Understanding the 8 Stages of the Omnichannel Order Lifecycle

Jul 27, 2015 12:41 PM By Jim Barnes

In a complex, omnichannel environment, retailers must address new questions such as what kind of investment in omnichannel makes sense, and how it will impact the bottom line. To determine the optimal approach and pinpoint opportunities for accelerated growth, savings and customer service improvements, retailers must define and implement processes, supporting technology and people across the eight stages of the omnichannel order lifecycle.

Each stage of the order lifecycle is interdependent with a number of sub-cycles that fall into two categories:

• Forward logistics: Any order received through any channel falls into this category. Fulfilling to the customer as efficiently as possible is the crux of the order management lifecycle.
• Reverse logistics: For every order, the returns process must also be considered. Without proper omnichannel solutions, returns can be far more complicated than purchases.

The eight stages are as follows:

Inventory availability

Supply chain responsiveness and customer service are improved by global, real-time inventory visibility across channels. Visibility to on-hand inventory and the segmentation of inventory (by physical and logical site, catalog, product and item) allows retailers to delineate among inventory in different physical locations, including within the store.

In order to improve gross margin return on investment (GMROI) and the customer experience, retailers need the ability to:

• Expose inventory and eliminate silo channel inventory to ensure a customer demand can be met regardless of inventory positioning
• Enable advanced order routing logic that evaluates cost versus service tradeoffs based on inventory positioning and variable supply chain costs such as transportation and labor

Order routing

The cornerstone of most advanced order management systems (OMS) is the ability to optimize the order routing logic through a work flow, or rules engine.

Orders can be optimized based on fixed and variable costs, such as transportation mode, carrier and service level. Systems can also route orders based upon store and DC labor capacity and cost.

Often overlooked is the ability to weight the order based on service versus cost tradeoffs, followed by tie breakers. When two stores within the same geographic region can fulfill the order at the same cost and service level, which store gets the order? Dynamic order routing is critical for improving order profitability.

Customer care and analytics

Knowing and proactively serving your customer is vital. Visibility to customer data at the point of purchase enables enhanced customer service. Buying behaviors, appeasement trends, preferred payment methods, loyalty points and customer call notes all improve the management and expediency of inbound and outbound calls. While the data models and user interfaces of many OMS systems today are order versus customer centric, omnichannel must start with the customer.

Payment processing

Retailers must understand how to mitigate variable and costly payment processing transactions and merchant service charges. Ensuring the OMS is PCI compliant is critical. From routing and allocation to how orders are processed and charged, managing multiple transactions from one customer can be complicated.

Authorization of payment is noted on a customer’s debit or credit card, and settlement of payment often occurs when the order has been physically shipped. Defining the payment process lifecycle from authorization to fraud detection and settlement can expedite order fulfillment and prevent shipping delays.

Fulfillment

There are many options for fulfillment, including brick-and-mortar stores, vendors, DCs, third-party logistics providers (3PLs), or in-store pickup. Strategically leveraging the best option for a given order will reduce overall costs while increasing fulfillment speed, not to mention GMPO. Regardless of where the order is shipped from, end-to-end integration is key.

Shipment

Shipping methods often vary depending on the product and shipment distance. Offering free or reduced rate shipping reduces GMPO. At the order level, retailers must be able to manage multiple ship-to locations, dynamically rate a shipment and select different carriers based on service level, origin and destination.

Importantly, retailers must also be able to upgrade or downgrade packages based on promised dates. Advanced OMS systems utilize real-time rating engines to evaluate where to route an order based on cost and service.

Integration

While each stage of the order lifecycle is pivotal, they must all be integrated to achieve omnichannel success. Many software systems can manage one or more stages of the order lifecycle, but few can communicate across solutions with ease.

A single software platform that enables seamless integration among solutions can be a strategic differentiator, addressing visibility and communication gaps and enabling retailers to more easily optimize the entire order lifecycle.

By understanding the eight stages of the omnichannel order lifecycle, retailers can begin investing in the optimal processes and enabling technology to make their omnichannel vision a reality.