Transforming Retail Enterprise: An In-Depth Look at OMS (Part 1)
Understanding Retail Enterprise and the Role of OMS
Welcome to a deep dive into the multifaceted world of the Retail Enterprise Landscape! If retail were a bustling city, its skyline would be dominated by several towering skyscrapers — each representing a key operational area that makes the enterprise tick. These “towers,” as we like to call them, are crucial components that span from the initial ‘Concept to Market,’ crafting brilliant ideas into tangible products, all the way through to ‘Record to Report,’ where every transaction and action is meticulously recorded and analyzed. Along the way, we encounter essential processes like ‘Plan to Cash,’ which fine-tunes inventory against demand, and ‘Procure to Pay,’ ensuring that suppliers and stakeholders are seamlessly integrated into the ecosystem. On the consumer-facing side, we have ‘Market to Consumer,’ the flashy billboard that attracts and engages customers, and ‘Order to Cash,’ the financial heartbeat that pumps revenue through the business. Let’s not forget the workforce, managed under ‘Hire to Retire,’ as no city functions without its citizens. We will unpack these operational towers, and understand how an effective Order Management system will benifit each of these domains. The below diagram shows these towers. Some of the capabilities(*) are applicable to CPG companies who are also retailers.
This blog is part of a multi part series about Retail enterprise and Order Management system.
Where Does the Order Management System (OMS) Fit into the Retail Enterprise Landscape?
In a retail enterprise landscape bustling with various operational towers, the Order Management System (OMS) shines as a pivotal connector and orchestrator of many key processes. So, where exactly does it fit in? The answer is multifold.
Central to ‘Order to Cash’
First and foremost, the OMS is the cornerstone of the ‘Order to Cash’ tower. It kicks into action the moment a customer places an order, overseeing the entire lifecycle of that order — from initial capture and validation to fulfillment and revenue recognition. The system ensures that products are picked, packed, and shipped efficiently, and that revenue is accurately recorded. It plays a crucial role in not just logging orders but also ensuring they translate into cash flow, thereby fulfilling its primary function within this tower.
A Vital Connection to ‘Plan to Cash’
Order Management Systems (OMS) are often tightly integrated with Inventory Management Systems, a cornerstone in the ‘Plan to Cash’ operational pillar. This integration offers real-time data synchronization, crucial for optimizing inventory levels and refining procurement forecasts. By continuously tracking sales performance and customer orders, the OMS delivers invaluable insights into what products are moving and which are not.
This real-time data is particularly beneficial for advanced inventory practices such as ‘Available to Sell’ and ‘Available to Promise.’ ‘Available to Sell’ refers to the current stock levels that are uncommitted and readily available for sale, helping businesses avoid stockouts or overstocking. ‘Available to Promise,’ on the other hand, provides an accurate estimate of future inventory levels based on existing purchase orders and production schedules. This enables retail organizations to confidently promise delivery timelines to their customers, thereby enhancing customer satisfaction and trust.
Most Order management systems would provide visibility to ATS and ATP inventory to efficiently utilize inventory.
Bridging the Gap with ‘Market to Consumer’
In the contemporary digital landscape, Order Management Systems (OMS) frequently interface with Customer Relationship Management (CRM) solutions, thereby serving as an integral element within the ‘Market to Consumer’ operational segment of retail enterprises. By leveraging historical purchase data and consumer preferences, the OMS enables the customization of marketing communications, promotional offerings, and product recommendations. This strategic integration goes beyond mere order fulfillment; it plays a crucial role in amplifying customer engagement and fostering long-term loyalty.
Features such as distributed order fulfillment and real-time tracking capabilities in the OMS architecture facilitate expedited and transparent order processing. These features enhance the customer’s ability to access real-time order status, thereby improving overall order visibility.
Furthermore, advanced OMS platforms offer a unified view of customer orders, a capability that significantly augments Customer Experience (CX) personalization strategies. This consolidated perspective allows customer experience teams to tailor interactions and service offerings more effectively, thereby elevating the overall customer experience.
Synergies with ‘Procure to Pay’
An adept Order Management System (OMS) possesses the capability to activate alerts based on pre-configured stock level thresholds. This functionality serves as a critical initiation point for the ‘Procure to Pay’ process within retail enterprise architecture. Upon reaching these set limits, the system automatically triggers the creation and approval of purchase orders, ensuring timely procurement of goods to meet anticipated demand, thereby closing the supply chain loop effectively.
One of the more advanced features within many OMS platforms is the ability to manage ‘Safety Stock’ settings. Safety stock acts as a buffer to mitigate risks related to supply chain uncertainties or sudden spikes in demand. When inventory levels approach this safety stock threshold, the OMS can automatically initiate procurement activities, thereby providing an additional layer of security against stockouts and ensuring uninterrupted business operations.
Beyond this, the OMS contributes significantly to the realm of supply planning. By integrating historical sales data, current inventory status, and future sales projections, the OMS can offer a more holistic and accurate representation of supply needs. This data-driven approach allows procurement teams to make more informed decisions, considering factors such as lead times from suppliers, seasonal demand fluctuations, and even geopolitical factors that might impact supply chains. The result is not just a reactive procurement process, but a proactive, agile, and resilient supply planning mechanism that adapts to the dynamic nature of the retail environment.
In summary, the OMS plays a multifaceted role in the ‘Procure to Pay’ operational pillar. By incorporating features like safety stock settings and enriching supply planning capabilities, it adds both robustness and flexibility to the procurement process. This ultimately ensures that retail enterprises are better equipped to meet future demand, thereby optimizing the entire supply chain cycle.
Enabling ‘Record to Report’
The data logged by the OMS serves as invaluable raw material for the ‘Record to Report’ tower. From sales figures to time-to-fulfillment metrics, the OMS feeds into analytics tools and financial systems to produce a wide range of operational and financial reports. These reports can then be used for performance analysis, strategic planning, and compliance.
An Overlooked Connection to ‘Hire to Retire’
While not directly connected, an efficient OMS can influence workforce management, a part of the ‘Hire to Retire’ tower. When order management is streamlined, it improves overall operational efficiency, which in turn may impact staffing needs, performance metrics, and employee satisfaction.
In the following section, we’ll explore in greater detail the functional elements of Order Management Systems (OMS) and how retailers can utilize these capabilities to enhance both their revenue growth and profit margins.
