Order Management, and the Rise of Multichannel Commerce

Order management and fulfillment has gotten more complicated. We all know that. At one time, the order management process might have been as simple as taking the order, applying the lead time, meeting the desired order delivery date, tracking the order status, invoicing the customer, and handling any subsequent returns. Multichannel commerce has changed this, while customers have become more demanding.

As many companies’ operations have become more complex, through organic growth, mergers and acquisitions, or outsourcing of production or fulfillment operations, what has evolved in many cases is an installed base of multiple internal order management systems that are not integrated with one another. These silos can prove to be a real obstacle to offering a satisfactory customer experience, much less an acceptable consistent, cross-channel customer experience.

To make matters worse, the cost of an imperfect order has certainly increased, not decreased. So the consequences of flaws or discontinuities in the order management process have greater implications than they might have had at one time.

Against this backdrop, scores of companies are pursuing a strategy of “buy anywhere, sell anywhere, fulfill anywhere, return anywhere” to satisfy these ever-increasing customer expectations, and to be able to do so with greater operational agility.

Distributed order management has been around for a while; the advent of multichannel commerce has increased the focus on increasingly sophisticated order management systems that can be much more channel agnostic.

Order Management Solutions

The vendor community has responded to these new realities with order management solutions with broader, deeper capabilities, particularly in areas such as the following:

  • Global order visibility, monitoring, and exception management

  • Integrated updates for orders placed through multiple channels (i.e., started in one channel, completed in another channel)

  • Monitoring of available-to-promise commitments

  • Allocation rules, segmentation, and prioritization rules

  • Integration of third-party/subcontracted order lines

  • Coordination of value-added services (e.g., testing, delivery, and installation)

  • Configuration management of more complex products

  • Store-based fulfillment

  • Seamless drop-shipping, with ability to trigger supplier purchase orders (POs)

  • Merge-in-transit fulfillment capabilities for single customer delivery

  • Re-routing of in-transit inventory

  • Reverse logistics business intelligence

  • Authorization and acceptance of returns at multiple points, regardless of where the purchase was made

  • Consolidation of returns shipments

Solutions from vendors such as IBM (Sterling Distributed Order Management)Manhattan AssociatesOracleSAPSofteon, and Syncron, in particular, offer order management capabilities that are worth looking at. The space is even attracting new vendors, such as Lettuce, to service the needs of small to medium businesses (SMBs).

Recommendations for End Users

Companies that are pursuing a multichannel commerce strategy really need to assess the capabilities of their order management systems to rise to the competitive challenge and to meet customers’ expectations. As the customer experience has become more important to customers, and is often one of the major decisive factors in whom a customer wants to do business with, companies need to recognize the importance of their order management systems to the customer experience, and to commit to meeting customer expectations.

Companies need to be aware and think about things such as the following:

  • How many order management systems does the company have in-house?

  • How are these order management systems integrated?

  • How important is it for the enterprise to have visibility across an enterprise’s order management systems?

  • Does the company need to achieve higher on-time delivery?

  • How important is it that your customers have a consistent experience across your channels?

  • Is the company pursuing a multichannel strategy?

  • How distributed are the company’s management and fulfillment processes?

  • How common are bottlenecks in the fulfillment process?

  • What are the company’s manufacturing and fulfillment strategies (e.g., make-to-stock; make to order; configure-to-order; engineer-to-order; drop-ship to customer)?

  • What is the cost of an imperfect order?

What is your channel strategy, and what are you doing to align your order management strategy?
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