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February 24, 2017 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet The Six Use Cases of Distributed Order Management bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Winner Announced bullet Trivia      bullet Feedback
bullet New Supply Chain by Design and Expert Columns bullet On Demand Videocasts


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first thought


Supply Chain Graphic of the Week
Impact of Imports on US Manufacturing - Two Different Views of the Same Chart


Major Deal in CPG Sector Collapses, but Industry Change far from Over

E2open is Supply Chain Software Company on the Move
Amazon Sales versus Stock Price Growth
Rail Carriers Remain Highly Profitable


January 17, 2017 Contest

See Who Took Home the Prize!

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This White Paper Discusses the Downfalls of 2016 and Reports the Main Features That Need to be Addressed in the Upcoming Year

Holste's Blog: Training & Maintenance are Key Factors to Reliable Conveyor System Performance

Weekly On-Target Newsletter:
February 22, 2017 Edition

Last Chance Cartoon, Rail Q4, E2open CEO, Amazon Packing Robot and more

The Most Overlooked and Underestimated Data in Supply Chain Design

by Dr. Michael Watson

Regulatory Compliance in a Changing Environment

by J. Anthony Hardenburgh
VP, Global Trade Content
Amber Road


MIT graduate student John Krafcik invented what iconic supply chain term in 1988?

Answer Found at the
Bottom of the Page

The Six Use Cases of Distributed Order Management

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.


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.


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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)
Distributed 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
Process Automation
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 first 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 Omnichannel 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:

• Omnichannel enablement without the 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.

View Web/Printable Version of this Column

On Demand Videocast:

Innovation in Shipper-3PL Relationships Benchmark Study Results

New Research will be Unveiled from SCDigest and JDA On This Increasingly Important Topic

In this outstanding broadcast, SCDigest and JDA recently completed new research study on innovation in shipper-3PL relationships, with the goal of obtaining the perspectives of both shippers and service providers on this increasingly important topic. All registrants will be sent a copy of the report will all the data shortly after the Videocast.

Featuring SCDigest editor Dan Gilmore and Danny Halim and Lori Harner of JDA.

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On Demand Videocast:

New Cloud WMS Solution is Game Changer for Warehouse Management Deployment and Flexibility

New Technology and Deployment Approach Offer a Simply Better Way to WMS Implementations - Learn How

In this outstanding Videocast, we will cover the latest in each-picking robotics, co-bots, artificial intelligence, autonomous vehicles, sensors, drones and droids.

Featuring  Dan Gilmore, Editor, along with Mark Hawksley and Bruno Dubreuil of TECSYS, a leading provider of WMS solutions.

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On Demand Videocast:

Successful Supply Chain Vendor Compliance - for Retailers and Beyond

Author Norm Katz on Vendor Compliance "By the Book"

In this outstanding Videocast, Katz will summarize key elements of book, to include: Compliance program guiding principles; What is permissible under the law relative to vendor chargebacks; Common mistakes companies make in rolling out and maintaining vendor compliance programs; The many "E's" of successful vendor compliance, from "Envision" to "Ethics."

Featuring  Dan Gilmore, Editor, Norman Katz, consultant and author of "Successful Supply Chain Vendor Compliance," and Greg Holder, CEO, Compliance Networks

Available On Demand


This week, more of the many email were received relative to SCDigest Editor Dan Gilmore's column on A Supply Chain Christmas Wish List for 2016. Great feedback - more next week.

Feedback on A Supply Chain Christmas Wish List for 2016:


As always an insightful and truly thought provoking "First Thought."

Maybe the cause is industry has been so beaten down by government regulation, financial crises etc., it is has just been in a survival not thrive mentality and thus offering reflect what they will buy?

It seems demand for real supply competitive advantage projects has narrowed to fewer industries and shrunk. Hopefully some of the leadership changes in government is about to re-spark this desire to gain advantage? I think exception to this is Amazon, which I see using basic competitive advantage efforts to out maneuver their competition. As far as I know they buy nothing but build all their own solutions?

The leadership you describe seems to be have been replaced by professional Olympic water treaders… no Michael Phelps? The current leaders use the term supply chain even try to use S&OP to sell marketing noise around Cloud, largely useless but expensive technology, powerpoints consulting process and theories that serve some niche agenda or narrow profit opportunity for the sellers but rarely if ever return the big ROI for clients.

Real supply chain/S&OP efforts are ALL about competitive advantage… not treading water.
These breakthrough S&OP/supply chain efforts ONLY work when they embrace people and understand the overriding problem is a distributed data / inventory production synchronization / work effort coordination problem. Thus cannot be solved by synchronous computing apps in isolation (99% of what is offered today). By the way synchronous computing applications is about all 90% of IT professionals are comfortable with….thus a big problem, big gap but big opportunity?

What is sad is still maybe less than 5% of the extended enterprise coordination of resources is being done anywhere let alone everywhere. Thus the opportunity to use basic problem solving approaches applying communication, workflow, and optimization technologies and adherence to rigorous finance thinking present probably unbounded business profit opportunities.

For example leverage of postponed manufacturing to promote US jobs, protect IP, grow profits, create more choice for customers… as one small example I mentioned in response to your Trump supply chain article?

Like you I think there should have been 50 Hau Lee's, Sanjiv Sidhu's, Jim Moorehouse's, Bob Delaney's minted in past 10 years.

I have seen this gap in industry and have frequently turned to academia in engineering and MBA programs to see if they want to grab the torch and set out BHAG (Big Harry Audacious Goals) What I find they are all fishing for corporate money to grow the size of their programs and thus take their lead from these same "treading water” or niche signals.

Time to break the cycle?

Jon Kirkegaard
DCRA Solutions


The reason why we hear all about the supply chains of the big companies is that they are big companies, and that is what the press typically gravitates to. This was not always the case, but in these times of the sponsored stories in the trade press, where the story supports the advertisers in the publication, we hear about the things the big companies do because that is what those advertisers want to cover.
Think of the economics of the issue. If you are the VP of sales and marketing at a software company, consulting firm, a 3PL or a carrier, what size of client do you want to use as your prestige example? You use the big company that has name recognition. If you are in that same position, what do you want to have as accounts, 10 big name companies or 10 no name SMBs? Shoot, you might need to have 100 of those SMB customers to equal the business that one big name brings you, so where will any smart VP of sales and marketing focus?

The idea that SMB (Small-Mid Market Businesses) don't have the same issues and problems to where they are not as interesting to work on is not accurate. SMBs have all of the same issues that the larger companies have, except for scale. Scale makes solutions easier. A SMB does not have the resources in people, process or capital that a larger company has. In my time at Pep Boys our freight spend alone was more than the total revenue of many of the clients I serve with my consulting practice. However, the problems are the same and are much more challenging to solve due to the lack of people, resources and capital to deploy. The tools that the bigs use, the "double comma” priced SCM systems, just do not scale down to what a $10MM or even a $100MM revenue company can justify. However, the SMBs still need to manage their inventory, they still have to fulfill orders, ship orders, and deal with returns. I have come to the opinion that it is much harder to solve these problems, and that the solutions must be deployed with great care in a SMB environment because the typical SMB can't tolerate the errors and variance that the big companies can. An error that would be a rounding issue at a Fortune 1000 company can be devastating at the SMB level.

Scale matters. In the SMB world the person that manages the warehouse, and perhaps transportation, may be managing the day to day of order processing and picking. Even in $500MM companies, the talent pool is small and shallow. The leaders can see what needs to be done – they get the strategy. They may even understand the tactics. But they sure don't have the depth in resources to start executing the tactics.

The SMB community is being served SCM material to think about and deploy. However, that content is not coming from the usual suspects in the SCM world. They get information from their industry associations, industry specific trade publications, from conferences focused on that industry segment, or from the Vistage, YPO and similar groups. They talk to other owners they know at the local Rotary or Lions Club meetings. In the SMB world the CEO is often just a few steps from the warehouse or the plant floor. They don't go to CSCMP or WERC conferences because they don't know about those organizations, or when they look at what the conference offers they see problems and solutions that are not what they as leaders have to deal with.

Can the SCM trade press do a better job of servicing the SMB market? The short answer is YES. However, it is going to take a different mindset, a focus on providing more than just the strategy and some of the tactics of SCM. It will take a level of commitment that the trade press may not be able to make, considering the cost of running those businesses. It will require writing about solutions that may not bring in advertising revenue, writing about solutions that some of the large vendors may not want covered, because there are solutions that provide the same functions for the SMB world as the big systems do, for far less money. In a publishing business model that depends on 100% advertising revenue for survival, can the publishers afford to provide the level of coverage that brings value to the SMB world without the advertising support that supports that mission?

David Schneider
David K. Schneider & Associates



Q: MIT graduate student John Krafcik invented what iconic supply chain term in 1988?

A: Lean. BTW, Krafcik is now CEO of auto buying web site/phone appTrueCar.

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