If you’re wondering why you need a DOM when you already have an existing order management system (OMS), read on and learn the difference between DOM and OMS, and how DOM takes order fulfillment to the next level.
- What is distributed order management?
- DOM versus traditional centralized order management
- How distributed systems optimize complex fulfillment networks
- Business benefits of distributed order management
- Real-world use cases of distributed order management
- Why DOM requires a modern, scalable system
- FAQs on distributed order management
What is distributed order management?
DOM is a specialized order management software that uses logic-based rules and automation to orchestrate multiple orders from the most cost-effective and timely location. DOM uses sophisticated order fulfillment logic algorithms to intelligently route orders to the most convenient fulfillment location based on real-time inventory across a network of stores, warehouses, and suppliers.
The primary purpose of a DOM is to optimize your order fulfillment process, enabling you to fulfill customer orders at the shortest possible delivery time and at the lowest possible cost. Distributed order management software is a key facilitator of multi-location fulfillment for fulfillment providers managing inventory across multiple warehouses and sales channels.
DOM enables you to seamlessly execute modern fulfillment strategies, such as omnichannel fulfillment, which gives you the much-needed competitive edge in today’s flooded fulfillment landscape. With DOM, you can capitalize on modern retail trends such as buy online, pickup in-store; buy online, return in-store; and buy online, ship to store.
Having multiple fulfillment options is a significant advantage given the insatiable appetite for diverse shopping experiences among modern customers.
DOM versus traditional centralized order management
In essence, a DOM is an advanced order management system because its ultimate goal is to fulfill orders, just like an OMS, as our guide to order management systems explains. But in practice, a DOM handles complex fulfillment workflows that a centralized OMS cannot process. The huge capacity difference between DOM and OMS is tied to structure and logic.
DOM follows the modern and more dynamic order fulfillment logic approach, while a centralized OMS uses linear logic. Fulfillment logic is rule-based, meaning it considers multiple variables and optimizes the order fulfillment process by finding the most convenient delivery route. Conversely, linear logic is rigid and straightforward, following a predetermined sequence of steps. Orders are routed to a single warehouse and delivery route.
Structurally, a DOM’s network is designed to manage complex multichannel networks that synchronize inventory across multiple warehouses or fulfillment centers into a single source of truth. In contrast, centralized OMS utilizes simple networks configured for a single fulfillment location.
Other notable differences influenced by structure and logic include:
- Scalability: It’s easier to scale a DOM compared to OMS.
- Inventory visibility: DOM offers real-time inventory visibility across all channels, while OMS is limited.
- Integration: DOM integrates seamlessly with your existing tech systems, such as enterprise resource planning systems. OMS requires a lot of restructuring.
- Multi-node fulfillment: DOM facilitates multi-location fulfillment, whereas a centralized OEM limits multi-node fulfillment because it’s designed to manage orders from a single source at a time.
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How distributed systems optimize complex fulfillment networks
Fulfillment networks can become complex fast, especially if your business scales rapidly within a short timeframe. But the good thing is that distributed order management software scales to match your fulfillment demands as they evolve. These unique capabilities of a DOM make it happen:
- Real-time routing and dynamic order allocation: A DOM leverages dynamic algorithms to automatically review prevailing conditions such as shipping costs, proximity to the customer and fulfillment center, and inventory availability. It then determines the optimal path to allocate customer orders.
- Syncing inventory across multiple warehouses and sales channels: A DOM evaluates inventory levels in real-time across all your distributed fulfillment centers and sales channels. This streamlines inventory management, as it’s easier to review inventory data from a single source and make prompt data-driven decisions.
- Handling split shipments, drop-shipping, and returns: You can program a DOM to split orders at the line-item level and allocate them to different fulfillment centers. A DOM uses its real-time routing capacity to drop-ship to multiple customers and reverse logistics optimization to manage product returns.
Business benefits of distributed order management
These are the main benefits of investing in a distributed order management software:
- Faster delivery and lower shipping costs: Research indicates that businesses using a DOM can lower their shipping costs by 15% and enhance their delivery speed by 20%. However, the percentages vary depending on your DOM’s efficiency and implementation success rate.
- Improved inventory utilization and reduced stockouts: A DOM’s agile inventory management feature enables you to monitor stock levels continually so that you can hold the optimal amount of stock. This way, you avoid inventory issues such as stockouts and overstocks, which eat into your bottom line.
- Enhanced customer satisfaction and SLA adherence: Order management and customer satisfaction go hand in glove. By enhancing fulfillment speed and reducing shipping costs, a DOM helps you keep customers satisfied.
Real-world use cases of distributed order management
Direct-to-consumer (DTC) brands are top candidates for deploying DOM, as they serve many clients across various regions. They leverage a DOM to expedite end-point delivery, where they have the benefit of impressing customers in person when making deliveries.
Top DTC brands that have implemented DOM successfully include:Casper, Allbirds, Warby Parker, Burrow, and ThirdLove.
Why DOM requires a modern, scalable system
For a DOM to work efficiently and satisfy your company’s evolving fulfillment needs, it needs a modern, scalable system architecture that you can fine-tune and expand to accommodate new client orders and onboard new supply chain partners. It should handle advanced order orchestration to facilitate faster order delivery and optimized inventory visibility.
Our advanced fulfillment software empowers you to scale your multi-location order fulfillment processes and deliver a memorable fulfillment experience to your customers. Logiwa fits the bill whether you’re an established 3PL looking to bolster your OMS with an AI-powered WMS or you’re a new entrant seeking to meet your business’s unique fulfillment needs. Schedule a demo today to learn more.
FAQs on distributed order management
What is the difference between OMS, WMS, and DOM?
- OMS (Order Management System): A traditional OMS tracks orders linearly from a single source. It is often rigid and limited in handling complex, multi-node networks.
- WMS (Warehouse Management System): This software focuses on the operations inside the four walls of a warehouse, such as picking, packing, and inventory storage.
- DOM (Distributed Order Management): DOM works with the WMS and OMS. It orchestrates the entire network, using logic-based rules to route orders to the best fulfillment center based on cost, proximity, and inventory levels. It is designed specifically to synchronize inventory across multiple warehouses and sales channels.
When should a business upgrade from a standard OMS to a DOM?
- You have multiple fulfillment nodes: Your inventory is spread across various warehouses, physical stores, or third-party logistics (3PL) providers.
- You want to offer omnichannel fulfillment: You need to support modern shopping experiences like buy online, pickup in-store (BOPIS) or ship-from-store.
- You are scaling rapidly: A centralized OMS often struggles with scalability, whereas DOM is built to scale and adapt to evolving fulfillment demands.
- Shipping costs are rising: You need dynamic algorithms to automatically find the most cost-effective delivery routes and split shipments intelligently.
What are the main benefits of using distributed order management software?
- Faster Delivery & Lower Costs: DOM leverages real-time routing to find the closest inventory source to the customer, which can reduce shipping costs by up to 15% and increase delivery speed by 20%.
- Real-Time Inventory Visibility: Unlike limited OMS platforms, DOM provides a “single source of truth” for inventory across all channels, reducing stockouts and overstocks.
- Complex Order Orchestration: It automates complex scenarios like split shipments, drop-shipping, and cross-channel returns.
