Order Management Has Become A Strategic Commerce Capability

Over the last few years we have seen a shift in client requirements. Commerce solution programs and eCommerce platform projects have begun to reflect a change in how companies are beginning to do business, and in next generation capability needs they have that encompass:

  • Managing orders across a diverse set of customer touchpoints. It is no longer just about the web. Today’s eBusiness is taking orders through the web, through the mobile web, through mobile apps, through marketplaces, through the contact center, and increasingly through mobile POS, sales force enablement tools, and self-service kiosks. A single order pipeline, enabled through APIs and integration tools will enable consistent order processing with security and control.
  • Enabling complex fulfillment and supply chain scenarios. No longer are orders going to be fulfilled from a single fulfillment center (FC). Tomorrow's orders will be sourced from a wide variety of locations that include that FC, but also include vendor drop-shippers, distributors, stores, and third-party logistics providers who may either regionally stage high-demand products or support seasonal inventory volumes, or both. Business logic and real-time decisioning is critical to driving a high quality consumer experience and a profitable order. The benefits here are multiple, including lower transportation costs and faster time to delivery.
  • Enabling inventory visibility. Today’s customer is using mobile and the web to find and locate products in stores. In stores, sales associates working with customers can drive a good experience from an out-of-stock while saving a sale and fulfilling that order from another store or from the DC to meet demand more profitably by driving inventory turns and reducing markdowns.  Having inventory visibility across all locations is critical, and while still hard in many cases, the costs of this have dropped significantly.
  •  Supporting a growing variety of payment types and supporting tiered fraud screening. Order management tools are critical to supporting a growing set of payment types, amplified by the globalization of businesses today. And as the dollars spent on fraud screening and card reauthorizations grows in a significant number, businesses need tiered fraud screening tools that they can manage and then integrate with third-party fraud tools more selectively.
  • Supporting customer service scenarios more effectively. Improving customer self service and driving efficient contact center interactions around the most common customer contact requires effective order management tools. “Where is my order,” “editing my order,” “canceling my order,” and managing order exceptions in the contact center are key to delivering high-quality customer experiences across touchpoints, while keeping service efficient in service time and money.

In the era of agile commerce, order management tools are becoming strategic. Dealing with a diverse set of customer touchpoints and fulfillment nodes is no longer a high-class problem reserved for the top-tier retailers and businesses. This is now an issue for businesses large and small. While in the past order management may have been an afterthought to the eCommerce platform, many clients today may be best served to first implement next-gen OMS capability before their next-gen commerce platform, simplifying the migration to and integration of that new platform while enabling more complex order fulfillment and inventory optimization.

The good news is that the solutions market is responding, and we are looking at this closely. We are incorporating OMS capability even further in our upcoming wave report on commerce platform suites — which is already underway — and have other research planned to support your need to find the right solutions for your business. I would love to know if you have specific OMS-related research you would like to see from us; please comment below if you have suggestions. 

Comments

I agree and believe this has

I agree and believe this has been going on for years and has been at the forefront of many distributors' agendas, especially as they're constantly looking to distinguish themselves from their competitors in order to serve their reseller customers. The challenge, in my opinion, is the consolidation that happens in the value chain. As it becomes harder to compete in this space, how do market leaders consolidate their platforms when they grow via acquisition? Buy new packages? Leverage existing packages? I suspect, it's not easy to make the transition to a common platform, as it would be extremely disruptive.

I agree that this is a

I agree that this is a critical differentiator for companies that are trying to provide a seamless customer experience. I was dissapointed when Forrester decided not to continue with the Order Management Hubs wave report. Without the order hub support, eCommerce solutions lack the visibility and intelligence to deliver complex cross-channel customer orders.

We are considering that

Rod, we are considering that. Thanks for the comment in support of that work. Will consider that. - Brian

What's the impetus?

hi Brian, conceptually, the idea looks great, but I'm wondering what is the business case? can you give a little more context to what type of business will this type of solution/model makes sense? For an OEM without extensive SKUs, most often, regional or multiple in-country hubs should already meet their supply needs without having to redirect demand into other supply nodes. I see this more suitable for companies with thousands of SKUs (e.g. amazon) or seasonal peaks that can be overflowed into secondary supply nodes. Do I read this correctly?

Vendor Analysis

Hi Brian,
When can we expect vendor analysis on the solutions that provide this capability? Thoughts on the following vendors:

VendorNet
Order Motion
Sterling
Manhatten
Epicor

We provide that today via inquiry

Kyle, Thanks for the question. We are covering these vendors today and an advise on them via inquiry. I encourage you to work with your Forrester Acct Exec to set up a conversation with me on these if you have question. We are considering research on this, but for the later part of the year. Thanks, Brian

Other Drivers

I wanted to share a couple additional drivers we're seeing from our merchant partners and their customers.

1. Consumers are paying for more order transparency.
We've seen significant positive swings in conversion rate across a few verticals (apparel in particular) when providing better frontend clarity into actual stock availability and fulfillment ETAs before ordering. Repeat shopping has also increased (in cases where multi-item orders that need multi-location fulfillment) because of superior customer service through detailed, line-item level order status information at every step in the order lifecycle.

Stock availability display rules need to account for cross-channel inventory and fulfillment business rules, enabling more specific and trustworthy messaging to the customers. Having intelligent transactional email messaging and order tracking within the My Account section for complex fulfillment scenarios is critical and consumers are likely to cancel their order if they see blanket statements about order status, causing confusion and lack of trust.
With enhanced OMS support within an ECP, many of these OMS capabilities should be wired into the frontend within My Account, Shopping Cart, Checkout, Product Catalog, etc.

2. Tighter Merchant Control with Payment Capture
In complex, multi-location fulfillment location scenarios (or in back order scenarios) - there has been a growing desire to tightly control payment processing steps in relationship with fulfillment policies. The days of "full authorization" and "full capture" at time of shipping doesn't work well in these cases. Merchants want to deploy OMS workflows and invoicing policies that align with distributed inventory availability. Some supply chain systems can be the "brain" to determine what SKUs will be shipping from where based on inventory policies and the OMS needs to support the ability to invoice, capture funds, and ship individual shipments, not simply the full order in many cases.

3. Roll up Cross Channel Orders to the Frontend
Providing a single view into the customer's order history, preferences, and loyalty has become a burning desire for many multi-channel merchants. They've asked to send orders from the retail ERP, Catalog systems, or call centers to the ECP so that the Marketing and Merchandising team can leverage that data on the site while the consumer sees their entire account history with the merchant. This is driving OMS support to easily receive orders from other sources into the ECP/OMS and is also forcing ECP/OMS systems to natively support linking external systems into the order work flow. Stored value databases like in-house Gift Cards or Loyalty programs need to be intelligently and reliably plugged in to the ECP/OMS so that these can be leveraged.

Thank you,