The Digital Commerce Chronicles: Book Two - Distributed Order Management and Beyond

Book Two Prelude

The Digital Commerce Chronicles are all about helping you navigate successfully through your ongoing quest for Digital Commerce excellence!

First step is to develop an understanding of the need for creation of a Distributed Logistics network to get closer to your customers (see Book One if you haven't already).

Very quickly, following the exploration of Distributed Logistics, comes the realization of the need for Distributed Order Management (DOM), so that your Distributed Logistics network will be able to function effectively.

Book Two begins with a lay persons discussion of what Distributed Order Management is, why it's needed and then moves into more detailed analysis of the key differences between available DOM solutions. Last but not least, we begin to explore options and exciting places where managing your entire digital ecosystem become possible.

Welcome to The Digital Commerce Chronicles: Book Two - Beyond Distributed Order Management!

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Distributed Order Management (DOM): Making the Most of Every Moment in Time

As we prepare to buckle down and withstand the rising, variant driven, third wave of the CoronaVirus pandemic, the importance of making the most of every moment has never been more top of mind.

When it comes to Digital Commerce this couldn't be more true, and in fact every time your business receives an order is truly a "moment of truth" both for your consumer's customer experience, as well as the profitable health of your business.

If you're managing your Digital Ecosystem properly, there should be no doubt that the product ordered is actually in stock within your internal facilities, or wider external inventory network. By the way, if this is often not the case, you and I should have a different conversation on how to quickly and easily fix that problem!

Increasingly, in order to meet faster delivery timelines and reduce transport costs, many brands and sellers are now opening multiple delivery locations and as soon as you open more than 1 fulfillment location option you will need some form of Distributed Order Management (or DOM for short) to determine from which location it's best to ship.

We simply define as below:

Distributed Order Management (DOM) - A networked inventory and order management system which selects and routes orders to the optimal fulfillment location based on an automated, rules-based decision process without the need for user intervention.

In the end, it really doesn't matter what slick network design and software modeling tools you've used to design your network, or even what additional product is currently on the way to your warehouse. What REALLY matters RIGHT NOW is what happens in that moment in time when that consumer places an order on your website, via a marketplace or on a retailers site for drop shipping, as it's now decision time!

This can run from the very basic of, we have two warehouse fulfillment centers and only one has the needed product in stock, so it's quite easy to decide to ship from that warehouse!

But what if the product is available in both warehouses, which do you choose? The answer here requires an understanding and calculation of shipping cost from each location.

Add to this the complexity of multi-item orders as well as several warehouse fulfillment centers, and other external inventory options, you can see how the decision process can quickly become very intensive indeed.

Here's an example of a fully functional DOM capability:

As you can imagine, there's numerous potential capabilities and functionalities which can be delivered through Distributed Order Management.

Some key areas to focus on to ensure you get the most bang for your DOM buck are:

1) Can the DOM hold different inventory costs for various product inventory locations, ie: if considering Distributor inventory closer to consumers there may be a higher cost, but due to proximity to end consumer, total delivered cost is lower.

2) Can the DOM leverage Inventory availability from other system types or does the DOM's host system need to be installed in every location where inventory is to be considered by the DOM logic?

These two items are only the tip of the iceberg when it comes to the potential functionality and variables to be considered by advanced Distributed Order Management systems, and we'll delve deeper into these in our next section All Distributed Order Management Systems Are Not Created Equal.

But for now I'll leave you with this question, when these moments of order truth start to come by the thousands, or even tens of thousands of times a day, will you be using the most optimal and capable solution to drive the maximum profit and customer delight possible in each moment?

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All Distributed Order Management Systems Are Not Created Equal

Are you familiar with the term?Distributed Order Management?or?DOM?for short?

And if you're familiar with the term, as most logistics and supply chain professionals should be by now, how much do you know about the actual make up and functions of a Distributed Order Management system?

For example, do you know which variables DOM systems utilize and what's involved in operating a DOM system effectively?

And do you know what functions Distributed Order Management systems are capable of performing, as very few are exactly the same and there's a wide range of capabilities beyond basic order management needs?

Talk of and utilization of Distributed Order Management systems continues to grow and now exponentially so, ever since the start of the CoronaVirus Pandemic drove 10 years of growth in 2020 and forced brands and retailers to ship product from wherever they could to meet this unprecedented demand.

The goal of this missive is to highlight some of the important functions and variable data points collected and utilized to successfully perform the Distributed Order Management capability.

Through reviewing these, we're hoping to highlight for you the differences to look for when selecting and then evaluating various Distributed Order Management systems, and how brands and retailers can best identify and measure these key traits in potential DOM solutions partners before selection.

Will start right out by saying there's a VERY wide spectrum of what can technically be considered a Distributed Order Management system.

Literally as soon as you have more than one Warehouse Fulfillment Center and put in place an automated review process that checks assigned zip/postal codes for each of these facilities, against the zip/postal code on each order to decide which facility will fulfill the order, you now have a basic Distributed Order Management system!

The potential of Distributed Order Management just builds from there based on both multiple functional capabilities and also the number of variables that the DOM platform collects, analyzes and utilizes as part of the decision process:

FUNCTIONS:

Connect to All Digital Sales Channels & Automate Functions

Aggregating Orders from All Connected Digital Sales Channels

Near Real Time Sku Level Inventory by Location (Internal Facilities)

Near Real Time Sku Level Inventory by Location (External Facilities)

Ability to Store and Apply Shipping Cost Models by Location (Internal Facilities)

Ability to Store and Apply Shipping Cost Models by Location (External Facilities)

Store Product?Costs by?Inventory?Location (Including Different Costs for Same SKU)

Solution Development, Calculation, Comparison & Selection of Best Solution

Automated Order Fulfillment Execution of Selected Best Solution

Support Drop Shipping Order & Fulfillment Processes

VARIABLES COLLECTED & UTILIZED BY DOM SYSTEMS:

Distance to Consumer

Weight/Cube of Products

Delivery Timing

Freight Cost (calculated)

Product Cost (Variable by Location)

Site Fulfillment Cost

Site Packaging Cost

The next time you're tasked with selecting a Distributed Order Management system or DOM, we hope you will give consideration to including all of the factors highlighted here as part of your selection process.

By utilizing such a rigorous and complete criteria in support of finding the best potential DOM solution, when you begin analyzing all of the different platform capabilities, it should become rapidly apparent that all Distributed Order Management systems are not created equal!

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Why Settle for Distributed Order Management (DOM)? When You Can Have Digital Ecosystem Management (DEM)!

Once upon a time a wise technology executive once said, “Never settle for average.” and even several years after his premature death to cancer, the company he formed under this mantra, Apple continues to grow and flourish!

“Never settle for average.” ―?Steve Jobs

The above two sections have provided a great foundation for readers on the basics of Distributed Order Management and just what it's all about, starting from the very basic of functionality to some of the most advanced.

The Digital Chronicles: Book Two?is called?Beyond Distributed Order Management?for a reason, and this article highlights the fact that there's much more out there for you to manage than just orders, you're each now managing a complex digital ecosystem.

Don't get me wrong, there's absolutely nothing wrong with Distributed Order Management, it's just that there's another additive level above DOM to which practitioners can aspire and that is Digital Ecosystem Management.

Those of you who've read my past articles on Matrix Commerce will most likely understand what I'm getting at here, and?Digital Ecosystem Management?or?DEM?for short represents the next logical step in this direction.

The below graphical depiction shares further detail, layering on all that's required in addition to basic Distributed Order Management (DOM) functionality to ultimately allow businesses to build, automate, manage and improve their Digital Ecosystems in a systemic, scalable and sustainable manner.

Over the last twelve months, while introducing the Etail Solutions EVP platform, I've been been utterly amazed at the level of inertia and confusion surrounding many businesses and their current IT systems tech stack and plans to change/improve the same.

Seemingly both the Technology leaders and the Business leaders in many organizations are both equally frustrated and at a deadlocked impasse over how to reconcile what systems they currently have and the best way to move things forward to meet rapidly changing business needs.

Great news is that the Digital Ecosystem Management approach shared above is not Rip & Replace, but offers both business practitioners AND their IT leaders a fast and affordable way out of current quagmires, ultimately leading to a happy place for all involved!

Most importantly of all, not only can Digital Ecosystem Management help businesses to successfully realign their current technology, but utilizing EVP?Channel Centric Architecture?can also give any business the FLEXIBILITY to smoothly make any needed Systems and/or Supply Chain changes required in the future.

Happy to connect and explain, in a purely informational manner, the true benefits available to those bold enough to start managing your wider Digital Commerce Ecosystem, and once we're through quite sure you'll agree with me that the time is now for all to warmly embrace Digital Ecosystem Management!

Cheers

Jeff Ashcroft

Look out for The Digital Commerce Chronicles: Book Three – Third Party Logistics coming next in May!

Return to The Digital Commerce Chronicles Index & Genesis Story

Ready to see how Distributed Logistics and Digital Ecosystem Management can improve your Supply Chain Costs, Sustainability and Customer Experience? Reach out to me now and I can help! Cheers!

Email: [email protected] Phone: 416.990.6433 Twitter: @JeffAshcroft

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