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  First Thoughts

    Dan Gilmore

    Editor

    Supply Chain Digest



 
Feb. 24, 2017

Supply Chain News: The Six Use Cases of Distributed Order Management


DOM is Perhaps the Most Interesting Supply Chain Related Software Application There is Right now - and Increasingly One of the Most Important

 

Distributed Order Management or DOM is perhaps the most interesting supply chain related software application there is right now - and increasingly one of the most important.

I was around at its inception, as a supply chain software analyst in the late 1990s. The first I heard of DOM - and don't know that was the name it went by at the time - was from an Indian software company called Yantra, which was then primarily known for trying to become a major player in the Warehouse Management Systems market.

In the very early days of ecommerce, Yantra's DOM was positioned as a tool to connect ecommerce websites with suppliers. The idea was in part that the ecom sites might actually carry no inventory at all, simply providing commerce functions, and thus (greatly simplifying) a system was needed to confirm inventory availability from suppliers and send them orders for drop shipping to the end consumer.

Gilmore Says....

DOM is becoming one of the hearts of integrated planning and execution - the other being systems supporting/driving the S&OP process - and it would be good for many of you get up to speed.

What do you say?

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A bit later, i2 Technologies also developed a DOM product, though I am unsure how that came to be. But for a long while, Yantra and i2 were the only DOM games in town. Ultimately, Yantra was acquired by Sterling Commerce, which was then acquired by IBM. And in fact, IBM's current DOM has its roots in that original Yantra solution.

As for i2, I think its interest in DOM faded when the dot com bubble burst, then it ran into financial difficulties in the mid-2000s before it was finally acquired by JDA. I believe, as with a number of i2 products back then, its DOM simply faded away. JDA now partners with IBM on DOM.

So, what is a Distributed Order Management system? That, it is clear, depends in large part whom you ask.

DOM is often described as providing order "orchestration." Again, what does that mean? My take is that it means DOM makes intelligent decisions about order execution, based on a variety of factors and checks, and then automates the delivery of that order (of multiple types) to the appropriate point or node for completion, without need for manual reviews or other processes.

So, you may say, that sounds like what we have always called an Order Management System (OMS) - what's the deal?

Well, there is currently some level of overlap between DOM and OMS - and I expect that overlap to grow. But there are important differences between DOM and OMS, as illustrated below:

 

Traditional Order Management Systems (OMS)
Disributed Order Management (DOM) Systems
Focus: Order Processing
Focus: Orchestration and Fulfillment
Order Entry
Optimal Sourcing Logic
Line Item Management
Inventory Visibility across the Network
Inventory Allocation
Supplier Integration
Pricing
Process Automation
Promotions
Multi-Node Inventory Allocation
Credit Checks
Available- to-Promise
Credit Card Processing
Drop Shipping Automation


Here is a rather detailed but more complete definition: A Distributed Order Management system serves as a powerful hub that enables Omnichannel commerce, integrates the extended supply chain, optimizes inbound and outbound order routing, provides real-time network inventory visibility, allocation and management, automates complex channel and customer requirements and maximizes profitability while meeting customer service commitments.

That's a mouthful, but DOM is in fact becoming something of a Swiss army knife for supply chain execution and planning.

DOM seemed to almost disappear for a few years after the dot com bubble burst, but has seen tremendous resurgence in recent years as the engine to power Omnichannel commerce, especially in retail. But that Omnichannel opportunity is far from the only application for DOM technology.

Last year, I collaborated with Dinesh Dongre, VP of product strategy at Softeon, a provider of DOM as well as WMS and other supply chain software solutions, to identify six distinct use cases for DOM. I think that number might actually have expanded by one or two since our inititial analysis, but this week and next we will review the six we were able to define in some detail, starting with the most prominent:

DOM User Case Number 1 - Omnichannel Enablement and Optimization: As noted above, this is the use case that lately has really put DOM again on the map, with DOM almost becoming a "must have" for Omnichanel success in retail, consumer goods and beyond.

Omnichannel is creating whole new points of interaction (POIs), points of fulfillment (POFs), such as retail stores, and point of return (PORs). How do all the these POIs, POFs, and PORs get stitched together, and how do new process flows like order on-line, pick-up in store become technically enabled without major and expensive modifications to existing systems?

DOM can be the answer, connecting disparate systems and orchestrating the flow of orders between the myriad combinations of POIs, POFs, and PORs, often allowing existing systems to keep merrily going on doing what they are doing without realizing they are now part of the Omnichannel world.

But DOM generally does a lot more than just enabling these Omnichannel connections and processes. It optimizes fulfillment performance. A DOM determines how to source an order in a way that meets customer service commitments at the lowest total cost or some other objective.

Generally at the heart of a DOM is a powerful, configurable rules engine that enables companies to define sourcing and fulfillment policies and logic in great detail. Those rules would be driven many factors and attributes, including inventory availability across the entire, extended network, rules around that inventory (such as minimum quantities say to be maintained in-store), customer service requirements, shipping costs, labor or other capacities and more.

Let's take a simple example: say a retailer has several DCs in different time zones across the US. As the day proceeds, even orders from the East coast may be routed by the DOM to DCs going further west in order to meet cutoff times for parcel carrier pick up, depending on service commitments to individual customers.

So a customer that chose free ground shipping with somewhat loose commitments for order delivery would be routed to the DC that would incur the lowest shipping costs, whereas the orders for customers paying for one or two-day delivery would have their sourcing points dynamically moved throughout the day to take advantage of later cutoff windows further west. Delivery commitments would be made with the knowledge of these rules and sourcing options.

There are many far more complex examples of such fulfillment logic - and my research indicates companies often start with somewhat basic rules, which they make more sophisticated and nuanced over time.

There is so much more. One fast growing consumer goods company (becoming a very well known brand) is primarily using DOM very similar to how it was originally envisioned by Yantra, supporting drop shipping processes (tracking all the way to the end customer) across hundreds of its vendors.

The benefits of this first DOM use case include:

• Omnichannel enablement without cost/effort of modifying existing systems, and/or just speeding idea to enablement.
Faster time to market with new channels/services and sourcing options
Profit optimization though lowest cost fulfillment within defined constraints
Multi-channel inventory visibility and control
Automation of many existing manual processes relevant to order fulfillment

So there is the most prominent use case for DOM, but Dongre and I defined at least five more, including probably the next most common, DOM as an "order hub" to tie together disparate ERP/OMS networks - as well as several other use cases you might not be familiar with.

I'll be back with that in the next week or two.

DOM is becoming one of the hearts of integrated planning and execution - the other being systems supporting/driving the S&OP process - and it would be good for many of you get up to speed. Will have other some resources for you next time.

What do you see going on in the DOM market? Is it a must have in Omnichannel commerce? What would you add to our discussion on this use case? Let us know your thought at the Feedback section below.


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