DC Velocity - January 2015

44 DC VELOCITY JANUARY 2015 www.dcvelocity.com str at e g ic i ns i gh t

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from the store. Exhibit 1 outlines the capabilities of the two solutions.

DISTRIBUTED ORDER MANAGEMENT

DOM technology itself is not new. It was developed at least a decade ago and, for a long time, was primarily used as a way to allocate in-transit inventory to customer orders before it actually arrived at the warehouse. This technology has been very successfully adapted to the task of deciding when to use store inventory to fill e-commerce orders. Manhattan Associates, one of the early pioneers of DOM, has reported that numerous large apparel retailers have rolled it out to support their omnichannel strategies. Most of these retailers declined to be mentioned in this article, as they view their use of distributed order management as a competitive differentiator, but having seen the list, I can attest that it’s an impressive one. One retailer that has gone public with DOM deployment is Lilly Pulitzer, which has used that software to expand its market reach and drive online traffic to its stores.

Another early pioneer of DOM technology was Yantra,
first acquired by Sterling Commerce in 2004 and then by
IBM in 2010. Although IBM has not been visibly promot-
ing DOM recently, a number of high-profile retailers use
the application. One retailer, Cabela’s, has been using the
solution since at least 2007.
There also are examples of companies that have achieved
distributed order management capabilities without using
an “off-the-shelf” application. For example, Stage Stores,
parent company of Bealls and Peebles department stores,
deployed Oracle in 2003 to perform a number of supply
chain functions. The company has configured Oracle to
help make decisions about when to fill e-commerce orders
from the DC versus using store employees and inventory.
Gough Grubbs, senior vice president of distribution and
logistics for Stage Stores, stressed that the company’s omni-
channel strategy is shifting rapidly. “While there is a high
level of satisfaction with the fact that our systems provide
us a choice in whether to fulfill orders from the stores or
the DC, the preference is changing as our online business
grows and profitability track records provide better direc-
tion,” he said in an interview. “Contrary to a recent article
publicizing another retailer’s shift to increase store fulfill-
ment of online orders, Stage Stores is shifting more toward
DC fulfillment. We don’t believe there is a common one-
size-fits-all solution across retailers. The answer varies by
retailer based on store size, depth of product, and location.”

Sears has also been leading the charge with a robust technology set to support its omnichannel distribution strategy. The company uses an internally developed system

Decision support

; Should we use distribution center inventory or store inventory to fill orders? ; Which locations have inventory?

; Which locations can fill the entire order?

; Which stores have available labor to pick orders?

; Which stores are selling the inventory at the lowest price point? ; Which locations offer the lowest cost of shipping?

Execution capabilities

; User-friendly interface for young workers

; Integration with store planogram for ease of locating product ; Ability to batch pick or cluster pick orders for greater efficiency ; Ability to confirm accuracy via bar-code scan