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9 critical components retailers must evaluate when selecting an omnichannel
order management system
SALESWARP WHITE PAPER SERIES | ORDER MANAGEMENT
THE ULTIMATE GUIDE
SELECTING AN OMNICHANNEL ORDER MANAGEMENT SYSTEM
< TO >
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Order Management Systems are not new technology by any stretch of the imagination,
and have been used in countless industries for a number of years. However, for the
average online retailer, the demand for a comprehensive, robust Order Management
System (OMS) has never been higher. That’s because the way people shop has changed
drastically–from in-store, phone, catalog, Web, and mobile–consumers are increasingly
using a wide array of channels to buy merchandise.1
Retailers such as Amazon that have incorporated robust Order Management Systems
have seen significant growth. Forbes reported that Amazon sales have grown by
23 percent so far in 2014, mainly on the back of
the merchant’s order management and fulfillment
capabilities.2 Services such as ship-from-store,
same-day shipping, endless aisles and other
similar offerings are now expected by today’s
shoppers, and retailers without the tools and
technology required to deliver on that end will
find themselves losing customers.
In fact, one recent report from Starmount and Retail Systems Research (RSR) suggested
that retailers struggle the most when it comes to order fulfillment capabilities.3 The report
includes data on retailers across six different dimensions, including inventory management,
customer service and technology integration, and concludes that retailers are least
mature in the area of order fulfillment.
This white paper will discuss what a robust Order Management System can do for retailers,
the benefits of such a system and the critical areas retailers need to evaluate when looking
into implementing omnichannel order management software.
- - - - 1 http://www.pewinternet.org/three-technology-revolutions/2 http://www.forbes.com/sites/stevebanker/2014/08/25/amazon-grows-rapidly-traditional-retailers-struggle-should-brick-and-mortar-retailers-partner-with-google/3 http://uk.reuters.com/article/2014/07/01/tx-starmount-idUKnBw016023a+100+BSW20140701
INTRODUCTION
“ Amazon sales have grown 23 percent
so far in 2014, mainly on the back of
the merchant's order management
and fulfillment capabilities.”
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WHAT IS ORDER MANAGEMENT AND WHAT CAN IT DO FOR YOUR RETAIL ORGANIZATION?
Managing orders has become a complex task in recent years given the rise of new sales
channels and the increase of fulfillment options, but the right Order Management System
can go a long way in helping enterprises iron out many of the complexities. Set up with
highly specific business rules, an OMS exists to determine the most efficient and cost-
effective way to manage, route, and deliver orders to customers.
An Omnichannel Order Management System provides retailers with a single, centralized
view of all orders from every sales channel, while providing real-time inventory visibility
across all fulfillment locations. Regardless of whether retailers serve a consumer-facing
audience (B2C) or resell to other retailers (B2B), or both, an OMS can handle all types of
orders in a seamless and streamlined fashion.
“ An OMS exists to determine the
most efficient and cost-effective
way to manage, route, and deliver
orders to customers.”
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UNDERSTANDING THE NEED FOR MODERN ORDER MANAGEMENT SOLUTIONS
One of the biggest challenges retailers face is the fact that their technology is just not
keeping up with the times. With the rise of digital stores and the omnichannel experience
that shoppers expect, the industry has only become more competitive. Some of these
challenges include:
• Reducing time and resources needed to fulfill and process orders.
• Delivering to the customer when and how they want it delivered.
• Supporting new omnichannel buying patterns and consumer expectations.
However, very few Order Management Systems were designed to be so forward thinking.
Most of these solutions are products of their time, designed to only meet the needs
of the single channel merchant. This can be a real problem for retailers using legacy,
disparate, or siloed systems, which are not often replaced simply due to the perceived
high upfront cost of upgrading and the potential downtime during implementation.
” The ability to identify where inventory
is located and expedite picking, packing,
and shipping is a benefit immediately
seen with the use of a robust Order
Management System.”
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” The implementation of an automated
order fulfillment system may increase
overall efficiencies by 150 to 300%.”
BENEFITS OF A MODERN OMS
A modern OMS brings a lot of value not just to the retailer, but also to the consumer.
An accessible and flexible Order Management System helps retailers improve customer
service, expedite delivery and offer more purchase, delivery and return options to cus-
tomers, thereby bolstering customer satisfaction, improving the shopping experience
and allowing brands to gain a competitive edge against other sellers within their niche.
On the internal side, an OMS plays a pivotal role in communicating with external systems
to eliminate manual tasks and reduce fulfillment errors. This improves productivity
and maximizes efficiency, which can result in greater revenue and higher profit margins.
According to Eric Cameron, VP of Sales at Bastian Solutions, the implementation
of an automated order fulfillment system may increase overall efficiencies by
150 to 300 percent.
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WHAT TO LOOK FOR IN AN ORDER MANAGEMENT SYSTEM
Forrester Research analyst Peter Sheldon made a poignant metaphor when he compared
trying to sell products to customers without an Order Management System to going into
battle with a wooden stick.4 These solutions ensure the entire process, from receiving the
initial order to getting it out to the customer, is much more efficient and cost-effective. Not
having the right system in place, one that is equipped to handle every order fulfillment
scenario in a streamlined fashion, could be a big detriment.
So, what does a retailer look for in an Order
Management System that can deliver on their
omnichannel initiatives? We have outlined nine
key components retailers must look at when
evaluating Order Management Systems.
1. INTEGRATION
Technology has become commonplace in today’s retail stores and is constantly evolv-
ing, from computer-based POS systems to cloud-based systems that can be accessed
on a tablet or smartphone. Merchants also use tools and solutions for everything from
Customer Relationship Management (CRM) to inventory tracking to accounting, product
management and more.
For example, to view and control inventory in real-time, an OMS must seamlessly integrate
with diverse systems across the organization, including Warehouse Management Systems
(WMS), Warehouse Control Systems (WCS) and Enterprise Resource Planning (ERP) systems.
Having a seamless integration provides optimal fulfillment execution, allowing operations
to effectively balance automated equipment demands, labor needs and costs.
Integration with Point-of-Sale (POS), eCommerce platforms and online marketplaces is
also critical for an Order Management System to be able to automatically pull and
consolidate orders into one place, making it easy for retailers to manage orders as they
progress through the order flow process.
” Order Management Systems must be
woven into many existing solutions and
communicate effectively with them in
order to maximize their use.”
- - - - 4 http://blogs.forrester.com/peter_sheldon/14-07-29-announcing_the_forrester_wave_omnichannel_order_management_q3_2014
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Order Management Systems must be woven into many existing solutions and communicate
effectively with them in order to maximize their use. If various tools cannot be integrated,
merchants may have issues with transparency and efficiency, even if the desired system
would, hypothetically, be perfect for their needs.
2. DISTRIBUTED ORDER MANAGEMENT
Distributed Order Management (DOM) provides a single view of all orders and available
inventory across the complete distribution network including fulfillment centers, retail
stores, suppliers and even orders in-transit. This allows retailers to manage every order
from every channel from a single, centralized platform with one set of order orchestration
rules and processes. In essence, the OMS becomes the centerpiece for all channels and
distribution centers, providing sellers with real-time intelligence about the status of all
orders and allowing retailers to fulfill purchases in the
most efficient way possible.
3. INTELLIGENT ORDER SOURCING
With consumers making purchases from a variety of
channels and merchants leveraging a number of sources
to fulfill these orders, it is crucial that retailers are able
to source orders in the most effective way possible. Sometimes, leveraging a nearby retail
store to fill an online order instead of a regional distribution center may not only be more
cost effective in terms of delivery, but could also get the order to customers quicker while
getting rid of excess inventory that may not be selling in-store.
Another crucial function to look for is the ability to fulfill different line items of a single
order from one or more fulfillment locations whether an internal warehouse, distribution
center, retail store or drop-shipper. Distributed Order Management enables order sourc-
ing and fulfillment from the location best suited for each line item, based on complex,
pre-defined rule sets and logic algorithms, as well as the customer preference. However,
in order to execute automated rule sets to determine how, when and where products are
fulfilled, retailers must also have inventory visibility.
An OMS that can provide rules and automated processes to identify the most optimal
fulfillment method, whether based upon inventory levels, costs or customer fulfillment
preference is absolutely necessary in today’s omnichannel world.
” Distributed Order Management
enables order sourcing and
fulfillment from the location
best suited for each line item.”
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” This level of visibility is critical as
it allows merchants to make smart
decisions about how they leverage
their stock.”
4. INVENTORY VISIBILITY
Order management can also be a valuable tool for helping retailers manage their
inventory. In siloed retail operations, in which each channel and distribution center are
considered separate entities, it would not be unusual to see inventory managed by
different solutions, such as a Warehouse Management System for distribution centers,
an ERP for large organizations, or a POS system for brick-and-mortar retailers. A
cross-channel Order Management System can effectively be the one source of all
of this pooled information, giving retailers better control over their different channels.
This level of visibility is critical as it allows merchants
to make smart decisions about how they leverage their
stock. For instance, after receiving an order, a retailer can
use the OMS to ping different fulfillment locations and
check inventory levels. Merchants can then choose wheth-
er they want to pull stock from a source that has plenty
of inventory, from a store that has excess stock, or from
the closest fulfillment location to the customer. This can also help improve transparency
for customers, letting them know which locations have stock available and when they can
expect to receive their shipments.
Inventory is the lifeblood of retailers, and with the right Order Management System
in place, merchants can gain real-time visibility into their entire stock. This not only
improves the efficiency with which merchants use their inventory, it also helps shoppers
make better purchasing decisions.
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” Retailers want to have as few
manual steps as possible between
the time a customer places an
order to the time they receive
their order.”
5. AUTOMATED PROCESSING AND STREAMLINED ORDER FULFILLMENT
Order processing can be a tremendously time consuming process, particularly when
merchants are executing this process manually. When an Order Management System
is integrated into retail operations and all steps around billing and order checks are
identified, retailers can begin to automate this process. This will expedite the time
between a customer making a purchase and all the necessary steps and checks that
have to occur in order to process an order.
In addition to automation, an Order Management System
is vital to improving order fulfillment efficiency; as these
back-office technologies help aid employees responsible
for executing warehouse management procedures. For
retailers with their own internal warehouse or retail stores, an
OMS with pick-pack-ship and barcode scanning capabilities
will be required for order verification and to complete
order fulfillment. Bin and lot tracking may also be a re-
quirement in an OMS for retailers who need to track bin locations in a warehouse and the
items in that bin that are reserved for an order. The ability to identify where inventory is
located and expedite picking, packing, and shipping is a benefit immediately seen with
the use of a robust Order Management System.
At the end of the day, retailers want to have as few manual steps as possible between
the time a customer places an order to the time they receive their product(s), as this
can create complications and delays.
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” Fraud costs eTailers as much as
$3.5 billion annually in 2012.”
6. BILLING
Billing is an important part of processing orders and managing refunds. Order Management
Systems can help merchants accomplish this goal through billing capabilities such as pay-
ment capture, refunds, invoiced billing and recurring billing. Moreover, these capabilities
can be used by any retailer, regardless of whether they are engaging B2B or B2C clients.
If businesses are using a third-party payment system, the OMS should be easily integrated
into these systems as well, maximizing the value these solutions bring to the table.
7. FRAUD PREVENTION
For retailers, fraud is a huge concern. One report from CyberSource suggests fraud costs
eTailers as much as $3.5 billion annually in 2012 – that is a huge loss the industry needs to
be aware of.5
Modern Order Management Systems should come
complete with fraud prevention capabilities (or at
least have integrations with stand-alone fraud
solutions), such as exception reporting and order
scoring, which can help merchants identify potential fraudulent transactions. The ability
to automate fraud check activities can significantly reduce delays and errors while
simultaneously helping retailers meet customer expectations.
- - - - 5 http://blogs.forrester.com/peter_sheldon/14-07-29-announcing_the_forrester_wave_omnichannel_order_management_q3_2014
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” Today's consumer not only wants
to be able to buy anywhere, fulfill
anywhere, but also to be able to
return anywhere.”
8. CALL CENTER AND CUSTOMER SERVICE APPLICATIONS
If omnichannel retail is all about the customer, then merchants need to have the right
tools to better serve the customer and how they want to shop. Call centers and customer
service agents can improve customer service times and gain more insight into customer
preferences with a centralized Order Management System.
The main perks of using an OMS for call center and customer service purposes are
providing these agents with access to a complete view of the customer profile, past
order history along with real-time information on current orders. With access to customer
and order information, customer service agents can identify order status and make the
necessary modifications to the order, such as editing or adding new items, processing a
refund or delaying the shipment until the complete order can be sent to the customer.
9. RETURNS
Returns can be an expensive part of retail operations, particularly in regard to online
purchases that must be shipped back to sellers. Today’s consumer not only wants to
be able to buy anywhere, fulfill anywhere, but also to
be able to return anywhere. For instance, a customer
may want to return an online purchase to a nearby
store. An OMS that allows the retailer to quickly
process the return and update inventory count will
help get the item in question back into circulation
as quickly as possible.
An OMS that will accept returns from all channels, fulfill exchanges, and manage refunds
can extend the seamless omnichannel experience to the return process.
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WHAT TO LOOK FOR IN A VENDOR OF AN ORDER MANAGEMENT SYSTEM
Although Order Management Systems are largely used to accomplish similar goals,
each vendor differs in various ways. Merchants must keep this in mind as they evaluate
all of their options and look for the perfect solution. That being said, here are some
things to consider when evaluating each vendor:
SERVICES: As mentioned earlier, retail is a fast-moving, always-evolving industry.
Merchants need to keep up to remain competitive, which means they also need a highly
flexible Order Management System that can be modified and even customized to meet
the requirements of their specific business. Retailers
should identify whether vendors offer customization ser-
vices that will help them stay at the top of their game.
PARTNERSHIP: When retailers are looking to put systems
in place to deliver an omnichannel customer experience,
retailers should look to vendors who will participate in
a long-term partnership. A vendor who takes the time
to understand a retailer’s strategy and who provides a
scalable solution that will transform and grow with the
company will prove to be a smart long-term investment. It is best to avoid the need
to re-platform in the future to prevent operations from being disrupted.
SUPPORT: Some vendors offer live help 24 hours a day, 7 days a week. Others simply
have online troubleshooting guides. In either case, the level of support should be
evaluated to ensure not being left up the creek without a paddle. In the case of bugs,
retailers should ask about response times, what qualifies as a bug, and who monetarily
is responsible to get it fixed. These are important questions to ask to ensure teams
are prepared for what is expected.
COST: Budget is always top of mind for most retailers. While Order Management
Systems are important pieces of technology, it is also important for merchants to
find a vendor that can provide them with a solution that fits their budget. If cost is
an issue, retailers may want to consider a vendor with a cloud-based system or a
solution that provides additional bonuses, such as commercial source code, to
maximize their investment.
” A vendor who takes the time to
understand a retailer's strategy
and provides a scalable solution
that will transform and grow with
the company will prove to be a
smart long-term investment.”
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The Order Management System is an integral piece of retail operations, as it plays a
critical role in several different facets of order and inventory management, ranging from
fraud prevention to order fulfillment to inventory visibility. Merchants must understand
what key functionality is needed in an Order Management System, and the type of
vendor that will help them deliver the omnichannel experience their customers expect.
SOURCES:- - - - http://blogs.forrester.com/peter_sheldon/14-07-29-announcing_the_forrester_wave_omni channel_order_management_q3_2014
http://uk.reuters.com/article/2014/07/01/tx-starmount-idUKnBw016023a+100+BSW20140701
http://www.forbes.com/sites/stevebanker/2014/08/25/amazon-grows-rapidly-traditional-retailers-struggle-should-brick-and-mortar-retailers-partner-with-google/
http://www.pewinternet.org/three-technology-revolutions/
http://www.nielsen.com/us/en/insights/news/2012/smartphones-the-ultimate-shopping-companion.html
http://www.retailsolutionsonline.com/doc/overcoming-order-fulfillment-challenges-with-plausible-solutions0001?sectionCode=Articles&templateCode=Single&utm_source=et_6214150&utm_medium=email&utm_campaign=ISRET_2014-10-08-W&utm_term=70a97cf7-12c6-491a-95d9-3a969f7159ee&utm_content=Overcom-ing%252bOrder%252bFulfillment%252bChallenges%252bWith%252bPlausible%252bSolutions
http://www.internetretailer.com/2013/03/28/online-fraud-costs-e-retailers-35-billion-2012
http://www.retailsolutionsonline.com/doc/why-omni-channel-commerce-needs-an-omni-channel-order-management-solution-0001
http://www.saleswarp.com/blog/infographic-how-to-unify-product-data-for-the-multi-channel-shopper/#more-59023
” Merchants must understand what
key functionality is needed in an
Order Management System to deliver
the omnichannel experience their
customers expect.”
To learn how SalesWarp can help your
retail organization accelerate growth, visit
SALESWARP.com or call 410.276.4600.
ABOUT SALESWARP
SALESWARP, a provider of omnichannel management software for responsive retail, breaks down the barriers
in a multi-channel commerce operation to manage all product, inventory, order, fulfillment, accounting and
customer data from one system. By eliminating operational silos, SalesWarp provides retailers with seamless
data flow and advanced intelligence that results in more effective decision-making for a profitable, streamlined
and responsive retail business. For more information, visit SALESWARP.com.