What is DOM—and How Will it Benefit Your Business?

There is a new concept emerging in online retail called Distributed Order Management—or "DOM" for short. What is DOM and why should you consider shifting your eCommerce business to this new technology?

First let's give some background information. The online retail landscape has expanded considerably in the last couple of years, both in terms of market share and the breadth and quality of service provided.

The result is that consumers expect to be able to interact with your brand across both online and offline sales channels.

Furthermore, they expect an experience that is fast, reliable, and easy to understand. Many customers would rather shop where they have a better experience, rather than always going with the best or cheapest product.

This puts pressure on retailers to provide a frictionless, intuitive, and seamless experience across all their channels. Which is  impossible without giving the issue a lot of thought—and getting the right expertise and technology to do the job.

Distributed Order Management (DOM) makes this kind of customer experience a possibility—which is why it's gaining so much traction in the market today.

Photo by Blake Wisz / Unsplash

Why a seamless experience is so challenging

Providing a seamless  experience to customers has proven challenging to most retailers. This is because most retailers are still stuck using legacy software—systems designed for a static retail environment, while everything online is dynamic.

What does that mean? Legacy order management software was built to support a limited number of warehouses or suppliers. They were designed to service individual channels or groups of channels, instead of focusing on individual customers.

Many of the older systems don't include management of deliveries and related services—both of which are so important to the way people shop online these days. All of these factors make it very difficult for companies still using legacy systems to meet modern customer expectations.

To provide a seamless customer experience across channels, you need to have extensive visibility into inventory, both in your own warehouses, and those of your distributors. These inventory levels need to be updated automatically based on order and delivery data.

Without this functionality, it will be impossible to give up-to-date and accurate delivery information to the customers, or fulfil orders using dynamically assigned fulfilment locations and methods.

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What DOM adds to the equation

Distributed Order Management is a relatively new concept in the market, and one we will try to explain here in some detail.

Basically, it's a sophisticated method to optimise the whole order fulfilment process in such a way that orders always arrive on time and in the most cost-effective way possible.

In practice, DOM is a technology system that automates several of the most important tasks in the modern supply chain: order routing and splitting, order shipping, making accurate demand forecasts, inventory reordering, as well as the entire inventory management process.

Companies that have to juggle  several channels and fulfilment networks will gain a tremendous advantage with DOM, since it acts as a central hub to orchestrate all of these activities.

DOM will allow customers to interact with your brand across all your channels and even start an order on one channel and complete it on another one. They will be able to buy something online while browsing in stores, and then have the product delivered in the way that is the most convenient to them.    

The DOM system allows both your physical and online stores to work in perfect sync, creating a hybrid platform that enhances rather than detracts from the overall customer experience. It provides a way to unify your operations and stay ahead of the latest industry trends and customer expectations.

In summary, DOM is a software solution aimed at optimising all the various systems and processes needed to fulfil orders in an efficient and timely manner.

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Benefits of DOM over legacy systems

Here are a couple of the benefits a Distributed Order Management (DOM) solution provides over legacy order management solutions:

  • The system is able to give a universal view of company inventory, even if sections of the business are using different enterprise resource planning (ERP) systems.
  • DOM gives unprecedented visibility into individual orders and makes it easy to keep track of their fulfilment status.
  • It provides a central hub where problems with specific orders can be resolved.

The system allows you to create different workflows for different order types, even those with complicated requirements and workflows. Which makes it possible to prioritise and sort orders based on inventory requirements. For example:

  • The system can be set up to fulfil certain orders with drop shipping from specific suppliers.
  • Parts of your supply chain can be outsourced to third-party logistics (3PL) partners.
  • You can specify that the system should automatically split certain orders in order to optimise cost or delivery times.
  • The system can automatically classify orders according to a set of criteria so that each order is handled based on an optimised workflow.

All of this functionality is wrapped up in the two most important features of a DOM system:

  • it's ability to give a global view of all your inventory and order data throughout the entire length of your supply chain;
  • and the ability of the system to act as an orchestration hub to automate all the most important tasks in your order fulfilment workflows, from routing and splitting orders, to making accurate demand forecasts and inventory management.
Photo by Blake Wisz / Unsplash

Why your business needs to upgrade to DOM

As you start to use more and more sales channels to reach customers, your order fulfilment processes will also get increasingly more complicated. It's especially difficult to integrate online and offline channels into a seamless operation.

What's more, you'll have to be able to process orders from any combination of those channels in a consistent and efficient manner. If you sell products to other businesses (B2B), those orders will have to be handled in a different way from orders from consumers.

With all this added complexity, it quickly becomes clear why you would need an automated system that's able to integrate all of these channels in a single, centralised hub.

Here are some of the reasons why you might consider upgrading to DOM:

  • DOM gives you a centralised hub where your team members can access all order data across all channels.  When accurate sales data is always available to your team, they will be able to provide a much better customer experience.
  • DOM is customisable and can be adapted to changes in your business. As your business grows, the system will scale upwards to match your needs.
  • DOM can orchestrate all the internal and external parts of your supply chain in a centralised system.
  • The system can be used to optimise the different business functions involved in fulfilling orders, including inventory management, logistics, and company assets.
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Using DOM to improve customer experience

Customers won't be happy with you if you give them the wrong information about what you have in stock or when they will receive their delivery order.

You have to provide up-to-date, accurate information about stock levels and delivery times—which become more difficult the more sales channels you use. When you use different warehouses and suppliers, it becomes even more complex.

This is where DOM shines. The system is able to integrate all your data into a single database. Which means that your sales team and  customers will have access to the same data that is updated in real time.

The DOM ensures that all order and shipping data are updated in real time and are available in a unified interface.

A DOM can also automatically organise orders across different channels in a logical and efficient manner. You will also be able to keep track of individual customers and their shopping activity across all your channels.

In this way, you will be able to manage your supply in the most efficient manner to meet their expectations.

In other words, the DOM allows you to optimise your order fulfilment to a level that's just not possible with legacy systems. This produces several key benefits for your customers:

  • They will always have access to accurate product availability data, regardless of the sales channel used.
  • The system will automatically   source out-of-stock inventory when a customer asks for it in your store and ship it directly to their address.
  • You will be able to lower the cost of your deliveries—while achieving shorter delivery times.
  • Because the DOM automates so many of your manual processes, you will be able to eliminate human error in order fulfilment.
  • You will be able to provide several additional fulfilment options to your customers. A good example here is "buy online, pickup in store" (BOPIS).
  • The system will automatically replenish inventory to prevent out-of-stock issues.
  • Finally, the DOM will streamline your returns processes—both on the customer end to handle the process, and also the back-end process of returning stock into inventory.

The end result is great word-of-mouth and online reviews—which will result in more sales and better customer retention.  

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When is it time to upgrade to DOM?

When you look at the current online retail environment, the largest and most respected players in the market all use distributed order systems. DOM is no longer just a buzzword in retail management, it has become the de facto standard.

How do you know if your company is ready to transition to DOM? In practice, most small companies won't necessarily benefit from DOM because they only operate through a limited number of sales channels. Their order fulfilment processes also aren't as complex as the big online retailers.

To evaluate your business need for DOM, you need to look at two factors: the current scope of your operations, and the places where you experience the most problems in order fulfilment.

If your business experience any of the following issues, you will certainly benefit tremendously from switching to a DOM solution:

1. If you need to work with a high number of suppliers

Managing the relationships with several suppliers at once is a difficult task. You need to keep track of all the product lines offered by your suppliers. Plus you need to keep track of sales numbers and how many new units you need to order from each supplier.

A DOM solution will be able to keep track of all your suppliers. It will also make accurate predictions of consumer demand so that you will be able to order the right number of items from each supplier to keep up with demand.

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2. If you have to manage several warehouses

Once your business uses more than two warehouses, it becomes incredibly difficult to keep track of the amount and location of your inventory.

Using 3PL warehouses adds to this complexity, since you don't have direct oversight into their operations. A DOM keeps track of all this data while also giving you accurate, up-to-date inventory data from your 3PL partners.

3. If you sell hundreds or thousands of products

It's easy to manage less than 50 SKUs in a spreadsheet. But once that number balloons into the thousands, you will have a problem. You need a centralised system to keep track of all your product lines and the various channels you make them available for sale.

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4. If you use different software solutions for different parts of your company

If the different technology platforms that you use throughout your company cannot sync data information in real time, it's almost impossible to provide a seamless experience to your customers. A DOM will be able to connect and manage all of your systems in a central hub.

5. If outdated systems and technology is stifling growth

It's difficult to grow your company if it's broken into separate sections, each using different technologies that have to be managed individually. The main problem is that the legacy software makes it difficult to keep track of all your data, plot your progress, and devise new strategies to stimulate growth. It might be time to transition your business to a DOM.

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Conclusion

Online shoppers are getting used to the idea of being able to interact with a brand by using any of a number of different sales channels and methods. Distributed Order Management (DOM) makes all this possible.

One of the key benefits of DOM is that it allows you to track all orders across all your sales channels from a centralised hub. In practice, this gives you a huge advantage in the marketplace:

  • You will be able to manage your orders and fulfilment processes in a centralised spot.
  • You will be able to give the same customer experience whether someone shops online or in one of your physical locations.
  • The system will automatically integrate your order fulfilment workflow with all your other shipping and fulfilment tools.

In short, a DOM solution will give you the technological support you need to give exceptional customer service—boosting your brand image and keeping your customers happy.

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