Make space, POS, DOM and CRM, OMS wants to be king of retail (2/2)

From the retailer’s perspective, manage any of the possible purchase, carry and delivery combinations with an OMS, is not without risks.  As was mentioned earlier, while ERP tracks aggregated inventory throughout the enterprise, OMS is charged to know exactly how much inventory is where, DCs, individual stores, even VSD, and to allow the consumer to buy from any of those locations with the confidence that reported inventory levels are correct and available.  Certainly, DCs today achieve very high inventory accuracy measures. But, in-store, behaviors such as more relaxed return and exchange practices, typically result in lower inventory accuracy. Thus, to meet shopper expectations when she is directed to a specific store to make her purchase, unified commerce platforms will require greater compliance to business processes than had previously been expected.  

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Additionally, in-store fulfillment of orders that require shipment will add workload, costs and complexity to store customer service resources.  Old KPIs, such as monthly sales targets, may need to be changed to better focus on client satisfaction. Audits have revealed, for example, that on occasion when incorporating store order fulfillment of on-line orders, some stores have delayed transactions a few days, after already meeting monthly sales objectives, to carry those transactions over to the beginning of the next month.  Such actions clearly are not customer-centric and, as such, new KPIs will be needed that more strongly focus on addressing customer expectations.

Also, optimizing where to direct orders will become a complex balancing act.  Most would agree that DC's are best outfitted to economically fill orders. But when out of stock, shipping an on-line order from a store may be preferable to losing the sale.  Yet, when order lines are split between a DC and a store, additional handling and transportation costs will result. And if the store chosen to fill a line wasn’t a store where the ordered item has a history of slow or no-move, in-store fulfillment runs the risk of cannibalizing potentially more profitable in-store sales.

Furthermore, split orders require both more proactive questions up-front to manage customer expectations and more complex order status reporting later in the process. Without line-level communication to avoid the surprise that multiple shipments against a single order will be received, upon receipt of the first delivery, customers may contact customer service to report their order is short.  Additionally, some retailers are analyzing whether the costs of merge-in-transit or synchronized delivery processes adds value to customer experience. And let's not overlook other benefits, such as when a DC is much further away than a store and an online customer order shipped complete from store results in lower transportation costs and reduced transit time.

Finally, it seems that OMS may be out to replace or at least leverage data traditionally associated with Customer Relationship Management (CRM) systems.  Recent conversations have had solution developers aiming for heightened customer engagement and personalization during both the shopping and check-out processes.  63% of retailers, according to BRP surveys, want customer transaction histories to enable intelligent system suggestions that tailor sales and service offers to fit preferences and client-specific buying patterns.  This, of course, will be another delicate balancing act. A customer may appreciate a reminder to add milk or even a birthday cake to her shopping cart at check-out, for example, but she may not appreciate the reminder to buy condoms or adult diapers.  The challenge, said one retail executive, is to successfully “form an intimate relationship with the customer without being creepy.”

So, will you be able to implement all of these processes all at once, out of the box, as you replace or upgrade your current OMS?  Probably not. Most likely your deployment roadmap will follow these phases:

  1. On-line orders shipped from DC or vendors to stores for customer pick-up…this phase will require moderate change management efforts in-store, will likely be met with retail operations cooperation, since foot-traffic typically will drive additional sales and store visits provide the opportunity for positive shopping experiences and, thus, store affinity.

  2. On-line orders shipped from stores for delivery to customer...this phase will require significant change management efforts within retail operations who might initially be resistant due to the additional work and costs associated with packaging and shipping orders.  “Sales credit” issues between category silos and the alignment of store KPIs with customer expectations will be necessary.

  3. United returns management, customer ability to return multi-channel purchases anywhere within the enterprise…this phase will require that every store and every DC have access to the complete history of enterprise sales records, within periods that support customer return policies, and processes to manage expenses associated with returns management and sales reversals.  

  4. Direct to consumer market messaging signals…depending on the complexity desired, this phase can require extensive BI efforts and include geo-fence messaging based on customer GPS coordinates (via known cell phone IP addresses).  Again, one of the key challenges will be to avoid giving the sense of intruding on the customers’ privacy (avoid appearing creepy). Certainly, automated messages should not spoil the surprise of your customers’ gift shopping, if his girlfriend happens to have his phone in her possession while out shopping…or worse.