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OMS, the latest eCommerce acronym to understand

iStock-1071030302-1As eCommerce has been a common-place part of all retail business since the turn of the century, we’ve all become familiar with the acronyms of the various systems we use day-in day-out to run and manage our businesses and online operations; CMS, ERP, WMS, PIM, CRM… etc.

More recently, we’ve seen the emergence of a new one: OMS or Order Management System.

Until recently, this has been considered more of an additional feature, capability, or module within an existing suite, and was not typically seen as a standalone system.

Growth in online sales, with increased expectations and sophistication of customers and experiences has driven demand for much greater flexibility, agility, and capability for retailers to manage their online orders.

Traditionally, order management has been the domain of a WMS, or advanced eCommerce platform, however the limitations of these systems – having been designed for different intents - has seen a growing awareness of the inefficiencies and capability gaps that continue to be a poor fit for the reality of modern retail.

The poor fit shows through the inefficiencies that exist through the many ad-hoc processes that often go unnoticed. The people tasked with using these systems operationally tend to adapt, innovate, and work around these problems out of necessity - introducing shadow processes, and creating an invisible layer of work and inefficiency.

If I can take some stale liberties and once again raise the COVID pandemic as a catalyst for change, then we have seen how the ongoing reality of this pandemic has pushed people out of stores and into online - initially out of necessity, but now out of convenience.

In this new world, those shadows processes and workarounds that exist in the traditional and unfit systems have now been pushed to the level where they aren’t scaling – that’s not necessarily in terms of volumes, but in capability and agility - and those hidden inefficiencies are now glaring risks and constraints on modern business.

Enter the Order Management System.

A few players have emerged in the last 18-24 months with extremely sophisticated, dedicated systems that do one thing well – and that is order management, more specifically, distributed order management.

This class of systems is focussed in its intent – to facilitate the process of distributing, picking, packing and shipping online orders across the increasingly diverse and distributed fulfilment networks retailers are deploying.

No longer do retailers run a single WMS in a single DC and rope off an area for online orders.

Fulfilment networks are becoming more complex, with 3rd party logistics, distribution centres, stores / “dark stores”, digital & dropship being commonplace in many retailers – the sophistication of this is well beyond the native capabilities of traditional systems, whilst the new breed of Distributed OMS solutions are designed specifically to cater for this with modern, intelligent, and scalable capabilities.

Dynamic, real-time decision making based on cost performance and real-world factors - is the future many only dream of but is already being used by the market leaders – and they’re winning – with sustained growth in online sales so significant that it’s supporting overall business growth even as instore sales continue to wind back.

Early movers that have pioneered the adoption and evolution of these systems have been bucking the retail trend, not only sustaining – but growing through the pandemic – and those that have persisted with their existing systems, have either failed, or remain precariously on the brink.

Gartner, amongst others, have been tracking the emergence of these systems for a couple of years – and hold a clear view that this is an area of competitive advantage.

So aside from the business efficiency gain, what is the advantage? Well as we’ve all seen repeatedly, customers are highly sensitive to change – where they don’t tolerate frequent and disruptive changes to their shopping experiences and journeys, they embrace faster fulfilment. Smoother and faster fulfilment drives a virtuous buying cycle, leading to much stronger and sustainable growth than what can even be measured through continuously tweaking and disrupting the buy journey

And this is where, on the delivery side of things, the world has changed too, where retailers have typically sought cost control by establishing relationships with one or two carriers and negotiating rates, this has been disrupted by casual/gig approaches, which whilst cost can be a barrier – these options are immensely useful for rapid, on-demand delivery from store to local customers, or even local store-to-store transfer for click and collect.

Integrating these is difficult to manage, and that’s where modern Distributed OMS leads the way – natively integrating to services like StarShipIT.

Distributed Order Management Systems are the largest opportunity for retailers to close the gap to their competition, leverage their existing store networks, and bring the promise of rapid, smooth fulfilment to their customers.

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