WHITE PAPER

DISTRIBUTED ORDER MANAGEMENT

Top Supply Chain Trend:

Distributed Order
Management
What is it and why should you care?

One Network Enterprises | www.onenetwork.com

WHITE PAPER DISTRIBUTED ORDER MANAGEMENT

Top Supply Chain Trend:

Distributed Order Management
What is it and why should you care?

WHAT IS DISTRIBUTED ORDER

MANAGEMENT?
The purpose of a distributed order management system
(DOM) is to intelligently broker orders across the various
systems and processes utilized by the multiple parties
involved in replenishing an order. The best way to achieve this
is to provide a single, global view of all inventory available in
order to intelligently source the line item components of that
order, ensuring that the business can meet both current and
future customer demand while optimizing inventory, logistics,
and asset utilization.
However delivering a seamless customer experience is a
challenge for most retailers. Legacy infrastructures were
designed to be static rather than dynamic, supporting
individual sales channels with single threaded supply
schema and segmenting groups of customers by channel,
rather than as individuals. While companies may focus on
transforming the customer-facing experience, they are
constantly challenged on the back end to optimize inventory
management and their supply chains, thereby enabling
real-time, enterprise-wide insight into inventory, as well
as a flexible supply chain that supports dynamic inventory
movement across channels.
The traditional order management systems that most
retailers use were basically configured to link to a discrete
number of specific plants or warehouses. This of course limits
inventory visibility as well as the options companies have in
fulfilling their items. It also fails to account for deliveries and
associated services that are increasingly part of the customer

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order and fulfillment process. Without comprehensive

visibility to internal and external inventory locations, including
delivery and service requirements, it is nearly impossible
to provide an accurate promise date to the customer, or
schedule orders to alternative fulfillment locations.
Customer service levels can only be maintained with accurate
and timely information. Given the increase in order capture
channels that are most likely supported by different systems,
accurate order information is often unavailable when
needed. Because companies maintain multiple databases of
order information, they are forced to manage by individual
channel, rather than across channels. A modern cloudbased DOM system aggregates orders from multiple order
capture channels and provides a single source of information
across these channels. All information and activity related to
that order is contained in a central control tower, basically
providing a single version of the truth in order to source
upstream in the supply network.
According to the 2013 RIS News/Gartner Retail Technology
Study, just 20% of retailer respondents are using up-todate technology for real-time inventory visibility, 24% for
distributed order management and 16% for multi-channel
fulfillment. The majority agree that the ultimate goal is to
migrate to a single, flexible platform capable of managing the
overall business.
From a technology perspective, cloud-based DOM provides
retailers a platform backbone capability, enabling the selling,
replenishment, and logistics processes for multi-party
business transactions across multiple echelons in a supply

WHITE PAPER DISTRIBUTED ORDER MANAGEMENT

According to the 2013 RIS News/Gartner Retail Technology Study,

just 20% of retailer respondents are using up-to-date technology
for real-time inventory visibility, 24% for distributed order
management and 16% for multi-channel fulfillment.

network. In other words it is an ecommerce engine, providing

a network based solution for managing information, executing
processes, and monitoring performance to ensure customer
orders are fulfilled accurately and cost efficiently across a
complex network of sourcing and fulfillment processes.
Key capabilities which enable responsiveness to shifting
customer demand, include intelligent order forecast sourcing,
global inventory visibility, real time order execution, and
demand sensing. Process robots provide the ability to
automate order execution based on predefined sets of rules
and performance measurement targets.
In addition, the best cloud-based DOM applications combine
multi-channel order aggregation with global visibility to
inventory, including delivery and service availability, enabling
the complete order promise (available-to-promise,
available-to-deliver and available-to-service). Essentially
these systems also offer the ability to order from anywhere,
fulfill from anywhere, and return to anywhere, including
optimized, rules-based order promising and scheduling,
inventory and resource allocation from any internal or
external source to meet both the conditions of the order and
the requirements of your business.
Outside of these core replenishment aspects, DOM also plays
an important role in the overall customer experience by
providing an environment to broker and manage orders from
multiple sales channels to ensure that customer orders are

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executed to meet or exceed customer expectations. The order

and shipment visibility across the supply network is a key
driver related to the overall customer experience.
By providing a centralized order orchestration hub, a DOM
system has the capability to provide a real time view of all of a
customers purchases across all of the sellers channels. In this
way, distributed order management becomes a key enabler of
increased supply chain efficiency in addition to an improved
customer experience.
Finally, from an industry perspective, distributed order
management applications can be used to solve different types
of business problems from one vertical to another. Consider
a couple of examples from the retail and communications
sectors.

Example #1: Distributed Order Management

for Retail
Given that retail is in a constant battle to improve margins in
the face of stagnant pricing, many retailers have aggressively
cut back on inventory levels to save on carrying costs and
obsolescence. With less safety stock to buffer risk, many
retailers are seeing rising levels of lost sales due to in-store
stock-outs. Historically retailers have lost the war with in-store
stock-outs, having had no efficient, reliable means of locating
and shipping available-to-promise inventory.

WHITE PAPER DISTRIBUTED ORDER MANAGEMENT

The end need and result of distributed order management is the

same: orchestrating all aspects of inventory awareness, sourcing,
and fulfillment to meet customer demand and expectations while
optimizing the utilization of inventory and resources.

A cloud-based distributed order management system solves

this problem by accessing inventory availability across
multiple inventory locations modeled in the system i.e. other
stores, alternate DCs, or even inventory on order or in transit
to the retailer.
With their cross-channel integration capabilities, distributed
order management solutions can also provide store associates
with visibility into available-to-promise inventory at eligible
fulfillment locations, as well as indicate the optimal location
from which the product should be replenished, and whether
it will be shipped, held for pickup, or transferred.
Standard APIs provide the ability to integrate with the
existing in-store point of sale systems. And finally, the
distributed order management system can trigger the
appropriate notifications to the designated replenishment
locations, maintaining comprehensive order status visibility
throughout the process.

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Example 2: Distributed Order Management

for Communications
Looking at the communications sector, imagine that a small
business is buying a broadband line supported by a secure
router that requires a custom installation services. Here, a
communications service providers DOM solution will need
to ensure that the logical network inventory is available,
the router is available from a third-party supplier and can
be shipped to meet the preferred installation date, and
that installation resources are available at the customers
preferred installation date. These are all inventory items of
different types for which availability and fulfillment must be
carefully orchestrated to ensure the delivery and installation
promise is kept with the customer.
While the complexity in this communications example may
be higher than in the retail case, the end need and result of
distributed order management is the same: orchestrating all
aspects of inventory awareness, sourcing, and fulfillment to
meet customer demand and expectations while optimizing
the utilization of inventory and resources.

WHITE PAPER DISTRIBUTED ORDER MANAGEMENT

Today DOM is moving closer to the customer and using cloud

based network capabilities to provide increased visibility to the
customer to enhance the buying experience.

INTEGRATING THE END-CUSTOMER

DOM isnt a new concept, however it is changing significantly
given the capabilities of new generation of cloud platforms.
The requirement is moving away from simply a supply-chain
facing system to one that is both supply-chain facing as well
as customer-facing. The typical view of a DOM system is one
of a behind-the-scenes, supply-chain facing system focused
on effectively and efficiently managing orders across a diverse
supply chain where seamless integration to multiple inventory
sources is the key requirement. For example, a DOM systems
ability to automatically generate purchase orders when
supplies are needed, while warning of events which could
delay deliveries is a key feature. In addition to providing order
purchase capabilities, DOM systems can help speculate future
supply demands based on current conditions.
Today DOM is moving closer to the customer and using cloud
based network capabilities to provide increased visibility
to the customer to enhance the buying experience. For
example, a DOM system with a well-defined services oriented
architecture can provide inventory, order, and shipment status
information to users or customers across any combination of
sales channels.
The best DOM systems can provide product and inventory
availability information to a retail store associates mobile
device to handle customer inquiries on availability in realtime. They can enable customers to track and even modify
their orders across different interaction channels. DOM

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enables companies to have a direct positive impact on the

customer experience by moving inventory, ordering, and
shipment information closer to the customer.
Other benefits include the ability to leverage in-stock
availability to recover from a stock-out, providing inventory
visibility everywhere (whether in stores, in DCs, in transit
to stores, on order, or in transit to distribution centers),
and providing the seller with the luxury of sourcing from
the most appropriate source without jeopardizing on-hand
inventory levels or failing to meet the fulfillment window for
a customer.
Given that todays consumers expect all sales channels to
work together, whether at a retailer, manufacturer, or service
provider, the DOM system should serve as the companys
primary order management system.
DOM plays a key role in unifying sales channels, such as
ecommerce and call center, enabling a customer to have a
consistent ordering experience across channels. It provides
the same view into inventory across all channels, plus acts
as the broker and information source of the order across all
channels. More importantly, DOM can facilitate transactions
that cross channel, such as buy on line and pick up in store or
buy anywhere and return anywhere.
The result is an order orchestration hub that facilitates order
transactions and information across all channels to create a
unified cross-channel customer experience.

WHITE PAPER DISTRIBUTED ORDER MANAGEMENT

The primary and traditional benefits of DOM include improving

order accuracy by tightly orchestrating orders across a complex
network of fulfillment systems, processes and suppliers.

The primary and traditional benefits of DOM include

improving order accuracy by tightly orchestrating orders
across a complex network of fulfillment systems, processes
and suppliers. DOM can also help to reduce costs by
automating the intelligent sourcing of orders and optimizing
the use of available inventory to meet customer demand.
When you consider that the foundation of cloud-based DOM
is based on a single version of the truth and a holistic visibility
into inventory, orders, shipments, and customer interaction
with the sellers brand, its easy to imagine how that might
be leveraged to further improve the customer experience, as
well as the sellers operational efficiency.
For example, knowing what the customer has purchased in
the pastregardless of the combination of channelsand
what inventory is currently available, promotions can be
tailored to best speak to customer needs while promoting
slow-moving inventory. End-of-season inventory that is at risk
of markdowns in slow-moving channels can be sold at full
price when sourced across channels.

managed at the line item level while maintaining an eye on

the overall context of the complete order. And, the concept
of an order need not be simply related to those steps that
led to a purchase, but, rather can include any investigatory
steps that began to show an interest in a particular product or
collection of products. Said differently, the purview of order
management will no longer be from the point of purchase
onward, but, rather, the point of interest onward.
In summary, many capabilities come into play when deploying
a modern DOM solution, such as order aggregation,
intelligent sourcing, and the ability to modify, cancel or track
orders across their life cycle in real time.
Other capabilities that might be required to provide a
complete solution are delivery and service scheduling,
available to promise, big visibility, reverse logistics, and
a set of core modules which can be configured to model
process flows, tracking events, and related performance
measurements.

With modern cloud-based DOM, inventory levels can be

pared down to the most efficient levels by removing excess
safety stock. Orders of any typeincluding orders with a
combination of product and service componentscan be

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WHITE PAPER DISTRIBUTED ORDER MANAGEMENT

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WHITE PAPER DISTRIBUTED ORDER MANAGEMENT

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Email: inquiries@onenetwork.com

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