Traditional Order Management Solutions Are “Killing” a Merchant's TCO

March 8, 2016

Order Management Solutions

A perfect order fulfillment should be easy to accomplish. The idea is that order delivery will meet performance expectations without any damages and with complete and accurate shipment and documentation.

Unfortunately it’s not that simple. There are various systems involved in your value network throughout the process. The number of systems isn’t necessarily the biggest issue the merchant , but the lack of real-time integration, with full visibility.

Nordstrom is focusing on “fewer, more meaningful projects, such as a scalable merchandising solution that supports seamless integration across multiple channels” and developing more efficient ways to deliver product and lower shipping costs. (Source: Geekwire, 2nd March, 2016)

The reason for this is various systems, which are disconnected and too slow in communicating between each other in order to meet the changes in demand and poor visibility into the fulfillment methods, increase the supply chain risk.

There are multiple examples where a merchant or producer has a variety of legacy systems in place covering the needs of this “closed-loop” process.

       -  Some of these companies have gone “rip and replace” -track, which is a huge risk and investment. Typically this fails to some extent; time runs out.

        - Some have tried integrating those various legacy tools with traditional EAI software and service. This is very expensive, too slow and again outdated when deployed due to constant changes in the environment; too much batch-based without the link to real time expectations by end-customers.

Times are changing. Fortunately there is no longer a need to invest in the traditional de facto order management or integration software, which is killing the TCO to most companies in the market, at least those aiming to growth and efficiency track.

The complexity of order management solutions, increasing customer experience expectation, and rising shipping costs result in major issues for most merchants. Ensuring the primary fulfillment method is chosen every time for a shipment is essential, as the secondary could eat the whole margin, or even trigger a dissatisfied customer who returns the product. One return eats the profit of about 8 successful shipments.

Amazon reported $1.8 billion in first-quarter shipping costs on Thursday, up 31% from a year earlier. (Source: WSJ.com 24th April, 2014)

Expenses are rising, and shipping is costly. Merchants should follow, in real-time, the performance and costs associated with this critical function by partners in their network.

Agile integration includes planning, demand forecasting, inventory management and the ability to serve more complex customer needs quicker and with fewer data errors. The solution gluing your processes and apps together must align with economics of scale in order to increase your unit margin with growing volumes.

The merchants supply chain is transforming into a data-driven value network.

The key is to ensure an agile and efficient data technology for the order management process, with complete, closed loop coverage. This is where Youredi will make the difference by providing the added value to the merchant.

The new world meeting the old. Simple, quick and convenient.

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