Order Management Systems are making point of sale systems obsolete

Let’s start by remembering the grandfather of Point-of-Sale systems, the cash register.  The cash register replaced cash boxes and written ledgers as a method to mechanically count sales revenue and calculate the exchange of money between buyers and sellers in stores.  Once charge plates (which later became known as credit cards) were introduced, mechanical card readers were developed and sat alongside cash registers to capture imprints of charge plates…


…Of course, POS systems revolutionized and expanded upon those functions by directly processing electronic credit card payments, tracking in-store inventory, facilitating product price management in-store, and, most recently, administrating gift cards and customer loyalty programs.  Yes, like its grandfather, POS systems still counts cash and makes change, but when they appeared in stores, especially in combination with scanning technology, they revolutionized the checkout process.

Today, however, the POS system has a younger cousin, who, like the kids in your own family, grew up with the internet.   Order Management Systems, OMS, manage virtual shopping carts, administrate the “check-out” process on-line and so much more.   As omni-channel retailers focus on replacing the siloed business processes associated with running catalog operations, call centers, in-store operations and internet sales, it’s the OMS who grew-up on the internet that’s replacing the aging POS and other systems.  Or, at minimum, more advanced POS systems are adapting and developing the skills of their OMS cousins to do more work, beyond the four walls of an individual store, in the retailer’s selling network.

By whichever name, the next generation of POS or OMS rolled-out in stores, those systems will become one of retailing’s keys to unifying customer experiences across all its selling channels.  This trend is well under way. According to a survey by BRP, formerly Boston Retail Partners, by 2020, for example, 30% of retailers will be using their OMS as their in-store POS.

In addition to OMS pushing its way into stores, what had briefly been referred to as Distributed Order Management, DOM, is also being displaced by OMS.  For the next few moments, let’s not focus on the specific system, but the objective. Retail and Supply Chain Management, like culture in general today, develop nomenclature to represent new and evolving business processes and those phrases are often replaced by new names to reflect slight distinctions or “improvements” in thought leadership…

…A few years ago, the concept or function DOM was popularized to represent a methodology whereby orders would be aggregated from multiple order-capture channels to provide a single source of information across those channels, intelligently brokering orders to various systems and processes.  This description fit the then-popular vision of an omni-channel retailer. But today, consultants and retail system providers assign the same work that had earlier been attributed to DOM to that cousin of the POS system, a more powerful and robust OMS. Whether OMS achieves the goals of DOM “seamlessly,” as advertised, or via middleware that mimics seamlessness, marketing such a functionality under the new buzz phrase “Unified Commerce” and then discussing the distribution of those orders among channels is contrary to the vision of a unified or singular order fulfillment operation.  

Of course, the concept of an OMS is not new, but clearly its role and functions, among ERP and other retail solution modules, are enlarging.  From the perspective of Unified Commerce, and as was the case with DOM, an advanced OMS is now charged with managing real-time inventories across the enterprise and facilitating a shopper’s ability to execute purchases any-time and anywhere, with a range of process combinations that includes:

  • Buy in store and carry-out from store

  • Buy in store with delivery from store, DC or Vendor Ship-Direct (VSD)

  • Shop in-store and check-out on-line (shopping cart contents exceed cash in wallet or forgotten credit/debit card)

  • Buy on-line and pick up in-store or “curb-side”

  • Buy on-line with delivery from DC, store or VSD

  • Buy via catalog or call center (yes, there are still segments of the market, although not large, that prefer these methods or require such services)

In some modern markets, according to BRP, 75%-85% of “customer purchase journeys” start online.  But, due to concerns regarding fit, product comfort, or look and feel, the journey sometimes also incorporates a store-visit, which may or may not be the final step of the purchase process.  For reasons of convenience, carry-out from store may not be the result (the consumer doesn’t own a vehicle to transport his purchase, products are too large to fit in her car or shopping bags in hand would be cumbersome based on her plans for the rest of her day).  The goal of the new OMS is to manage any of the possible purchase, carry and delivery combinations.

To be continue…