March 13, 2017,
By David Gill
An effective omnichannel order management system increases the total visibility of a retailer’s inventory, making the whole operation more seamless and efficient.
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.
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.
Transparency is key to an effective order management system.
“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.”