The Next Frontier in B2B Commerce;

Where to Focus - Order Management Systems vs ERPs vs Ecom Platforms

By Matt Boland

Every week (more like every day or every other) I read posts, articles, papers, etc., from AGENCIES, ANALYSTS and PUNDITS talking about B2B companies being laggards in eCommerce; or the next big growth sector in eCommerce is B2B.

Eventually these prognosticators will be right as they have been predicting this for years…at this point it is simply a matter of time.

I gotta tell you, I am still not there yet…at least not from an Enterprise perspective.

eCommerce Platforms should focus on the “S” of the SMB Market of B2B to help these companies create a charter for eCommerce adoption that automates their processes via commerce systems enablement.

But eCommerce Platforms as the next focus area for Mid-size and Enterprise Level B2B? That dog won’t hunt and won’t for a while.

TAKE-AWAY:?An eCommerce Platform should not be your focus area in 2024.?Why?

At a base view, eCommerce is simply an online catalog and another order capture channel. ?Selling in B2B is not an online “process”. B2B selling relies on engagement, consultation, negotiation and collaboration. Capturing orders is not an issue for Midsize & Enterprise B2B companies, they have these capabilities across many channels.?

The journey to Supply Chain excellence requires a “superhighway” that provides the connection to the “full circle” view of clients, their transactions, status and activity. Customer Care, both assumed and overlooked, is that critical piece to a “full circle” Order Management strategy.?Customer Care transcends the order lifecycle and can be the beginning, middle, end or the entire experience a client has with your brand.?Customer Care is also the “invisible avenger” to all anomalies that require intervention when orders present risk factors.

Allocation, orchestration and execution, etc. of orders must be the focus area for B2B, it is the “Next Frontier” of precision and efficiency in the B2B world before assessing and embracing a full-blown ecommerce platform initiative.?Allocation, orchestration and execution, etc. is the world of the [Distributed] Order Management System.

It is important for everyone to understand that B2B companies have been the leaders in eCommerce before there were platforms…they are / were the pioneers of electronic commerce.?

B2B companies can, should and will adopt a greater eCommerce Platform presence; however, those who think this is the way B2B commerce will be conducted and transacted in the future need to drill down a bit more.?Just try to tell any Enterprise B2B Organization that an eCommerce Platform is the way to transact business because of Millennial Buyers entering the workforce and their habits trend in that direction and you will likely get a response akin to:

“You can take away my EDI when you pry it from my cold, dead hands…”

[For you folks new to Commerce, Supply Chain and EDI…EDI started in the 1960’s.]

B2B eCommerce can and will grow; however, we will talk about B2B eCommerce & eCommerce Platforms as a Part 2 to this editorial.?So, what am I getting at??

TAKE-AWAY:?You are already using EDI and you have an ERP that you may or may not be using for Order Management.?Why does OMS make sense in these scenarios?

My endeavor is to explore where in today’s business-to-business supply chain there is a greater question to explore:

What is the next big economy of scale in B2B Commerce?

Today B2B Commerce is dominated by two philosophies:

1)???EDI for Transactions.

2)???ERP for Order Management.

One philosophy is right on.?EDI over eCommerce…it only makes sense.?Thousands of orders, tens of thousands of lines; EDI is the way to transact commerce.

The other philosophy, ERP for Order Management is not fitting in today’s world of distributed supply chains.?ERP for Order Management is an antiquated approach in addition to being costly and overly complex.?With ERP, you always end up buying more than you need as functionality exists in modules and to get at the required functionality, you need to buy the entire module.?This is where microservices architected solution are more “composable” than the monolithic world of ERP.?A well-designed OMS can also operate in a “headless” manner.

Laying OMS over the EDI transaction provides improved business logic, delivers a “single version of the truth” to all internal / external constituents and moves your operation to working in the real-time world that today’s business demands.?These mission critical capabilities are the Supply Chain Imperatives to the modern world of commerce and provide the most promising and strategic next frontier for driving exponential value in today’s B2B world.

As previously referenced, Allocation, Orchestration and Execution, etc. are critical areas of focus and the most pressing and complex matters that are at the forefront of the B2B world.?These are also the areas Order Management Systems were developed for, as they are not conducive to an ERP approach.?Remember ERP is the financial system of record, so the more you try to do outside of that “built for” purpose, the more difficult rules and business processes become to automate and configure.

In the world of distributed, multi-participant Supply Chains, pressures and complexities increase for orders to be delivered “On Time, In Full (OTIF)”, while orchestrating execution plans that can balance and capitalize on variables that impact margins, efficiencies, costs of doing business and the requirements of clients to receive orders OTIF.?

Order Management Systems (OMS) are the masters of pulling in all the variables and demands of the business with all the Service Level Agreement (SLA) expectations of the client to generate a plan that solves these complexities (down to the individual SKU if required) to:

-?????????Generate the highest margin return on your inventory investment,

-?????????Drive efficiencies,

-?????????Increase profitability,

-?????????Improve performance,

-?????????Drive customer satisfaction

While simultaneously:

-?????????Decreasing order errors,

-?????????Reducing chargebacks,

-?????????Adhering to individual service level agreements,

-?????????Delivering capabilities to proactively intervene on orders at risk,

-?????????Giving information that improves customer Self-Service.

These next frontier of economies of scale for a B2B organizations exist in an [Distributed] Order Management System (OMS).

An Enterprise Resource Planning (ERP) system supplies integration of various business processes within an organization, including finance, human resources, inventory management, and manufacturing.?The key words to focus on here are “within an organization”.?Ask yourself how many businesses in today’s world are self-contained.?Additionally, the architecture of ERPs does not allow for quick changes and instant pivots when strategies change.

Alternatively, OMS system serves a different charter.?This system specifically focuses on managing the complexities outside the four (4) walls of the enterprise and the distributed nature of today’s global commerce networks and the participants to the order processes and supply chain impacts.?OMS plays a crucial role of orchestrating, executing and managing the complex order fulfillment process.?Key words here include distributed, external, networks and participants.

Furthermore, OMS is “purpose built” for integration with back-end systems and external parties’ systems, particularly those critical to order management.?Delivering a SINGLE VERSION OF THE TRUTH, regardless of the source of the data!!?These include internal and external systems for all constituents to the supply chain including, but not limited to:

-?????????existing backend systems, such as an ERP,

-?????????inventory systems,

-?????????supply chain systems,

-?????????infinitesimal Order Capture systems

These integrations ensure seamless order processing, inventory visibility, and fulfillment. Coordinating these integrations can be more complex in ERP due to the diversity of external systems and data formats involved.?ERP is built to stay behind the castle walls, OMS seeks to conquer new territory beyond its borders.

Whereas ERP is akin to Monolith, equal difficulty getting in as it is getting out, like a fortification, K?rber’s OMS is built to account for the openness and the interoperability or systems required by today’s business and their supply chains.?Our approach to OMS rests of four (4) pillars…like the openness of a forum where information (like people) freely comes and goes.

The way business is conducted in the B2B world is too complex and ever changing, driven by multiple sales channels, systems, participants, suppliers, partners, contracts, rules, etc. to be managed by a monolithic fortification like ERP.?You must account for “n’ tier relationships and systems in the B2B commerce world and the information vital to the supply chain.

Part 2 we explore the approach, concepts and thinking that drive the K?rber Supply Chain focus on helping B2B organization with the Supply Chain Imperatives for 2024 and beyond with OMS as the cornerstone of their strategies.

Pillar I - Inventory

Let’s look at some of B2B complexities.?Before the Order can be managed from “Capture to Close” efficiently, you need to make sure you account for Global Inventory Positions!!

1)???Global Inventory Complexity.?Considerations:

a.????Visibility: OMS supplies real-time, global visibility throughout the entire supply chain allowing the OMS to understand order allocation, fulfillment options, and stock replenishment. It helps prevent overselling, reduces stockouts, and improves inventory availability.

b.???Optimization: By supplying real-time visibility into inventory levels across multiple warehouses and locations, OMS supports business decisions to optimize inventory allocation, reduce stockouts, and minimize carrying costs. Optimizing inventory is critical to driving “On Time, In Full” success rates, which drives improved Customer Satisfaction and increases the likely of return customer and repeat sales.

Inventory Priorities from K?rber Supply Chain:

???????Enterprise inventory visibility across your distributed global network,

???????Inventory availability and reservations as a real-time microservice,

? Prevent loss sales through the ability to find inventory through unlimited sources,

???Drive more sales by supplying availability of inventory for on hand, on order, in transit, etc.,

? Virtual segmentation / partitioning by customer, channel, or marketplace,

???Dynamically reserve (soft and hard) inventory for different customer use cases,

???Horizontal and vertical scaling allows for unlimited, real-time inventory availability calls,

? Standard and simulate integrations for inventory lookup and reservations.

Caution – ERP works best when it owns the inventory in its network and financial system.?Inventory does not work that way in today’s world.?Inventory is often in motion, owned by a 3rd Party, Vendor Managed or in some other state.?This is not a core competency of ERP. The fact that ERP works in a Batch Mode means that in a highly complex and fast-moving environments are less likely to be accurate.?Batch Mode is fine for managing complexity, but not when real time accuracy is required.

Pillar II – Orchestration & Channels

With your inventory in check and dependable, it is time to focus on Order Orchestration challenges.?Orchestration is not just about the single order you are looking at during a moment in time.?It is about all the orders received during the day and how precision Orchestration and Execution across your global network of Nodes, Channels inside and outside your castle walls can drive efficiency and cost reduction.

Caution – ERP is not designed to get, make or leverage real-time ERP calls for the benefit of accuracy and orchestration…without it there is jeopardy.

Let’s look at the variables that contribute to both the “Pains & Gains” of world-class order orchestration:

1)???Multi-Channel Support - OMS are designed to manage orders across channels, and there are simply too many to name.?The predominant channels are still:

?????????????????????????????????????i. EDI,

????????????????????????????????????ii.??e-commerce platforms,

??????????????????????????????????iii. marketplaces (eBay, Amazon, etc.),

??????????????????????????????????iv.??brick-and-mortar stores,

???????????????????????????????????v. call centers,

??????????????????????????????????vi.??Mobile Sales Devices

Other & Evolving Channels

?????????????????????????????????i. Private, Industry Marketplaces

???????????????????????????????ii. Social (Facebook, Spotify, Metaverse)

??????????????????????????????iii. Metaverse

??????????????????????????????iv. Email Marketing

???????????????????????????????v. SMS Messaging

??????????????????????????????vi. Kiosk

Multi-Channel Support directly feeds into your ability to manage orders across multiple channels. This means consolidating orders from all existing and new channels to support order processing.?Ultimately, this also has a direct impact on the customer experience and downstream to customer satisfaction6.

2)???Multi-Channel Order Management: B2B businesses typically operate through multiple sales channels, including online marketplaces, direct sales, distributors, and more. A DOMS enables businesses to manage and track orders across these various channels in a centralized platform. It ensures consistent order processing, regardless of the channel used by the customer, thereby improving operational efficiency and minimizing errors.?Remember…in many cases, Participants to your Sales are also Channels.

3)???Order Orchestration: A DOM system specializes in order orchestration, allowing businesses to efficiently manage orders across multiple channels, fulfillment centers, and suppliers. It optimizes the order fulfillment process by considering various factors such as inventory availability, customer location, shipping options, and cost down to the LINE LEVEL…even further splitting the line at the SKU level and the individual piece.

4)???Order Orchestration: In B2B commerce, orders often involve multiple parties, including suppliers, manufacturers, distributors, and customers spread across different regions. A DOMS helps in orchestrating these orders by consolidating and coordinating all the necessary activities involved in fulfilling an order, such as inventory management, order routing, fulfillment optimization, and shipment tracking. This ensures a seamless and efficient order fulfillment process, which is critical for customer satisfaction and retention.

5)???A critical piece of any OMS allocations and orchestration initiative in the B2B market is capabilities to solve Fair Share allocation rules & scenarios.?Typical considerations for solving Fai Share scenarios include abilities to recognize factors like:

1. Demand received in bulk.
2. Limited number of buyers.
3. Clientele is tiered based on metrics set by the organization:

• Tier 1 (Priority / Most Important client)
• Tier 2 (Secondary / Important)
• Tier 3 (Tertiary / Bottom)
• Tier 4 (Remaining Product Catch All)

Additional complexity is added when you consider the existing products or brands under the control of the organization as Fair Share tiering can change based on each.?Therefore, different fair share strategies from the B2B customers to determine a fair share percentage will likely exist to solve for each stream of demand and your ability to provide “real time”, accurate Available to Promise (ATP) signals.

K?rber Fair Share includes configurable methods for Fair Share allocation including, but not limited to:

• FIFO Method
• Demand Ratio
• Fixed Unit
• Fixed Percent
• Full Order by Tier

Orchestration Priorities from K?rber Supply Chain:

? Order Sourcing (optimal fulfillment sources) and allocation (soft or hard reservations) as a real-time microservice,

? Next Gen Optimization Engine increases profitability using fulfillment rules to mutually serve the customer and business,

? Ability to orchestrate orders based on “Fair Share” rules,

? Improve Order Accuracy to deliver On Time, In Full (OTIF),

? Promise and reserve inventory based on any inventory status (e.g., Presale, In Transit, Capacity, Inbound, On Hand, etc.),

? Configure Capacity to Manufacture (Build to Order) in orchestration scenarios,

? Configure micro and macro-based rules for customers, channels, products, sites, and more,

? Leverage industry best practices to implement customer and business rules and priorities,

? Empower your team to adapt & configure order routing in the UI in real-time,

? Test and simulate new rules and promote to production through version control.

Caution – not purpose built for adding and removing channels / participants and processes.?The monolithic architecture of ERP makes it difficult, time-consuming, and expensive to implement strategies that requires process change and pivots to fit the business strategy.?Lack of interaction, integration, collaboration, and inventory means orchestration is a non-starter for effective orchestration.

Order fulfillment challenges: B2B orders often have different fulfillment requirements compared to B2C orders. ?I like to say it this way, there are no SLAs in B2C eCommerce only promises and expectations; and most of the time, they do not align.

B2B order processes are documented to the extreme and often include as many rules that you are NOT ALLOWED to utilize as those that you are allowed incorporate and configure.?B2B involves partial shipments, order mergers, cross-docks, multiple delivery locations, specific packaging or labeling instructions, documented order processes that also include complex logistics arrangements.?Managing these fulfillment challenges and the coordination with various suppliers, participants, carriers are more demanding in B2B ecommerce and all parties (internal and external) are responsible for the outcome of every order.

Let’s look at more of the challenges of Global (inclusive of your world) Order Management.

6)???Global Constraints.

• OMS offers capabilities for managing cross-border orders and the complexities therein…if not within its own capabilities, by again, passing rules and logic to systems trusted to manage the process.?This can include compliance challenges, customs requirements, and calculations for duty and shipping.?OMS monitors the order across applications to limit exceptions and delays that can arise once an order leaves control of the four (4) walls of the enterprise.

7)???Order Fulfillment.

• At its most base level, OMS creates the optimal fulfillment process based on rules that include the best fulfillment location. This is determined by factors such as inventory availability, proximity to the customer and cost considerations. This capability capitalizes on efficiencies for picking, packing, and shipping.?This equates to faster processing, reduced costs, and improved customer satisfaction by incorporating systems outside the realm of the order, but key to orchestration to optimize order flow.
• At its most complex, fulfillment rules are accountable and in compliance with the orchestration path delivered for execution and vice-versa, orchestration must consider fulfillment rules when orchestrating and executing the order path.

Fulfillment Priorities from K?rber Supply Chain:

? Customers receive goods how, when and where they want based on Business Rules & SLAs

? Reduce / Eliminate Chargebacks for incorrect Fulfillment Rules

? Enable stores to become micro distribution locations

? Ship from anywhere store, pickup in store, and receive anywhere (e.g., warehouse, depot, service center, curbside, pickup at store)

? Capacity to Manufacture (Build to Order) in orchestration scenarios

? Discrete order/line and batch picking enablement, depending on the needs

? Manifest daily shipments for carrier pickups

Dropship Vendors

?? Native EDI capabilities to automate integrations

? Portal for vendors to acknowledge, reject, pick, pack, print, and ship orders

? Supply Side Engagement Model

Caution – supply chain strategies for multi-enterprise organizations are not conducive to ERP. Laying a top tier OMS over all the divisions in an enterprise means not having to migrate every enterprise to the same version of the same ERP.?Not only does this connect all the organizations together, but also allows for the rationalization of internal systems and the integration to internal and external 3rd Party Systems and applications that complete the end-to-end unified commerce view of the order lifecycle.?This delivers the comprehensive single version of the truth that drives Call Center excellence.

We now have our Pillar I - Inventory, Pillar II - Orchestration and Pillar III - Fulfillment competencies intact, from availability to promising to allocating to orchestrating to execution to fulfillment…these are required to master order management excellence with the final, remaining Pillar.

From CAPTURE to the final piece CLOSE;?the final piece is Customer Care.?Customer Care is where all the consolidation of integration and collaboration comes to closure; it is also where the “Single Version of the Truth” methodology makes Customer Service and Customer Self Service drives overall improvement in customer experience and customer satisfaction.

Pillar IV - Customer Care

There are likely to be 50 integrations to an order management project.?This means a single version of the truth in one Call Center application.?The critical data needs is gathered and displayed in the Call Center with ALL the information pertaining to the order lifecycle so customers are satisfied in a single call…better yet, in Self Service.

Clients expect you to have all the data about their orders at your fingertips and / or deliver all the data to their fingertips.

8) Customer Care - OMS holds the enterprise accountable for a full 360-degree view of the order and the customer from first purchase to repeat purchases.?That accountability means all the data that comes from across the 50+ solutions that are a party to the transaction is in that one place and reduces and / or eliminates “system-switching” for agents to shorten service calls…even better, not having to say, “let me call you back”.

9) Shipments at Risk - Customer care is also not just “after the fact”.?OMS monitors order regardless of status and can create notifications for “Shipments at Risk”.?Now you can get ahead of a complaint before a complaint can happen.?The OMS can track the timelines and expectations that signal that an order is in jeopardy of making its commitment to the client.?This means you can make specific decisions to execute contingency plans to make sure there is not a system failure.?In B2B that can mean thousands of dollars in penalties.

10) Customer Satisfaction - Think about how these capabilities increase customer satisfaction scores (CSAT) and improve overall customer experience.

Customer Care Priorities from K?rber Supply Chain:

???????Comprehensive 360-degree view of the customer order history and status,

???????Automated, proactive event-driven notifications improves the overall customer experience and manages exceptions,

???????Configure pre-allocation, post sale substitution, supersessions,

???????Manage Order modification, returns, exchange, payment & appeasement, discounting & price administration,

???????Reduce “system-switching” for agents to shorten service calls,

???????Deliver overall satisfaction for the Customer Experience,

???????Robust Customer Self-Service capabilities.

Caution:?ERP customers must depend on multiple systems to find the data. When data is coming from an external system and data is late, unclear, or lost…ERP says, “not my problem…”

All the information contained in the opinion is built in the K?rber OMS.?To do this in ERP requires custom development, multiple modules, and a lot of capital $$$.?And when you get there, only time will tell; but K?rber’s "versionless" SaaS solution shortens your time to value to as little as five (5) months (even four (4) with the right guidance and commitment). There is not a single ERP in the world with a time to value as fast as that...

“Companies stating that they use ERP for OMS should not summarily dismiss the value of an OMS in addition to and in conjunction with their ERP.?These two systems can co-exist and work in harmony…the advantages are too great, the efficiencies are exponential, the margin improvements are proven and the cost reduction through system rationalization is groundbreaking.”

-?????????Matt Boland, K?rber OMS Global Partner Ecosystem

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Connect and follow K?rber Supply Chain and #ConquerSupplyChainComplexity … it will be worth your time.