Five reasons to adopt an OMS for General Merchandise retail

We live in a world in which speed counts. Over a very short span of time, certain pure-play e-commerce retailers developed the operational capabilities to deliver all manner of products extremely quickly. This level of service quickly conditioned shoppers to anticipate rapid ‘last mile’ delivery options from every retailer – much as supply chains were conditioned to provide ‘Just In Time’ delivery decades ago.

The outcome is that all retailers - in certain categories, including groceries, more than others - compete in a world in which the promise of next-day delivery often wins the customer’s order, even if the price isn’t the lowest. In a further twist, delivery precision is hugely important to buyers in certain product categories (1).

It goes almost without saying that retailers can only achieve this level of service through the adoption of a single administrative platform that manages every aspect of the shopper’s experience, end to end: from ensuring that adequate stock exists to fulfil orders, through to the delivery of the item according to the shopper’s preference (slower-but-less-expensive-or-free, or faster-but-more-expensive). In modern omni-channel logistics, that administrative platform needs to be a high-performance Order Management System (OMS).

Here are five outstanding reasons for adopting an OMS on which to build your omnichannel logistics.

Retailers that offer omnichannel features such as click-and-collect or ship-from-store are likely to already be relying on an OMS, because these customer experiences are only possible using a single platform to manage the entire process through all available channels.  The alternative is to develop specific tools, designed to enable each customer journey. But these do not provide a global overview, often lack real-time capabilities, and don’t easily integrate with each other. To introduce, improve, or even create experiences that customers have come to expect as standard, you’re going to need an OMS.

Industry analysts IHL state that the shipping optimisation engine is one of the most important sources of return on investment on an OMS, because efficient fulfilment has a significant impact on the cost incurred in completing a sale.

For example, a high-performance OMS can automatically allocate an order to the store that will minimise costs to the retailer. If the least costly option to fulfil an order is unavailable (for instance, because of a lack of stock), the OMS will move on to the second-least costly - such as using inventory from multiple stores or warehouses. This cycle can be repeated until the cost of fulfilling the order is considered greater than the value of fulfilling it - a calculation that needs, however, to account for the cost of a frustrated client.

With the right OMS, such rules may be set according to how you categorise your clients, and how you anticipate their reaction.

You may know that your VIP clients and ambassadors - faithful customers who never return an order - will accept an unfulfilled order without excess damage to your relationship with them. In this scenario, the maximum cost you’ll accept to fulfil the order will be low, although this might be a dangerous strategy in the long term.

You may prefer, however, to keep your best customers happy. In this scenario, you may be prepared to accept a higher cost to fulfil their orders, on the basis that the short-term loss will easily be compensated by a future order.

At the other extreme, you may aim to fulfil the orders of unhappy clients at all costs, to try and turn them into satisfied customers. No matter your goals and strategy, an OMS is the key to success.

Making a sale remains only part of the retail story. Not every item sold remains sold, and a proportion (which varies significantly by category) is always liable to be returned. How you manage returns and refunds has a huge impact on customer satisfaction, even determining whether that shopper will return for another purchase, another time.

An OMS simplifies and streamlines returns and refunds for the customer. An OMS enables, for instance, the return in-store of online orders (or vice versa). It does this while ensuring that stock levels are duly readjusted and important insights – such as identifying persistently returned items – are captured for analysis.

For some product categories, a well-configured OMS can even make allowances for ‘persistently returned items’, and permit “virtual inventory” to be sold, confident that sufficient stock will be available to dispatch in time.

While we’re on the topic of inventory: don’t subject your customers to ‘out of stock’ disappointment: improve the availability of products at all your points-of-sale through improved stock level control.

Ensuring you always have a single source of truth for inventory levels, an OMS will harmonise, replace or otherwise improve multiple replenishment processes within your supply chain ecosystem via a set of transaction analysis and management tools. As well as avoiding out-of-stock situations, this minimises leftover stock, meaning less waste or items sold at a reduced price during Sales. 

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