Is Distributed Order Management the Right Move for Sellers? 2024 Update

It takes a lot of work (and a whole lot more people) to keep a supply chain moving. If you’re balancing customer expectations for timely, accurate deliveries on one hand, and disparate fulfillment processes on the other,  that’s when you know you’re going to need distributed order management software.

DOM software has seen rapid adoption in recent times due to its ability to streamline and unify data and workflows at a scale that traditional fulfillment hasn’t succeeded in doing. 

In this post, we’ll dive into what distributed order management is and who stands to gain the most from deploying it.

What is Distributed Order Management?

Distributed order management is an approach to fulfilling multi-channel sales and orders quickly and cost-effectively. Using rule-based logic, it streamlines order fulfillment processes such as

1. Syncing inventory data and offering absolute inventory visibility to avoid stockouts or excesses.
2. Cycle count 
3. Inventory forecasting to determine availability for growth demands. 
4. Redistributing inventory to warehouses running low or on the verge of running out.
5. Deploying dropshipping for small businesses. 
6. Consolidating shipments for the same customer against multiple orders.
7. Splitting shipments and rerouting orders. 
8. Returns management. 

Traditional Versus Distributed Order Management: The Differences

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The Pillars of Distributed Order Management

Distributed order management is defined by three pillars that distinguish it from legacy systems, which are;‍

Managing inventory

The first step to order fulfillment lies in determining if your current inventory levels suffice to fulfill both present and future demand. Further if levels are not consistently optimal across multiple locations in pincodes closest to a customer, you need a mechanism to reroute that part of your inventory to the correct fulfillment center to meet shipping and delivery SLAs. 

Without visibility, you cannot know precisely when you’re coming up short, or have a surplus that you cannot sell quickly enough, which particularly impacts expiry-sensitive SKUs. A distributed inventory gives a bird’s eye view of inventory levels with configurations for location, demand forecasting, past sales and volume, which addresses all the above concerns. The exactness helps you order from suppliers on time, and ahead of demand, so that you’re not thrown off guard by a spike in interest for a certain item. 

Being able to track your inventory at all times lets you know which items are best and least-sold, allowing you to replenish inventory in line with customer preferences. When everyone in the network has the same visibility, they can cooperate to push and move inventory. 

In the EasyEcom system, you can automate cycle counts and get inventory visibility at a bin-level through both mobile and web, allowing your warehouse staff to quickly scan the right shelf and reduce both the footwork and paperwork. Once the data is updated, the information is available to all users ensuring accuracy and quickness.

Automating order management workflows 

Any distributed order management software should automate order workflows to make its consequent processing and fulfillment timeline short, precise and damage-free. It should follow rule-based logic to queue up orders based on customer details, item invoice, location, expiry, packing requirement and courier partners to speed up delivery. This includes ground-coordination between pickers and packing stations, staging docks etc to reduce transit time and ensure that the order goes out to the customer in the shortest possible time.

This is precisely what the shipping carrier within the EasyEcom environment does. It helps sellers aggregate courier partners according to their reliability, trustworthiness and cost-efficiency, and ensures a seamless communication to keep both the seller and customer on the same page once the order is dispatched. 

Omnichannel fulfillment 

Distributed is synonymous with omni channel order management because it connects multiple touch points and fulfillment options into a central ecosystem to offer greater convenience, simplicity and time-saving for sellers and customers alike. A seller can manage DTC, B2B and marketplace orders from one place without switching between scattered systems, reducing the dependency for updates from courier partners or marketplaces. In fact, 13% of retailers surveyed by Deloitte have prioritized accelerating omnichannel capabilities by 2024.

A DOM unites fragmented shopping experiences that begin and end either online or offline, allowing sellers to follow and gain a better understanding of their audience. In other words, it offers options such as

1. BOPIS
2. BORIS
3. BOSTS (Buy-online, ship to store) 
4. Endless aisles

These options encourage customers to make repeat purchases based on previously seamless experiences in both buying and returns processes. And even in streamlining reverse logistics, decisions concerning returned items can be expedited based on quality and condition. Warehouse workers can scan and update quality status, allowing sellers to decide the quantity of items that can be restored to inventory before updating listings. For example, if a clothing seller sold 10 shirts and 5 were found to be a size mismatch for one or more orders, those quantities can be used to fulfill another set of orders in different combinations, ensuring zero-loss. If a returned item qualifies for refund processing, the DOM can compute how much payment the seller was owed after deducting requisite fees, ensuring the seller isn’t overcharged.

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Distributed Order Management Challenges

Wealth of choice

You would have heard of the saying, ‘too many cooks spoil the broth’.

And there’s a very real risk of this happening to you if your goals and constraints to using a distributed order management software are unclear. Are you looking to 

• Save time?
• Reduce working capital?
• Fasttrack fulfillment and drive customer satisfaction?

It’s here that you should decide what your long-term objectives are in line with measuring success metrics, growth plans and budget. It isn’t necessary that an expensive system will solve all your problems, so give more weightage to a solution that is scalable and customizable to help your eCommerce business stay lean. ‍

Order distribution

It can be challenging to know when, where and how to split and segregate orders when they come from different sources such as directly-from-manufacturers or from distribution hubs. A distributed order management system should therefore allow for different fulfillment models that determine the level of involvement and accountability expected from dropshippers, 3PL or cross-docking.

Worldwide shipping and processing

Cross border commerce requires sellers to have complete understanding of local regulations, excise and customs which are to be considered as part of the delivery timeline. ‍

Order complexity by demand growth

Options like BOPIS and ship from store complicate fulfillment because it occurs asynchronously with assembly and shipping happening at different locations. This requires all involved parties to be looped in to ensure they are in agreement with fees, type of orders by quantity and dimensions at the time of committing to the fulfillment clause.

The Advantages of Distributed Order Management System

It is almost subliminal to see an automated distributed order management software at work, because it’s like seeing all the pieces of a jigsaw fitting together to produce a complete picture. The key benefits distributed order management systems offer sellers are‍

Optimize inventory levels 

A DOM can keep track of inventory levels at several warehouses and hubs across the fulfillment network. It can also tell you which ones are running low on stock and allow you to source the required material to replenish your inventory before demand kicks in. I

f you have surplus inventory, your warehousing and storage fees go up. And if you’re stocked out, you lose a sales opportunity by being unable to fulfill the order.  A distributed order management system can minimize such occurrences with real-time updates of channel-wise inventory and help you to intelligently predict demand based on inventory forecasts.

Automate and expedite fulfillment 

Distributed order management systems can accommodate the fulfillment requirements of any business size. By allowing sellers to diversify sales potential without creating gaps in the supply chain, DOMS can drive and amplify sales growth. What’s more, it can reroute orders, split them to fulfill different order permutations and ship more by volume, helping to bring down the cost of shipping and fulfillment. It saves costs in another interesting way. 

Think about expiring inventory,i.e. Perishables with a short shelf life that cannot be sold to customers. On average, expired inventory costs a company 1-3% of its annual sales which is preventable if you use a system like EasyEcom which lets you set expiry thresholds to different SKUs. As the date nears, such items get pushed first to comply with quality guidelines while ensuring sellers aren’t stuck with an unusable inventory. 

Painless Reverse Logistics

DOMs smoothen reverse workflows by allowing you to reconcile returns and payments to be settled with the seller from different marketplaces. It can help you assess all damages in its entirety before making further decisions. If the item is undamaged, it can go back into the inventory and be reshuffled according to where demand peaks. If a replacement or refund is requested, the seller can update the system and determine if the expected number of returns match the actual arrivals at warehouses. From there, the seller is able to calculate the dues owed to them and raise disputes in instances where they’ve been wrongly charged by either the marketplace or courier partner. 

On EasyEcom, documentation expands to more images from multiple angles to support claims raised and get the settlement in a shorter time. Overall, a DOM helps to improve returns management, schedule returns and approve refunds, leading to exceptional customer experiences. 

Lesser room for human error

Automated order management software removes busywork. For example, item-level tagging using barcode scanners and RFIDs at warehouses can increase inventory accuracy from 63% to 95%, according to a study from PR NewsWire. It can make all the difference w.r.t the time and labor.  It can recognize and remove duplicates and ensure precision to inventory cycle counts, leading to fewer stockouts and improved sales with better inventory and warehouse management practices.‍

Customer experience

With global visibility, both sellers and buyers have access to the same information which drives up the seller’s image and credibility.  The seller can plug and play with multiple warehouse and carrier integrations to widen the distribution and delivery network, and be in a position to closely watch movements in and out of the warehouse. This makes it easier to know that the order has reached the customer on time or ahead of schedule. As customers grow comfortable transacting with your business, sales will repeat and expand thanks to glowing recommendations, attracting more footfall. 

Cloud-based systems

A cloud-based order management tool is lightweight and takes up less infrastructure without compromising on scale. Both you and your team at the ground-level have access anytime, anywhere, which beats having to manually go around asking for updates. By being able to better handle information processing, you can execute business strategies and monitor daily performance. 

In fact, a cloud-based DOM provides deep insights through its analytics suite which helps you understand how your sales, orders, inventory and returns are faring. For example, you can examine SKU performance reports to know which items sold the most during a particular season. Or, you can look at inventory aging by days and shelf reports to know how long your inventory has been idling to reduce the time between orders being received and fulfilled. 

What goes into selecting distributed order management software?

The right distributed order management tool should upscale your existing processes without disrupting them. Here are three tips to help you make the right decision;

Examine your long-term business goals

Should your DOM take fulfillment completely out of your hands or would you feel better about it supporting your in house efforts?This question can be answered if you are able to align your growth plans with current estimates which allow you to decide on the level of accountability and who it lies with.

Cross channel integration

Given that the system should manage orders across multiple channels, it should be able to integrate with existing ERP, invoicing, accounting and customer management systems in order to facilitate a seamless data flow between all tools. A tool like EasyEcom OMS can not only integrate with multiple fulfillment partners but can also recommend cost-effective and quick turnaround time to make selling seamless.‍

Prioritize quality support

The system training should be comprehensive and offer clarity on different fields, forms, features and level of configuration applicable to the system. The support you get should allow you to determine when you’ve got the hang of the system and how capable the team is in identifying both the bottleneck and the solution to it. From onboarding and initial setup to hands-on support, ensure that the solution that you’re going with has knowledgeable experts who can make themselves available to guide you through the process until you feel confident!