According to Grand View Research, in 2019, the global distributed order management market size was valued at $3.3 billion and is projected to reach $8.7 billion by 2027, at a CAGR of 12.2%.
In fact, as per the Research and Markets, global distributed order management software revenue is expected to reach $3.8 billion by 2023, a CAGR of 9.1%. This is further supported by the studies of Mordor Intelligence, according to whom the global distributed order management market is expected to grow at a CAGR of 11.9% from 2020 to 2027.
Lastly, the distributed order management market in North America is expected to reach $2.2 billion by 2026, at a CAGR of 13.3%, according to Fortune Business Insights. At the same time, the Asia Pacific distributed order management market is expected to reach $1.6 billion by 2026, at a CAGR of 14.4%, according to Market Research Future.
All of these statistics highlight the rising popularity as well as the need for distributed order management. If your business wants to be competitive and stay profitable, as well as capable of satisfying its customers’ expectations, then it is necessary to adopt distributed order management.
This article will be your comprehensive guide for the same by covering the following topics:
- What is Distributed Order Management?
- What are the Key Features of a Distributed Order Management System?
- Why do Retailers Need Distributed Order Management?
- How does Distributed Order Management Work?
- Distributed Order Management vs. Traditional Order Management
- How does Distributed Order Management Differ from Other Kinds of Order Management?
- What can Distributed Order Management do that Other Order Management Systems Cannot?
- What are the Benefits of Using a Distributed Order Management System?
- What is the Selection Process for the Distribution Order Management Software?
- FAQS about Distributed Order Management
- How can Deskera Help You with the Implementation of Distributed Order Management?
- Key Takeaways
- Related Articles
What is Distributed Order Management?
Distributed Order Management (DOM) is a method used to optimize fulfillment so that the orders arrive to customers on time while incurring the lowest possible cost.
Distributed order management is a technology solution that helps retailers and other organizations manage their sales and fulfillment operations across multiple channels, locations, and systems. They do so and thereby improve the overall supply chain too by automating several functions like order routing, order splitting, inventory forecasting and reordering, shipping, and inventory management.
The main purpose of DOM is to provide a centralized and real-time view of inventory and customer demand across all sales channels and locations, enabling organizations to make informed decisions about how to allocate and fulfill orders.
Distributed order management systems work to improve those supply chain kinks by automating key functions like:
- Synchronizing order routing and inventory data with all sales channels and fulfillment centers
- Processing orders from multiple sales channels
- Inventory forecasting and reordering
- Inventory management
In fact, in addition to improving how your company processes and manages customer orders, the distribution order management system will also help you streamline your stock replenishment by connecting your technology to a central platform. In fact, this central platform will offer you one viewpoint of every item in your inventory.
Additionally, your DOM system will also assist you in processing orders from multiple sales channels and then routing them to the best fulfillment center. In fact, your DOM system might also be able to select the best shipper for you. Thus, with a DOM system, there would be faster order turnaround with more accuracy at lower costs.
Lastly, not only will your DOM system be able to route orders automatically, but it will also be able to prioritize the fulfillment of each order against others. Furthermore, it will also be able to manage back orders and pre-orders for upcoming product launches.
Nowadays, your buyer personas will tend to buy a product from a variety of channels, bounce between platforms, and even order online directly from within a store and have it fulfilled in a way that suits them.
This means that both the physical stores and the eCommerce platforms need to work together. In fact, blending multiple platforms without impacting the experience of your customers is essential.
A distributed order management system is one that is designed to make it easier to meet the demand for products that stems from this industry shift. In fact, omnichannel retail is increasingly complex, in which case the distribution order management system is a way of unifying your business in this new age of commerce.
In fact, as eCommerce technology continues to evolve with apps, social media, and third-party retail platforms, brands are being forced to accommodate just as quickly. This makes inventory management increasingly challenging for them, leading to a call for backend technology that will become a backbone for brands to fulfill their expectations in a cost-effective, flexible, and efficient way.
The implementation of a distributed order management system will provide the needed support to brands, thereby ensuring the delivery of high-quality customer service, which in turn will boost customer satisfaction and brand trust.
What are the Key Features of a Distributed Order Management System?
The key features of Distributed Order Management (DOM) systems are:
This feature provides a real-time and centralized view of inventory levels across all sales channels and locations. This helps organizations make informed decisions about how to allocate inventory and fulfill orders.
This leads to better inventory management as well as warehouse management. It also ensures accurate calculation of safety stock levels, which in turn helps in keeping business expenses in check.
This feature enables organizations to manage orders from multiple sales channels, including e-commerce sites, brick-and-mortar stores, and marketplaces, in a centralized and real-time manner. Proper order management will ensure that your customers are satisfied, which will lead to higher net revenues and improved customer retention.
DOM systems use algorithms to determine the most efficient and cost-effective way to fulfill orders. This optimization takes into account factors such as inventory levels, shipping costs, and delivery time, enabling organizations to minimize costs and improve delivery times.
This will also help in reducing inventory lead times as well as manufacturing lead times while ensuring that you are adhering to the deadlines set during demand planning.
This feature provides real-time information about product availability and delivery times, helping organizations to manage customer expectations and avoid delays or cancellations. This leads to an improved customer experience. This will encourage returning customers, as well as increased sales referrals.
DOM systems are typically integrated with other systems, such as warehouse management systems, transportation management systems, and customer relationship management systems, providing a comprehensive and seamless solution for managing sales and fulfillment operations.
DOM systems provide data-driven insights and recommendations to organizations, helping them make informed decisions about how to allocate inventory and fulfill orders. This leads to improved operational efficiency and increased sales and revenue. This will improve operational metrics as well as business metrics.
DOM systems are designed to scale and accommodate growing organizations and changing business needs, ensuring that organizations are always able to manage their sales and fulfillment operations effectively and efficiently.
DOM systems provide data-driven insights and recommendations to organizations, helping them make informed decisions about how to allocate inventory and fulfill orders. This will help you keep your operating expenses in check and therefore prevent any undue pressure on your working capital.
Increased Sales and Revenue
By improving the efficiency and effectiveness of sales and fulfillment operations, DOM systems aim to increase sales and revenue for organizations. This will also lead to a higher net profit ratio and improved financial KPIs and financial statements of your business.
Why do Retailers Need Distributed Order Management?
Distributed order management software will help solve several challenges faced by retailers in today’s omnichannel world. In fact, those retailers which are already facing friction in several areas of their business will benefit the most from the implementation of a distributed order management system.
Some examples of retailers facing friction in their business are:
- All the retailers who are working with a high number of product suppliers more often than not struggle to manage those relationships and track their products’ data. Here, the distributed order management system will help in managing this information, as well as in tracking how and when a retailer orders from their suppliers.
- All the retailers who have more than two warehouses can also benefit from the distributed order management system. This is because the more warehouses that a retailer has, the harder it is for him or her to keep track of their inventory. Add to that 3PL warehouses and drop shippers, and a DOM system will become crucial for consolidating data across all sources. An added advantage of implementing a DOM system is also that it gives retailers access to that data at any time, anywhere.
- If the retailer has an SKU portfolio that has grown to the hundreds and thousands, such that it is no longer manageable on spreadsheets, then such a retailer will benefit from implementing a distributed order management system. Implementing a DOM system will help them track their products efficiently.
- Lastly, a lack of connectedness across a retailer’s current technology solutions is also a challenge. With the implementation of a DOM system, there is a decrease in the added risk of tech silos by bringing all the processes together. In fact, with DOM implementation, not only will the growth of the retailers be ensured, but a single data hub will also be created, which will help them manage their data before challenges arise that make it harder for them to grow.
How does Distributed Order Management Work?
Today, retailers are more reliant on effective inventory management and order fulfillment than ever before. This is why the implementation of distributed order management systems has become a necessity.
Some of the reasons why retailers use distributed order management systems are:
- Syncing eCommerce platforms and storefront locations to give customers the ability to buy online and pick up in-store.
- Merging orders placed by the same customer to consolidate shipping.
- Quicker and more efficient order processing.
- Rate shopping across shipping partners to access the best rates while meeting delivery dates.
- A faster experience for customers
Collectively, these features will allow your customers to have more control over when and where they purchase while also helping you track their engagement and connect the dots if they decide to purchase from a different channel each time. These insights will help you have an accurate resource capacity plan, as well as be able to mitigate the bullwhip effect in supply chains.
What you must keep in mind is that distributed order management and the benefits of the same are not just limited to direct-to-consumer businesses but also applies to business to business structures in the form of a greater level of visibility, flexibility, and synchronization with wholesale partners and distributors.
Distributed Order Management vs. Traditional Order Management
Distributed Order Management (DOM) and Traditional Order Management (TOM) are two distinct approaches to managing orders within an enterprise.
Here are some key differences between the two:
- Order Sources: In TOM, orders are usually received from a single source, such as an e-commerce website or brick-and-mortar store. In contrast, DOM is designed to handle orders from multiple sources, including online marketplaces, brick-and-mortar stores, call centers, and mobile apps.
- Inventory Management: TOM typically relies on a single, centralized inventory system to manage stock levels across the enterprise. DOM, on the other hand, takes a more decentralized approach, using real-time data from multiple inventory sources to ensure accurate stock levels and availability across all channels.
- Fulfillment Options: TOM is limited in its ability to offer multiple fulfillment options to customers, such as shipping from a store or direct-to-consumer delivery. DOM, however, is designed to support a wide range of fulfillment options, including in-store pickup, ship-from-store, and cross-docking.
- Real-Time Data: TOM typically operates on a batch-processing basis, meaning that order information is updated at regular intervals. DOM, on the other hand, is designed to operate in real time, providing up-to-date information on order status, inventory levels, and customer information.
- Customer Experience: In TOM, customers typically only have access to a limited set of information, such as order status and shipping information. DOM, however, is designed to provide a more comprehensive view of the customer's order history, preferences, and previous interactions, improving the overall customer experience.
In summary, DOM is designed to offer a more flexible, efficient, and customer-focused approach to order management than traditional TOM systems. By supporting multiple order sources, real-time data, and a wider range of fulfillment options, DOM can help businesses to streamline their operations and provide a better customer experience.
How does Distributed Order Management Differ from Other Kinds of Order Management?
OMSs, or legacy order management systems, were created long before the idea of omnichannel retail. As a result, they are unable to support various routes for modern retail distribution.
In addition, they are unable to access some of the preferred fulfillment strategies utilized by merchants with the same speed and efficiency. This is because they are made to function as a standalone process. They merely link a small number of channels to a single source of inventory without considering its location. This has resulted in significantly reducing inventory visibility at each crucial point in the supply chain.
To fulfill customer orders, channel managers and fulfillment operations staff must be aware of their stock's availability and location. Distributed order management creates a real-time central location for this information so that everyone may access it simultaneously.
Your company's production will eventually increase as a result of your ability to access data rapidly and merge internal and external data sources, allowing you to fulfill more orders. This will lead to increased customer loyalty, as well as positive brand awareness.
What can Distributed Order Management do that Other Order Management Systems Cannot?
While legacy systems tend to be used only for the processing of orders, distributed order management systems tend to focus far more on accommodating the different techniques and methods for order fulfillment that your company might need to use.
The distributed order management system does this by integrating with third-party businesses and suppliers that you rely on. In fact, the DMO streamlines the entire fulfillment process for every order by being much more transparent in its presentation and collection of data. This will provide your business access to many new capabilities. These are:
There are several IT systems that were designed and built and even sold to businesses before the concept of omnichannel commerce was invented. Omnichannel commerce is that new method of retail that involves a variety of touchpoints for consumers, multiple fulfillment points, and even a multitude of return points.
Thus, if you are using one of those IT systems which cannot manage the demands of omnichannel commerce, then your ability to sell will be limited, leading to reduced gross profits and cash flow.
However, distributed order management has the right automation setup working alongside the ability to access real-world data, which allows those channels to be connected without excessive modifications required to the basic structure of your business. This will improve your cash flow and lead to higher net profits.
Implementation and usage of distributed order management systems will allow you to establish the rules and parameters for your unique business.
This would be important because when you add more channels to your omnichannel business model, it would be crucial that your business has a clear definition of how you want your business to function.
This will ensure that you adhere to your demand planning and master production schedule and that you are able to keep your customers happy and satisfied.
In fact, with a distributed order management system, establishing your brand's relevant rules and synchronizing your inventory flow, pricing, information flow, and fulfillment data will become easier than ever.
This is because these systems are designed to adapt to new data as it becomes relevant, which leads to a more logical and consistent system of processes for your business.
In modern businesses, data comes from various sources. This is why the challenge lies in ensuring that you are not only getting the right data but also aligning it with every other source. This is important because the vast amount of data will not be useful without stable integrations that let you see the full supply process.
The advantage of implementing distributed order management is that it will allow you to collect internal as well as external data at the same location, which will offer your greater visibility at all times. This will help you in efficient production planning and scheduling, as well as accurate resource capacity planning.
Flexibility and Scalability
One of the ways in which businesses can grow is by ensuring that they are staying one step ahead of emerging trends and technologies. With the implementation of a distributed order management system, the evolution of businesses becomes much easier due to the flexibility that it imparts.
With distributed order management systems, changes can be made more quickly across the entire system, ensuring that there is no department being kept out of the data loop.
Another main difference between legacy OMS and DOM is how they can quickly adjust to the new requirements in retail. In fact, while the DOM and legacy OMS may have certain similar functions, the legacy OMS is limited.
These limitations are not faced by the distributed order management system because it is built on cloud technology and multi-tenant architecture. In fact, the multi-tenancy of the DOM system is crucial as it helps in improving the efficiency of business processes, and is even inherently scalable at any time.
For a retailer, all of these factors need to be a priority.
What are the Benefits of Using a Distributed Order Management System?
With the implementation of the distributed order management system, retailers will get a more comprehensive view of their supply chain. In fact, distributed order management systems will also give them more control over their supply chain management, order coordination, and even access to a real-time view of orders being processed and inventory that is in transit.
This will lead to businesses taking advantage of higher rates of efficiency and effectiveness, as well as improved flexibility, which in turn will lead to healthier financial statements and financial KPIs.
Thus, the benefits of using distributed order management system are:
Multiple Fulfillment Processes
A legacy OMS may only be able to connect to a limited number of shipping providers, which forces businesses to use other software to access more accommodating shipping options. Each of these add-ons came with a cost, which added to the overall price tag for the system, and added on to the pressure of net working capital.
In contrast, by adopting a distributed order management system, businesses get a central hub with the capabilities to handle all order fulfillment which led to smoother processes that not only became easier but also more manageable. In fact, it also led to an increase in the ratio of operating income to operating expenses.
Furthermore, a distributed order management system also allows for split orders, which leads to a reduction in the cost of shipping and fulfillment across every available channel. This, in turn, led to more defined workflows and extensive monitoring of results, which led to increased productivity and, therefore, the profitability of businesses.
Cross Channel Integration
With the use of distributed order management systems, disparate sales channels and systems can be unified far more effectively. In fact, with DOM, inventory sourcing becomes easier to accomplish even when there are different channels and individual store or warehouse locations in the picture.
Thus, a distributed order management system ensures the precision and accuracy of your business’s fulfillment data.
In contrast, if you use a legacy OMS, then you will need to juggle multiple systems, which will slow down updates and even offer a skewed view of your real-time inventory status.
The Customer Experience
One of the greatest challenges that a business can face is failure to complete order fulfillment due to poor inventory and cost management. If your business is facing stock-outs, then the profits earned by you will slow down as well.
These challenges can be combated with the use of a distributed order management system, using which you will be able to have a unified overall view of your inventory as well as suppliers. This will make it easier for you to anticipate and react to unexpected scenarios.
Also, considering that distributed order management systems will enable you to track your inventory across multiple channels, you will have far greater control over providing your customers with what they need and when they need it.
This will lead to increased sales velocity, and faster as well as higher profits and returns on investment for your business.
One of the other benefits of using a distributed order management system is that it will lead to more global inventory visibility of your business. With your 3PLs and international warehouses connected to this system, it will become easier for your consumers to order and receive products from anywhere.
This will lead to repeat sales and a higher ratio of accounts receivables as against accounts payable for your business.
Considering that distributed order management systems are cloud-based systems, your business will get the foundation that it needs to grow. In fact, the cloud structure is such that even when updates are made to the DOM system, those updates will be available to your customers immediately without impacting the service.
Additionally, it also provides the users with the flexibility to log into the system from any computer, by allowing data to be accessed by any member of your team that has been given clearance for the same.
This also provides a network-based solution that leads to better handling of information processing, execution of your business strategies, and performance monitoring. In fact, with the use of distributed order management systems, intelligent forecasting becomes easier to evaluate and analyze, while automation can streamline your processes even further.
It thus improves your risk management and increases the sustainability of your business while ensuring that you are able to incorporate sustainable supply chains, have higher profits and productivity, and have happier customers.
What is the Selection Process for the Distribution Order Management Software?
The first and most important step in selecting the best distribution order management software for your business is to identify your requirements. This list should be comprehensive and unique to your business.
For instance, you may ask yourself questions like, “do we need to purchase order support for B2B eCommerce? Will we enable customers to set up recurring orders? Do we want to enable customers to choose their own delivery dates? And so on.
Once you have a clear view of your needs, as well as their importance, you are then ready to select your vendor. However, at this stage, you should consider drafting a proposal that includes your must-have technical requirements as well as your wish list of core features.
A few examples of elements that you can include in your proposal are:
- Order volumes
- Details of the existing vendor landscape
- Systems acquisition process timeline
- List of current software
- A detailed breakdown of training processes
Lastly, when selecting your vendor for your distributed order management system, it is important that you do your own research too, and that you do not take the vendors at their word. This means that you should check out for yourself whether the order management software does all that you were told it does.
One of the best ways of doing this is by making use of vendor demos and trials, which will help you see the real capabilities in action. You should also ensure that you ask to review the success stories from existing clients or to speak to your vendor’s client base directly as an added reference.
What you must remember through this all is that you might not be able to find a vendor that fulfills all your requirements. Thus, it is important that you keep in mind which requirements you are willing to trade off and which are your most vital needs that you are not willing to trade-off.
FAQS about Distributed Order Management
- What is a distributed order management system (DOMS)?
A distributed order management system (DOMS) is a software solution designed to help retailers manage and fulfill customer orders from multiple channels and locations in real time. It provides a unified view of inventory across different retail locations, enabling retailers to process orders from any channel in any location and deliver them to customers with ease.
- How does a DOMS improve order fulfillment?
A DOMS improves order fulfillment by providing real-time visibility into inventory across multiple retail locations. This helps retailers process customer orders from any channel, in any location, and fulfill them from the nearest available inventory. This helps to reduce shipping costs and delivery times, improve customer satisfaction and increase order accuracy.
- How does a DOMS benefit retailers?
A DOMS benefits retailers by providing a unified view of inventory across multiple retail locations, allowing them to process customer orders from any channel, in any location, and fulfill them with ease. This helps to reduce shipping costs, improve delivery times, increase order accuracy, and improve customer satisfaction.
- Can a DOMS integrate with other systems?
Yes, a DOMS can integrate with other systems such as e-commerce platforms, warehouse management systems, and shipping carriers to provide a seamless order fulfillment process.
- How does a DOMS manage inventory?
A DOMS manages inventory by providing real-time visibility into inventory levels across multiple retail locations. It updates inventory levels in real-time as orders are processed, ensuring that the right inventory is available to fulfill customer orders.
- How does a DOMS help retailers manage multiple channels?
A DOMS helps retailers manage multiple channels by providing a unified view of inventory across different retail locations, enabling retailers to process orders from any channel in any location and fulfill them with ease.
- How does a DOMS improve order accuracy?
A DOMS improves order accuracy by providing real-time visibility into inventory levels across multiple retail locations. This helps retailers to avoid overselling and ensures that the right inventory is available to fulfill customer orders.
- How does a DOMS reduce shipping costs?
A DOMS reduces shipping costs by enabling retailers to fulfill customer orders from the nearest available inventory, reducing shipping distances and delivery times.
- How does a DOMS improve customer satisfaction?
A DOMS improves customer satisfaction by enabling retailers to process customer orders from any channel, in any location, and fulfill them with ease. This helps to reduce shipping costs and delivery times, increase order accuracy, and improve customer satisfaction.
- Can a DOMS be used by both brick-and-mortar and online retailers?
Yes, a DOMS can be used by both brick-and-mortar and online retailers as it provides a unified view of inventory across multiple retail locations, enabling retailers to process customer orders from any channel, in any location, and fulfill them with ease.
How can Deskera Help You with the Implementation of Distributed Order Management?
Deskera is a cloud-based enterprise resource planning (ERP) platform that provides a suite of integrated business applications to manage various aspects of an organization. It can help with the implementation of distributed order management in several ways:
- Centralized Order Management: Deskera provides a centralized order management system that allows businesses to manage orders from multiple channels, such as e-commerce stores, brick-and-mortar stores, and marketplaces, in one place. This can help businesses to have a better overview of the entire order fulfillment process and make informed decisions.
- Inventory Management: Deskera provides real-time inventory management that enables businesses to track the availability of products across different locations. This helps businesses to fulfill orders from the nearest location and reduce lead time.
- Multi-channel Fulfillment: Deskera allows businesses to fulfill orders from multiple channels such as e-commerce stores, brick-and-mortar stores, and marketplaces, in an efficient and streamlined manner. This helps businesses to increase the speed and accuracy of order fulfillment.
- Order Routing: Deskera provides the ability to route orders to different fulfillment centers based on criteria such as inventory availability, shipping cost, and delivery time. This helps businesses to optimize the order fulfillment process and reduce the cost of shipping.
- Analytics and Reporting: Deskera provides robust analytics and reporting capabilities that enable businesses to gain insights into the performance of their order fulfillment process. This helps businesses to identify areas for improvement and make data-driven decisions.
Distributed order management (DOM) is a software solution that helps businesses manage orders across multiple sales channels, fulfillment centers, and other business units.
DOM automates the order fulfillment process and helps organizations achieve greater supply chain visibility, scalability, and efficiency. It allows businesses to coordinate and optimize orders from multiple channels and locations, streamline order management processes, and improve customer satisfaction.
The key features of a distributed order management system are:
- Inventory visibility
- Order management
- Fulfillment optimization
- Customer experience
- Decision making
- Data-driven insights
- Increased sales and revenue
The benefits of using a distributed order management system are:
- Multiple Fulfillment Processes
- Cross Channel Integration
- The Customer Experience
- Global Visibility
- The Cloud
The selection process for a distributed order management system is as follows:
- Define objectives and priorities
- Proposal request
- Do your research
Deskera will be able to help your businesses with the implementation of distributed order management by providing a centralized order management system, real-time inventory management, multi-channel fulfillment, order routing, and analytics and reporting capabilities.