The retail world is a vastly different place to what it was 20 years ago. Not only do customers demand new products and services, but today’s retailers are also required to adapt and transition to new strategies, standards, technology, and payment methods almost constantly. In such a fast-paced environment, it is easy to become overwhelmed and berated by new ways to engage customers.
So how do retailers push back against this surmounting wall of pressure put on them by customers? How do retailers satisfy the new demands of an ever-evolving and technologically advanced consumer?
If you find yourself asking these same questions, then the answer might be focusing on the fundamental break down of your business’ supply chain management. In this blog post, we’ll look at Order Management in Dynamics 365.
1. What is “DOM”
Distributed Order Management or “DOM” is a tool that allows retailers to see real-time inventory levels across all channels and optimize order fulfillment, allocation, and distribution to better serve their customer’s needs.
In order to understand the benefits of DOM, we must start with the basic structure of a traditional Order Management System. Order management handles the fulfillment of customer orders from an online store or brick and mortar store. Orders are sent to a fulfillment center or third-party logistics center (3PL) to be processed, picked, packed, and shipped. Returned orders are processed at the fulfillment location and add the inventory back into stock.
This example outlines a simple operation with a single storefront and a single fulfillment center. When this operation is scaled up to multiple storefront’s and multiple fulfillment centers, many more challenges arise. This is where DOM can make a major difference in this operation.
DOM works to optimize how each order is fulfilled. By analyzing the inventory levels across multiple channels, comparing shipping costs for items held at different fulfillment centers with different levels of inventory, and taking into account physical inventory at Brick and Mortar stores that may have returned items from online orders.
DOM takes the guesswork out of trying to manage an omni-channel operation by providing clear and concise decisions on order fulfillment to optimize costs and time. Thus, resulting in a better experience for today’s more demanding customers.
2. DOM in Today’s World of eCommerce and Omni-Channel Retail
DOM brings clarity and reason to even the most complex order management scenarios. With many retailers using multiple online storefronts and a mix of fulfillment centers and 3PL solutions, order management can become very complicated and costly.
DOM can solve many of these frequently faced problems. Firstly, how do you ensure that you are selling stocked inventory across all your channels? How do you react to low inventory levels at a fulfillment center with open orders for that item? How can you ensure that inventory is accurate before a customer places their order? Which fulfillment center should process which order?
These are inventory questions that every retailer faces when using eCommerce. DOM can help address these issues and provide real-time solutions for managing inventory.
Now let’s factor in brick and mortar stores and shipping carriers into the equation. How do you factor in-store inventory into your inventory reporting? Are returns included in your saleable inventory? If a fulfillment center is out of stock of an item, can it be shipped from a store to fulfill an order? Do shipping costs change depending on which fulfillment center processes an order? How can shipping costs be factored into your cost analysis of inventory movement and turnover?
These questions can all be addressed with the use of DOM. Not only can you optimize your processing time and cost of orders, but inventory turnover can be improved by transferring inventory from slow-moving stores or fulfillment centers to move active locations.
3. DOM Functionality
While the structure of DOM is somewhat complicated to explain on paper, implementing DOM with Microsoft Dynamics 365 for Finance and Operations is straightforward, providing you have the correct information.
This information comes from your current day business processes and costs analysis. DOM can be run with basic operational data and costing information (such as carrier/shipping costs); however, there is a plethora of information that can be used to optimize order management. The level of complexity depends on data you feed it.
The basic functionality of DOM is based on the following diagram:
Orders are submitted and processed by the DOM Solver based on a set of prerequisite parameters, rules, fulfillment profiles, and plans.
The DOM Parameters allow you to set up your order retention and rejection period in days, maximum fulfillment attempts, and maximum distance for applicable fulfillment centers. These basic parameters are the foundation for your DOM Solver.
DOM also considers a wide assortment of rules and profiles depending on the level of complexity of your operation and operation procedures. We will go into more detail on this setup and how it affects the DOM results in a future blog.
DOM is an impressive tool for retailers and an absolute necessity for those retailers running omni-channel operations or eCommerce solutions. As we can see from the challenges faced by retailers in today’s world, customers want to be able to navigate and order from any channel with the same user experience synonymously. This provides a unique challenge to satisfy and retain these customers. This is where DOM can not only add value to the customer experience but simultaneously add cost-saving measures to the retailer.