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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?

Click here to send us your comments
 

A bit later, i2 Technologies also developed a DOM product, though I am unsure how that developed. 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. I think that number might actually have expanded by one or two since then, 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 usually 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 by 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:

• 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.


Your Comments/Feedback

Srihari

Senior Consultant, Infosys
Posted on: May, 22 2016
Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.

Mike O'Brien

Senior editor, Access Intelligence
Posted on: May, 26 2016
Surprised to see Home Depot fall off the list; thought they were winning with Sync?

Julie Leonard

Marketing Director, Inovity
Posted on: Jun, 27 2016
Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.

Carsten Baumann

Strategic Alliance Manager, Schneider Electric
Posted on: Aug, 19 2016

The IoT Platform in this year's (2016) Hype Cycle is on the ascending side, entering the "Peak of Inflated Expectation" area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn't this contradicting in itself?

Editor's Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.

 

 

Jo Ann Tudtud-Navalta

Materials Management Manager, Chong Hua Hospital, Cebu City, Philippines
Posted on: Aug, 21 2016

I agree totally with Mr. Schneider.

I have always lived by "put it in writing" all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This "putting in writing" can also be used for almost anything else.  Here are some general benefits (only some) of "putting in writing":

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  "Learn from the past" it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to "put it in writing".





Sandy Montalbano

Consultant, Reshoring Initiative
Posted on: Aug, 24 2016
U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of "Made in USA".

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm

Robert

Transportation Manager, N/A
Posted on: Aug, 30 2016
 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!

Ian Jansen

Mr, NHLS
Posted on: Sep, 14 2016
SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I've worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many "picks" per day.

I've learned that one doesn't have to remind Germany about your EDI orders.

Don Benson

Partner, Warehouse Coach
Posted on: Sep, 15 2016
Challenge - to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 

Jade

Admin, Fulfillment Logistics UK Ltd
Posted on: Oct, 02 2016
Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.

Mike Dargis

President of asset-based carrier based in the Midwest, Zip Xpress Inc. (at ZipXpress.net)
Posted on: Oct, 03 2016
Thanks for the article, but I know there's a lot more to this issue than just the pay rates. Please check out my blogs on the subject at www.zipxpress.net.

Blaine

Inventory Specialist, Syncron
Posted on: Nov, 16 2016
Lora, great article! I agree that companies choose the 'safe' solution more often than not. My solution is a bolt-on for legacy ERP's and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.

Blaine
blaine.schultz@syncron.com

Bob McIntyre

National Account Executive, DBK Concepts LLC
Posted on: Nov, 21 2016
This is a game changer in GE's production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 
 
 
 
 

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