March 7, 2016

The importance of order management in an omnichannel world

Rajesh Mukundan

Principal Consultant, Tieto

In an age of omnichannel retail, effective order management is critical to customer satisfaction. Here's how a dedicated OMS can help.

An order management system (OMS) allows retailers to automate and streamline the flow of an order from point of purchase to the customer. An OMS can process orders from multiple channels (ecommerce, mobile, call centre, in-store and more), allocate orders to multiple sources of fulfillment (warehouse, drop shippers, retail stores), and track the order to the customer.

This way, an OMS offers a centralised platform for customer, merchandising, inventory and call centre management, enabling real-time visibility into customer purchasing behaviours, stock levels, merchandise performance and more.

The benefits of this platform include greater sales visibility, improved customer service, efficient and cost-effective order routing, inventory visibility, and tools or access to data to improve marketing and promotional initiatives.

What makes an OMS important?

Digitalization has changed the retail industry dramatically, driving a shift in focus away from brick and mortar firstly to online sales, then multichannel, and finally the omnichannel model. Throughout this journey, the customer has remained constant, and is now recognised as the point around which everything else revolves.

This has fundamentally changed the nature of supply chain management. Traditionally, the supply chain was viewed as a key enabler of long-term success, reduced costs and improved internal efficiency. In the new omnichannel world, however, challenges around supply chain and fulfilment have grown exponentially - traditional fulfilment mechanisms are no longer an option, and retailers must break down the barriers between channels to handle complex orders coming from the store, online and elsewhere.

Customers today expect to be able to interact with retailers at any time, anywhere and in whatever way they desire. If they shift between channels while shopping, they expect their experience to be consistent and seamless across each touchpoint. It's up to retailers to listen to their customers and adapt to their changing expectations.

The complexity of omnichannel order flow

The complexity of an OMS is often underestimated, and this complexity can increase over time as a result of organic growth, M&A activity and so on. Many retailers amass multiple order capture and fulfilment systems, which may be integrated poorly - if at all.

This makes it extremely difficult, if not impossible, to:

  • Gain an end-to-end view of a customer's order
  • Apply global rules to ensure orders are fulfilled efficiently
  • Give customers accurate delivery dates and ensure they are met
  • Give customers accurate information on order status

Keeping this complexity under control is no simple task. It grows exponentially with each new channel we introduce, and increases even further when the need for a seamless customer experience is added to the equation.

Most retailers already use some form of OMS. It may be home-grown, or else part of their ecommerce platform or ERP solution. However, these systems are rarely able to handle the complexity of the omnichannel order flow, and may comprise multiple solutions with overlapping order management capabilities that make the entire ecosystem inflexible and costly to upgrade. This can result in poor customer experience and time-to-market, directly contributing to lost sales and eroded customer loyalty.

Examples of a flawed omnichannel customer experience

  • Order online, pickup at store: The customer purchases a product online and goes to their local store for pickup, but arrives there to find the order isn't ready. While on the premises, they ask to add more items to the order, but the saleperson has no visibility of, or access to, their online transaction. 
  • Shop at store, order online: The customer goes to their local store to purchase a particular product. The item isn't available in their branch, and the salesperson is unable to place an order online because the point-of-sale system is not integrated with the retailer's ecommerce solution.
  • Shop online, item out of stock: The customer wishes to purchase a product that is listed online as out-of-stock. The item is available at other stores, but because the ecommerce solution is not fully integrated, the customer is unable to make the order.

All of these scenarios not only affect the overall customer experience, but could also cost the retailer a sale - and possibly a customer, too.

Will an OMS solve these problems?

In an omnichannel world, an OMS is a critical part of a retailer's infrastructure. As customer expectations continue to evolve, it's vital that organisations have order management solutions with sufficiently advanced cross-channel and omnichannel capabilities to manage complex order flows seamlessly.

Establishing an effective omnichannel strategy means understanding the current retail ecosystem, taking into account these order flows, and being able to respond when the market changes in the future. A fully featured OMS - as opposed to part of an ecommerce platform or ERP solution - will deliver on most of the backend requirements in this regard, as well as improve decision-making around the supply chain, returns, inventory and more.

For many retailers, achieving true omnichannel capability will be a long and difficult journey. Having the right OMS in place is an important step in the right direction.

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