order data to everyone in the company helps increase productivity and capacity.
What Can DOM do that Other Order Management Systems Cannot?
Legacy systems only focus on processing orders, but distributed order management focuses more on fulfilling an order and ensuring it is done in the best way possible.
When an order is placed, it will be managed by the system. This helps ensure that everything goes smoothly with customer orders because all data can be collected quickly and transparently.
The capabilities of DOM include:
- Improved Automation: Automation is essential for companies that want to take advantage of the omnichannel experience. This new retail method means many touchpoints, and it’s crucial to keep up with them all. Otherwise, you’ll limit your ability as a company.
- Customization: When it comes to managing your business, you need a personalized system for how you do things. Distributed order management systems will allow for customization and flexibility by establishing parameters based on your needs.
- Integration: The challenge with a multitude of data sources is the integration. It isn’t easy to ensure that you get all relevant information and align it correctly. Still, once this has been done properly, businesses will see everything from every angle.
- Flexibility and Scalability: One of the benefits of a DOM system is scalability. This means you can grow your business easily because changes can be made quickly across all departments and divisions, so no one gets left out.
Traditional order management systems are limited to their functions, but a distributed order management system is not. This difference in architecture makes it more efficient and scalable.
As the retail industry has become more digital, companies need to use a distributed order management system and traditional ordering methods. These systems are necessary for retailers who want flexibility and responsiveness.
Benefits Distributed Order Management System
Distributed order management helps retailers control their supply chain by giving them a better view of the orders being processed and inventory in transit. This means they can be more flexible with how they run things.
- Multiple Fulfillment Processes: Legacy order management systems often only connect to a limited number of shipping providers, meaning that businesses must use other software for more accommodating options. These add-ons come with their own expense and quickly add up the overall price tag. DOM provides a more straightforward process because it can handle all fulfillment orders and split them to reduce costs across every available channel.
- Cross-Channel Integration: It is easier to unify them with distributed order management if you have disparate sales channels. This will ensure accuracy in inventory sourcing when different channels are taken into account.
- Customer experience: Businesses need to have an order fulfillment system. This will help them keep track of their inventory across multiple channels, so they don’t run out unexpectedly. This translates to a better customer experience because you’ll be able to provide what they need promptly.
- Global visibility: DOM can support global inventory visibility, allowing customers to order and receive items anywhere.
- Cloud: DOM systems are cloud-based. This means that all relevant information and data can be accessed easily from any computer.
How to Choose a Distributed Order Management System
When choosing an order management system, there are some key questions to ask and elements that need consideration. Have a clear picture of what your company hopes to achieve.
Here are some best practices when selecting a DOM system:
1. Define Objectives and Priorities
It is essential to look at the company and understand what you need your new system to do for you. Include every department in your corporate structure, including suppliers who can help set up systems that work best with this type of order management.
Some questions to ask:
- What are your success metrics when it comes to inventory? Do you want to reduce carrying costs, develop accurate inventory counts, and improve inventory turnover?
- What are your growth plans? Choose a tool that will allow you to keep track of them and manage them more easily.
- How seasonal are your sales? Your business needs to ensure that the inventory management tool you are using can handle seasonal sales.
2. Proposal Request
To find the right vendor for your DOM, you need a proposal that includes features and technical requirements. Here are the elements your proposal should consist of:
- Order volume
- Software, hardware, and networks that you use
- Your existing vendor landscape
- System acquisition process timeline
- A detailed breakdown of your training process
Through these questions, the DOM vendor will tell you if they can match your needs.
3. Do Your Research
Before you commit to a software system, be sure to know what features and limitations it has. Talk with various DOM vendors about their plans so that you can find the one best suited for your needs.
When considering a new system, it is essential to try out the software for yourself. This will give you an idea of how easy or difficult training on this particular tool would be.
You can also check customer reviews to see whether or not customers are satisfied with the performance of the DOM system.
Finding the perfect system is complex, and if you can’t find one that fits all of your needs, it’s important to make compromises.
It’s also worth considering who will be responsible for providing support, training, etc.
The following steps will help you find the perfect distributed order management system. Consider all of your needs and what you can live without to determine which DOMS is right for you.
Once you’ve selected the software that will best fit your needs, it is time to make sure this decision is a good one.
- Does the system allow you to automate manual processes?
- Does the system let you manage sales across multiple channels, currencies, and geographical locations?
- Does it support the use of multiple warehouse locations?
- Is forecasting possible?
- Does it support third-party integration such as warehouse management, accounting, and fulfillment?
- Are there new features being added?
Final Thoughts on Distributed Order Management
You may have a legacy order management system, but it is time to consider upgrading. Make sure you are looking at the capabilities of modern solutions, and your business will be better positioned for success.