In a world where 62% of customers consider fast and free shipping a key factor influencing their online purchases, Canadian businesses need innovative solutions to optimize their fulfillment operations. This is where distributed order management (DOM) comes in.
Distributed order management (DOM) is a supply chain management strategy that allows you to optimize order fulfillment across multiple sales channels and logistics networks. DOM provides visibility and control over your entire order fulfillment operation, from inventory to shipping.
With DOM, orders can be dynamically routed to the optimal fulfillment location based on real-time inventory availability, proximity to the customer, cost, service capabilities, and other factors. This enables you to fulfill orders most efficiently while meeting customer expectations.
DOM helps break down silos between sales channels, fulfillment centers, and delivery methods. By taking a holistic approach to order management, DOM systems enhance flexibility, reduce costs, and improve the customer experience.
What is Distributed Order Management?
Distributed Order Management (DOM) is a process that provides flexibility in how and where orders are fulfilled. With a DOM system, orders can be fulfilled from anywhere in a company’s fulfillment network, not just a single warehouse.
DOM allows companies to optimize order fulfillment across their entire network of distribution centers, retail locations, drop-ship vendors, and other facilities. Instead of designating a single warehouse to fulfill each order, DOM dynamically determines the best location to fulfill based on factors like inventory availability, proximity to the customer, and transportation costs.
It thus comes as no surprise that the DOM system market size is estimated at USD 799.5 million in 2022 and is expected to reach USD 2,224.5 million by 2031, growing at a CAGR of 17% from 2022 to 2031.
The key benefit of DOM is flexibility. Companies can fulfill orders from the location that makes the most sense for each order. For example, if a product is out of stock at the primary warehouse, the order could be automatically routed to another location that has the inventory available. Or an order could be split across multiple locations if that is most efficient.
By providing this level of flexibility, DOM helps companies improve order accuracy, reduce shipping costs, and deliver better customer service. Inventory is used more efficiently across the network. Companies gain scalability to easily handle surges in demand. DOM acts as a critical component of an omni-channel strategy for today’s customer-driven environment.
What are the Core Pillars of DOM?
Distributed order management (DOM) relies on four core pillars to enable omnichannel fulfillment excellence:
1. Inventory Visibility Across the Network
DOM provides complete visibility into inventory across all nodes in your fulfillment network, including stores, warehouses, suppliers, and drop-ship vendors. This unified view of inventory enables intelligent sourcing decisions to optimize fulfillment performance.
2. Order Orchestration and Optimization
The DOM system sequences and sources each order to the optimal node based on configured rules, including proximity to the customer, cost, service capabilities, and inventory availability. This order orchestration maximizes efficiency and customer satisfaction.
3. Flexible Fulfillment Location Assignment
DOM allows dynamic assignment of fulfillment locations at the line item level instead of the order level. This provides tremendous flexibility to split orders and fulfill from the optimal location per item.
4. Real-Time Performance Analytics
Robust analytics and reporting provide real-time visibility into fulfillment performance, inventory positions, and order trends. This powers data-driven optimization of network nodes, inventory, and order orchestration.
How Does Distributed Order Management Benefit Businesses?
Global distributed order management software revenue reached $3.8 billion by 2023, with a CAGR of 9.1%. It shows that retailers, manufacturers, and logistics providers are favouring and adopting DOM systems more in recent years.
DOM offers several key benefits for businesses that utilize it as part of their fulfillment strategy:
1. Increased Sales from Broader Inventory Access
One of the primary advantages of DOM is that it provides access to inventory across multiple fulfillment locations, including stores, warehouses, suppliers, and drop-ship vendors. This broader inventory visibility and availability allows businesses to sell more products online, even if they are all stocked in multiple warehouses. DOM systems intelligently route orders to the optimal fulfillment location that has the product in stock. This omnichannel inventory access increases sales potential and conversion rates.
2. Faster Delivery Times and Lower Logistics Costs
By having visibility into inventory across multiple fulfillment points, DOM allows orders to be fulfilled from the location closest to the customer. This proximity-based shipping results in faster delivery times and lower logistics costs. Customers also benefit from fast, low-cost delivery, which improves satisfaction and loyalty. The optimized order routing capabilities of DOM save on delivery expenses and transit times.
3. Warehouse Optimization
DOM helps businesses right-size their warehousing needs. By strategically distributing inventory across multiple, potentially smaller locations, businesses can reduce overall storage costs compared to maintaining a single, large warehouse. This is particularly beneficial for businesses with seasonal products or fluctuating demand in specific regions.
4. Product Portfolio Management
DOM allows businesses to offer a wider range of products by leveraging inventory across multiple locations. This expands their product portfolio and potentially attracts new customer segments, leading to increased sales opportunities.
5. Improved Customer Experience
The enhanced inventory availability, faster shipping times, and lower costs enabled by DOM ultimately translate into an improved customer experience. Customers have access to more products for immediate purchase. They also benefit from quick, affordable delivery. This results in higher satisfaction and brand loyalty. DOM provides businesses with the omnichannel capabilities to deliver consistent, high-quality experiences across all customer touchpoints.
4 Factors to Consider When Choosing a DOM Provider
Choosing the right distributed order management (DOM) provider is critical for omnichannel retailers.
Here are some key factors to consider when evaluating DOM solutions:
1. Experience with Omnichannel Retailers
Look for a provider with extensive experience handling order orchestration for complex omnichannel businesses. They should understand the unique requirements of unified commerce across channels like brick-and-mortar stores, eCommerce, mobile apps, call centers, and more. Ask for case studies and client references to validate their capabilities.
2. Sophisticated Order Orchestration Technology
The DOM system should use advanced rules-based algorithms and AI to optimize order brokering between fulfillment locations in real-time. This intelligent order orchestration is what maximizes delivery speed, improves inventory visibility, and reduces costs across channels. Make sure the technology goes beyond basic distributed order routing.
3. Integrations with Major eCommerce Platforms
Your DOM solution should integrate seamlessly with your eCommerce platform, ERP, WMS, PO systems, and other critical technology infrastructure. Look for pre-built connectors, APIs, and integration support to ensure your DOM system will work with your existing eCommerce stack.
4. Scalability
As your omnichannel operations grow, your DOM capabilities need to scale in tandem. Seek providers prepared to handle huge volumes across channels and peaks like Black Friday. Make sure they have experience with large multi-site distributed environments and operating at enterprise retailer scale.
Read Also: Signs You Need a Canadian Fulfillment Center
ShipTop’s Distributed Order Management Services
ShipTop offers best-in-class distributed order management services to help your business optimize fulfillment operations. Our DOM system is custom-built to provide:
1. Real-time Inventory Visibility
Get a real-time view of inventory across all your warehouses and suppliers with DOM. Our system connects to your WMS and ERP to provide up-to-date stock levels across your network. This enables intelligent order routing and inventory allocation.
2. Intelligent Order Routing
ShipTop uses powerful technology to determine the optimal warehouse or supplier to fulfill each order. Factors like product availability, cost, delivery speed, and more are analyzed in real-time to meet customer expectations.
3. Fast, Accurate Fulfillment
By leveraging real-time inventory data and intelligent order routing, ShipTop enables you to fulfill orders faster and more accurately. Meet tight delivery windows, reduce split shipments, and minimize out-of-stock.
4. Detailed Analytics Dashboard
Get actionable insights into your distributed fulfillment operations through ShipTop’s analytics proprietary solution. Track metrics like order cycle times, fill rates per warehouse, shipping costs, and more. Identify opportunities for improvement.
Rely on a world-class DOM system to optimize your fulfillment network and provide an exceptional customer experience.
Wrapping Up
Distributed Order Management (DOM) is a rapidly evolving technology that can provide tremendous value to businesses looking to optimize their order fulfillment processes.
Some of the key benefits of implementing a DOM system include:
- Enhanced visibility into inventory across all fulfillment channels
- Dynamic order routing to optimize delivery speed, cost and service levels
- Improved order orchestration and reduced order fallout
- Increased customer satisfaction through consistent omnichannel experiences
- Reduced costs through inventory optimization
If your business could benefit from advanced distributed order management capabilities, connect with ShipTop’s experts to learn more about our end-to-end DOM solutions. Our team has extensive experience implementing and managing DOM for leading retailers across North America.
Get in touch with us today to get the quote and get started with managing your order fulfillment.