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Best Practises for Omnichannel Order Management

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Criticality of Order Management for Enterprise Businesses

The burgeoning e-commerce industry is making online shopping a piece of cake, no matter what device or location we shop from. Rarely do we think about the complexity of what is taking place behind the scenes when we hit ‘Buy’. After the click of that button, either an employee or an automated system must make careful choices about how the order will be fulfilled, and must answer crucial questions – what is the cheapest route for shipping? Which inventory location will fulfill the order, when there are multiple suppliers at various locations and multiple warehouses stocking the item? What is the fastest, most cost effective way (or combination of ways) to fulfill an order?

This introduces the scope of order management, which, simply put, is the tracking and fulfilling of sales orders efficiently. Order management has traditionally been manually handled with heavy ledgers by employees (and often still is for small businesses). But as business booms, it can be maddening to deal with the onslaught of orders. A few erroneous orders or delayed deliveries are forgiven, but over time, they will tarnish the reputation of a brand.

The quest to keep customers satisfied must be relentless. Given the luxury of choice we have today, customers are increasingly expectant that all services and support will be tailored to their individual preferences of when, where and how they want to interact. To cater to this demand, businesses are realizing the importance of providing an omnichannel experience to stay afloat. This grants customers the freedom to initiate a session on their mobile phones, resume the session the next day on their laptops, and cinch in to buy a product online or decide to pick it up in store. As we’ll explore in this article, this experience would crumble without the solid integration of an order management system.

Order Management in the Omnichannel Era

"The old adage ‘know thy customer’ is a task that is becoming simultaneously easier and more difficult in this day and age of technology.

Difficult, because as new tech innovations make their way into our lives every other day, it results in consumer trends changing at a pace where they are hard to predict. Yet, at the same time, people are increasingly running their lives using technology, and it has never been easier to gather data from connected customers, and gain insights into their lifestyles and consumer patterns.

As the tides of technology turn, ‘online shopping’ and ‘in-store shopping’ might soon be antiquated terms. The lines are becoming blurred as more customers use their mobiles to enhance their brick-and-mortar shopping experience. Shoppers rely on online product information, seek out coupons, and largely prefer looking up online reviews to consulting in-store associates.

The Rise of BOPIS, BORIS & SFS

There is a growing trend of shoppers choosing to buy products online and pick them up in store; a pattern retailers refer to by the acronym ‘BOPIS’. There is almost a frenzy amidst retailers to offer BOPIS as the demand for it has spread like wildfire.

In 2018, the number of retail locations offering BOPIS nearly doubled among leading US grocery retailers. The number of click-and-collect locations for brands like Walmart, Target, Kroger, Ahold and Albertsons went from 2,451 in January 2018 to 5,800 in December 2018. Home improvement company Lowe’s claims that 60% of its online orders are collected in-store--and that number is 36% for Kohl’s and 43% for Home Depot. Retail giant Target announced that their BOPIS programs grew more than 60% year over year in 2018.

Customers are gravitating towards the concept of BOPIS for smart reasons; for one, customers who pick up their order in store avoid shipping fees. Others choose BOPIS because they needed the product the same day, or because the store is close enough for the convenience of picking up their order. For reasons of convenience, a growing number of retailers are also allowing customers to return online purchases at physical locations (BORIS). Other programs like Ship from Store (SFS) offers retailers the capability to use physical stores as distribution centers. All over, there is a movement of companies leaving a one-channel-only approach, presumably because omnichannel captures a wider audience and drives more sales. Digital retailers are branching out into physical stores, as they are hurt by the soaring costs of online ads, which in turn make the cost for acquiring online customers steep.

"By adopting a Brick-and-Clicks business model, companies can integrate their online store (the clicks) and offline store (the bricks) into a single retail strategy.

As brands make the move to Brick-and-Clicks, one of the key challenges they face is supply chain planning. Without real-time inventory tracking across all the different channels available, retailers are going to risk overselling or underselling their products. A well-oiled system can prevent unpleasant situations of delays and back-orders, which are otherwise inevitably. While most customers can forgive one-off incidents, a reputation for delays is catastrophic for brands. Given the dynamic competition in most industries today, Harvard Business Review concludes that the ultimate differentiator for companies comes down to customer experience. Customers who have faced multiple delays, and those who are frustrated with inconsistent experiences on different devices won’t stick for long--but this is where order management can save the day, and help businesses get their act together.

Get Your Omnichannel Order Management Right

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Getting Omnichannel Order Management Right

Unlike the bygone days where retail employees would manually keep track of orders, an order management system (OMS) is designed to simultaneously juggle millions of orders. It prioritizes the best way (in some cases, cheapest; in some cases, fastest) to fulfill an order by evaluating all the stocks of inventory, supply locations and available channels.

Seamless
integration

Retailers use a myriad of softwares to run their eCommerce platform, as well as software for inventory management. After thorough research and reviews, invest in an OMS that integrates seamlessly with your eCommerce platform, warehouse management system (WMS) and other supply chain technologies.

Real-time
global inventory visibility

Different customers have differing preferences on how they want to receive their order. One of the main complaints of customers opting for BOPIS is that the order isn’t ready even when they’ve been notified for pick up. These negative situations can be avoided by choosing an OMS that provides your business with real-time updates about the current state of your inventory, your vendors, sudden customer changes, requests for returns and refunds, updates on billing and payments, and everything related to the complete cycle of order fulfillment.

Real-time
global inventory visibility

Predictive
Insights

You only need to glance at sales around Christmas, Black Friday, Valentine’s Day or other holidays to realize that patterns differ drastically from month to month, season to season. You may sell some products that are highly predictable in their demand, whereas other items may be unpredictable (but still need to be sufficiently kept in stock). By investing in an OMS that uses artificial intelligence to make decisions, you can build a time series prediction model that estimates the demand in the upcoming days and months across your inventory. Although it will take several weeks to train, an OMS with AI will utilize predictive models to efficiently make decisions in real-time. This is a data-hungry model makes decisions by learning the history of your inventory and order fulfillment.

Factoring in
external conditions

AI-powered recommendation engines do not merely predict product demand based on the history of orders. Intelligent systems predict the demand and shipping time based on road conditions, weather forecasts, and shipping capacities. For example, using AI, Walmart has studied how their customer’s demands fluctuate based on weather conditions--they claim a rise in the demand for steaks versus hamburger patties when the weather is warm and cloudy! By analyzing external factors, AI-powered systems can optimize inventory management.

Factoring in
external conditions

Focus on
customer satisfaction

Simply put, the reasons for an OMS should be superior customer experience, and not merely cost-effective supply chain management. The key to creating loyal customers is to provide consistency in their experience between channels with updates on their order. From the moment an order is placed, to being dispatched, to final delivery, a reliable OMS must provide the right amount of real-time status updates and assistance with orders to the customer.

Benefits of Omnichannel Order Management

check_circleFaster deliveries

An intelligent order management system can foresee bottlenecks in delivery according to real-time conditions, and reroute the delivery onto the fastest route. Additionally, an OMS offers flexibility with delivery. Based on the clients requirements, the order can intelligently be split into multiple shipments based on costs or delivery location. In comparison to a traditional delivery system, using an OMS automatically provides the inventory personnel detailed information on the delivery at hand, leaves less room for human error, saves time and streamlines the entire process.

check_circleRoute orders based on cost-effectiveness

As a business grows, the magnitude of orders received each month often crosses a thousand--and for large retailers, that number is in the millions. It is near impossible for humans or conventional technology to efficiently manage orders at this scale. However, an intelligent OMS can optimize order fulfillment by considering the closest available warehouse locations and shipping options, and will find the most cost-effective route for a customer based on their expected delivery time frame. A strong OMS can also collect insights into the total number of vehicles available for delivery, the capacity available with each, weather conditions, traffic conditions, and accurately predict the price and time frame accordingly.

check_circleDeliver a great customer experience

According to studies, 69 percent of respondents are much less likely to shop with a retailer in the future if an item they purchased is not delivered within two days of the date promised. Effectively managing warehouse and inventory helps keep omnichannel fulfillment consistent. Brands that take advantage of multiple distribution channels are viewed in the marketplace as attentive to customers’ needs and preferences. As a result, those customers are likely to be more satisfied with your brand and will keep coming back for more. Tracking customer interaction on every channel can lead to sales-boosting insights, from tracking when customers are more likely to purchase certain items to tracking demographics of loyal customers.

check_circleDecrease labour costs

In comparison to traditional order management, an AI-powered OMS requires significantly less manual entry and checks. Due to this, the load on warehouse personnel and other staff members can be reduced, and labor costs can be decreased

check_circleTransform stores into Distribution Centers

Whether you offer BOPIS or Ship-From-Store, you now have the ability to use your physical store as a distribution center, and open up new market opportunities by leveraging additional channels.

check_circleIncrease footfalls with store pickup

Not only do customers who opt for BOPIS spend more in store – 37% of all online shoppers make unplanned additional purchases when they pick up their item in store; but more importantly, offering additional delivery options increases customer loyalty.

check_circleReduce stockouts

By improving efficiency, managing inventory and proactively sending notifications, an order management system can dramatically reduce situations where items are out-of-stock and overstock.

Although there exists a plethora of options for implementing an OMS, businesses must choose the option that sits perfectly with their existing setup. Order Management forms the core of an effective omnichannel retail strategy – forward-thinking brands will need to get it right to stay consumer ready in the rapidly evolving retail universe.

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