DOM Delivers
The average company has 5.2 order management systems, 4.3 fulfillment systems and 60 percent have little or no integration among them, according to AMR Research. In addition, most are focused on internal business processes. Distributed order management (DOM) is one approach to consolidating orders in an environment where increased outsourcing, customer demands and sales channels have manufacturers scrambling to keep track of it all. According to AMR, DOM works best for companies who most heavily rely on multiple suppliers and channels, such as consumer packaged goods, high-tech OEMs, consumer durables, heavy equipment and third-party logistics firms.
Start Simple
When Maytag Corp. wanted to sell its appliances online without violating its indirect distribution channels the company chose a DOM solution from Comergent Technologies. Maytag's solution is an early example of distributed order management, an emerging approach to customer fulfillment that accommodates the multiple sources of supply and multiple channels of distribution that quickly overwhelm the current order management infrastructure of many manufacturers. The Comergent solution creates a shopping cart on Maytag's Web-site, requests a zip code to match the order, checks inventory and pricing, presents those to the customer, then passes the order to the selected dealer where the transaction is completed.
More than half of the orders transacted on the new site occur outside normal retail hours and more than 70 percent exceed $1,000, almost double the average in-store sale. The revamped Maytag Web-site also increases the volume of in-store purchases.
Plan of Action
Maytag's Web-site strategy includes finding partners that create Web-sites for certain dealers, while meshing with the existing e-commerce infrastructure of others. Integration with Maytag's largest retail partners was still underway at press time. Larger dealers "all have their own Web-sites and their own processes," says Mark Monroe, manager of e-business for Maytag. "There are many more steps we must go through."
These types of small, controlled deployments have proven the success of distributed order management among early adopters, says Rod Johnson, vice president, AMR Research. Johnson urges manufacturers to start planning now for change in their customer fulfillment infrastructure.
Gaining Control
TaylorMade-adidas Golf had a single, albeit antiquated, order management application for each of its business units, but it was so flexible and loose that users "could do almost anything they wanted to an order," notes Rob McLellan, director of global supply chain management and e-services for TaylorMade. Despite a clunky interface, users managed to "change priorities, quantities, dates and override pricing controls to get better deals."
TaylorMade wanted to tap its newly implemented i2 Technologies supply chain applications for real-time order management by customers and staff. An i2 distributed order management module acts as a front end to its order management infrastructure to provide self-service access to orders with appropriate levels of manipulation, such as splitting shipments. Thanks to the link with the rest of the suite, they're also able to provide more efficient order promising and can better manage demand, reducing inventory and preserving capital.
"We're using the same storefront globally, in Europe, Japan and Canada," says McLellan. "They're all similar but they don't use the same currencies or product catalogs." The new DOM module "takes order data, passes it out, and zips it to the proper order management system."
Field Test
TaylorMade field staff is now testing a wireless component that enables it to check inventory and offer real-time order promising and pricing remotely via wireless terminals, with the ability for supervisors to override the order.
"The better we're able to manage the order, the more we can improve the supply chain," says McLellan.
Third party logistics firms by definition handle multiple sources of supply and distribution. DOM solutions are fulfilling their need to provide more visibility and control to customers.
The Right Path
Consumer goods companies increasingly want outsourcers to work upstream at the order management level, says Neil O'Connell, CTO for Stonepath Logistics, a global logistics provider. Stonepath uses Yantra Corp.'s DOM product at Target, for example, to match purchase data for non-retail store materials with materials needs, in order to sort them into transportation orders.
PFSWeb Inc. is using a DOM soultion from Vcommerce Corp. to offer a portal to clients, helping them increase inventory turns, decrease cycle times and lower their inventory investments by monitoring inventory movement and removing choke points from the supply chain. "Before we took small stabs at that functionality on a client by client basis," says Steve Graham, CTO and head of business development for PFSWeb, a business process outsourcing provider. "There wasn't going to be a good solution until there was a way to communicate information throughout the supply chain."
The DOM Challenge
AMR's Johnson predicts DOM technology will not be ready for large-scale deployment until 2005. Challenges in implementation include scalability, limited project scope and data normalization. However, early adopters have proven that DOM delivers the process flexibility and distributed execution demanded by today's complex supply chains.