eCommerce has generated a lot of interest in Distributed Order Management or DOM solutions.
The reason for this is that unlike most traditional distribution, where fulfillment paths are fairly fixed (e.g. specific DC services or a set of stores or customer DCs), there is a timing aspect in eCommerce that usually requires a different approach.
eCustomers expect rapid and in many cases near immediate delivery. That means that if a product ordered is not at the DC that would normally be used to fulfill the order, the system needs to find an alternative sourcing location from within the extended network.
Of course that decision should be made in the context of satisfying the customer, but doing so in the optimal logistics way. What does optimal mean? Lowest shipping costs would be obviously one criterion, but perhaps not the only one. For example, maybe it would be better to ship from a DC that would involve slightly higher parcel shipping costs if that location is overstocked with inventory of that SKU, while the closer DC has just few of the item on hand.
This is the kind of decision that DOM systems should be equipped to make. In Softeon’s case, a powerful rules engine can be configured to logically walk through all these scenarios and make the right sourcing decision.
As another example, a Softeon customer that promises same day fulfillment for orders placed by 5:00 pm actually shifts the sourcing location for orders coming from the East Coast and Midwest to DCs further West in order to keep extending the cut off times for the parcel carriers. DOM enables this automatically, based on the rules, and it means that the window for same day shipping can be extended for customers in more Eastern US locations.
Of course, “drop shipping” from vendors is an approach many retailers and others are also using to reduce their own inventory levels, increase the number of products they can offer, or find inventory if they are out of an item in their own network.
A good DOM system should be able to provide robust support for drop shipping programs, again based on the rules for such a process. In fact, drop shipping with a DOM should be easy from a technical perspective, with the right system, as the vendor’s shipping locations are just one of the sourcing possibilities set up in the system. For some SKUs, the rules may say always drop ship from the vendor. In other cases, drop shipment may be the choice only after internal sourcing points have been exhausted, based on the rules.
Of course, there are a number of process issues with vendors associated with drop shipping that must be addressed in conjunction with the technical capabilities.
One feature in the Softeon DOM solution not common among others in the market is the ability to easily set specific, tailored rules for each customer, channel, etc. Softeon customer Sony DADC now provides third party fulfillment services for more than 50 other providers of entertainment media (DVDs, CDs, games, etc.) beyond their own entertainment businesses. Each customer has its own rules about how inventory needs to be handled, how orders are to be processed, and much more.
Sony uses the Softeon DOM to set up all these complex rules by each individual customer. Some of these rules are enacted at the time an order is received. Others are executed in the DC, as the DOM passes the rules seamlessly to the Softeon WMS in one integrated system.
Sony commented that the DOM system allowed them to on-board new clients in a few days, versus the several weeks it used to take using its previous systems.
That’s an introduction to what DOM might be able to do for your company, but there is a lot more we will cover in future postings. Interested in learning more? We’d be happy to show you a DOM demo. Let us know at contact@softeon.com.
