Visibility Unlimited

Retailers need systems that provide complete information about inventory and delivery options across all channels of trade
March 13, 2017David Gill

IBMOmnichannelResearch OrderManagementSystemAn effective omnichannel order management system increases the total visibility of a retailer’s inventory, making the whole operation more seamless and efficient.
By David Gill

Transparency is a business imperative these days, and nowhere is that more evident than in omnichannel retailing, according to a report from IBM Commerce.

Titled “Connecting the Dots Across Channels with Omnichannel Fulfillment,” the report asserts that retailers need order management systems that provide accurate views of inventory across all channels. Systems must be able to pull inventory reports from retailers’ enterprise resource planning (ERP) and back-end systems and present that information to shoppers in real time.

“Cross-channel visibility underpins an omnichannel operation,” Rob Poratti, IBM product marketing manager for digital commerce solutions and who also contributed to the report, told HFN. “We know that shoppers go online to research purchases, but they also go on the websites to see where the items they want are available. And it may be beneficial for a retailer to fulfill orders from stores rather than from a distribution center that could be thousands of miles away.”

An order management system must be designed with the ability to understand, reason and learn. It should include the capability to look at historical demand from a previous shopping period and then build a fulfillment model for the next time that shopping period occurs.

“The retailer can use this historical information to model fulfillment scenarios based on how they expect to see demand over different time periods, and then put those models into execution so they can fulfill orders most effectively,” Poratti wrote in the report.

IBMOmnichannelResearch InStoreComparisonTransparency is key to an effective order management system.
By providing cross-channel inventory visibility, such an order management system enables retailers to make inventory decisions based on where a store is located, how often and quickly a particular item sells, shipping costs and other factors. It therefore helps to solve the age-old retail challenge—having the right merchandise in the right place for when the shopper walks into the store.

“Exposing not only the online inventory but other stores’ inventory to store associates so they can have access to it, and be able to promise customer orders against it and save the sale, is having a huge impact on retail sales, as well as same-store sales,” Mike Deaton, solution executive for IBM Global Commerce, wrote in the report.

Retailers must also couple the order management software to a logistics system that takes advantage of the data the software provides, according to Andrew Kemendo, founder of Pair Inc., which provides technology solutions for brand building. “Logistics processes need to be built to ingest that logistics data,” Kemendo said. “For example, if there is a seamless way for a retailer to know with certainty how many of each SKU is where [warehouse, showroom, etc.], this data can be served cross channel in a clean way.”

In the retailing of home furnishings, order management systems could be a vehicle for larger retailers to distinguish themselves from smaller retailers. “The major vertical retailers have the funds to be able to deploy these types of systems because they can afford it, while the middle ones don’t have the expertise or the money to do it,” Kemendo said. “So the big verticals are going to put further distance between themselves and the middle sellers.”

The recent holiday season exposed the danger for retailers who want to bolster their omnichannel operations but who lack the clear and complete visibility afforded by such a system, Poratti told HFN. “Many retailers were hurt by Amazon during the season,” he said. “Many of them failed to use their store assets to serve their cross-channel customers.”

In Poratti’s view, every retailer must have either an inventory management system or an ERP system that includes order management functions. “Order management allows them to connect their inventory management systems across all of their channels,” he said.

In addition, retailers need to equip their store associates with the tools to make orders for delivery, enable returns and effectively participate in the omnichannel effort. “The system needs to be easy for them to use, since many of the store associates are young and still in school,” Poratti said. He added that store associates should all be furnished with tablet computers, which would enable them to use the order management system on the spot with shoppers.

Some retailers are already positioned well in this space, Poratti said, citing Kohl’s as one that is using such a system as part of its buy-online-pick-up-in-store offering. Early last year, the department-store retailer began this program in a couple of dozen stores. Last summer, the program was rolled out to all Kohl’s stores.

Target and J.C. Penney are have also launched such programs, and Poratti noted that IBM is currently working with Walmart on an order management system.

“Price used to be the top decision maker in the shopping process,” he said. “With online, many consumers have shown that they now value convenience over price. An order management system brings that convenience to the consumer.”

David GillDavid Gill | Senior Editor
dgill@hfnmag.com

David Gill covers home textiles, small electrics housewares, personal-care products, cleaning products, mattresses, consumer electronics and major appliances. He also reports on retailers and writes about the business and financial side of both vendors and retailers. He has more than 30 years of experience in business journalism, and has worked for other publications and websites that cover consumer products from both the manufacturer and retailer sides. His outside interests include sports (he is a big fan of the New York teams and of British soccer), cooking, movies and theater. He occasionally enjoys a good cigar as well.

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