Omni-Channel Retail Operations: How to Choose the Right Order Management System
Use a Scorecard to Identify and Select an Order Management System (OMS) for Omni-Channel Retail Operations
In any business technology decision, there are a variety of factors at play and interests to keep in mind. This generally comes down to a fundamental question of breadth vs. depth. How can the business best address critical functional requirements that promote business, technology and integration realities, most seamlessly? In other words, does your business need a “best-of-breed” (BoB) solution that best solves a single area of need? Or does a software suite make more sense, covering all basic needs while tacking on auxiliary support for ancillary areas?
This can very easily become a question without an answer if you don’t know how to break down the costs, benefits, and risks of each system. To that end, we advocate using a scorecard that helps simplify each aspect of the review. Such as the one we have developed to help retailers determine the system that best meets their order management and fulfillment needs.
Well, Why Does It Matter?
In short, BoB solutions should be the prime consideration for mission critical and systems touching core functional areas of your omni-channel retail operations. A broader look at the actual system choices of technology leaders across industries showed an interesting pattern. Technology decision makers gravitate toward BoB solutions for areas where the application is:
- Mission critical;
- Computationally intensive;
- Functionally specialized;
- Backend facing (largely)
Software suite providers have the advantage of simplified system integration and tend to fulfill a broader assortment of business requirements. However, for non-core areas, they are often technologically lacking in important areas like feature richness, power, robustness and future functionality. Critically, they may not have the functional depth to cover all essential business requirements, or fulfill the technology needs for a core functional area.
Make Analysis Easy with a Scorecard
Scorecards simplify the decision-making process by providing executives with a complete foundational template to ensure that a company’s strategic goals translate into its technology investments. These scorecards can be invaluable tools as leadership teams begin the path to investment. They break the review into manageable chunks to independently, and then collectively, address business needs, technology needs, and integration capabilities.
Scorecards help remove bias and provide a snapshot of business realities. They allow you to focus on specific questions that get to the root of the decision, instead of focusing on it from a purely idealistic perspective. Importantly, while scorecards don’t answer the question authoritatively, they guide the review by requiring executives to identify a limited number of critical needs and risks to find the right balance. No third-party system will ever address every need or problem a company has. Rather it will help show where compromises can be made, if at all.
Is Order Management a Critical Need for Retailers?
Although not the lone consideration, at the core of this decision is whether order management is a critical business requirement for omni-channel retail operations. To oversimplify, this generally comes down to size, and thus complexity, of the retail operations.
For example, a retailer already in business and pivoting toward an omni-channel strategy may be tempted to choose a light OMS option that is part of a software suite for their POS (Point of Sale) or eCommerce system. This might be adequate for a smaller retailer, but once the number of retail locations exceeds 15, the complexity of managing that level of inventory flow becomes astronomical. At this point it makes the OMS a mission critical technology to operate the business effectively, and efficiently. In other words, retail operations without an OMS at this level, becomes a frustrating and ineffective exercise.
For mid/large retail organizations, robust order management can be the difference between breaking the bank and breaking a profit. An OrderDynamics OMS Brief on retail order routing showed that a 60 store retailer with one eCommerce site, could face up to 92 million daily order route permutations. Clearly, optimizing these volumes warrants more than a light OMS, or in other words, a best-in-breed system.
For mid- to large-size retailers, an OMS is a mission critical, computationally intense, functionally specialized, and largely a back-end facing system, with several front-facing integrated components. Functional areas like the inventory visibility component provides direct client-facing features. However, the system as a whole largely drive routing, processing and order fulfillment behind the scenes. In this respect, although the OMS ties both the back-office world of retail with the front store element of retail operations and sales – most retailers need the raw power of a specialized best-of-breed solution.
Simplifying the Complex
No business decision can be made based on what others are doing. Effective decision-making at the executive level requires a comprehensive understanding of strategic direction and operational realities. When it comes to managing your order management systems, this is no different. But don’t get overwhelmed or make knee-jerk reactions. Use the scorecard to make sure your technology investments align with your needs and rest easy you’re pursuing the right option for your organization’s omni-channel retail operations.