order management systems · e-commerce platforms, for example, can only deal with orders received...

Order Management Systems The Key to Successful Order Management in Digital Commerce

W H I T E PA P E R

Table of contents

Introduction ....................................................................................................................................................................4

C H A P T E R 1 ERP and OMS: the whole is greater than the sum of the parts ..........................7

C H A P T E R 2 The evolution of order management systems .............................................................9

C H A P T E R 3 Bridging the gap: order management systems as the key to

digital transformation ...........................................................................................................................................11

C H A P T E R 4 Order management as e-commerce middleware .................................................13

C H A P T E R 5 Intershop Order Management: the solution for SMEs .........................................15

Seven key features of an order management system .......................................................................16

Customer Case Study .............................................................................................................................................24

3

Introduction

As customers become increasingly comfortable with

multi-channel commerce and online shopping technol-

ogies, they are developing highly specific preferences

and dictat to vendors how, when, and where they want

to shop. They expect to be able to connect with a vendor

from any location, using the channel of their choice, and

to be able to switch seamlessly between touchpoints at

any time.

Nevertheless, many vendors still find it difficult to man-

age cross-channel order processes, to integrate new

or existing sales channels, and to orchestrate customer

orders smoothly. They need greater flexibility to meet

growing customer expectations and to accelerate their

access to untapped markets and target groups.

In order to provide customers with a seamless shop-

ping experience across all channels, vendors need an

equally seamless and efficient system for orchestrating

their order processes. They have to combine back-office

systems, warehouse locations, suppliers, channels, and

partner systems to create a homogeneous, effective, and

flexible e-commerce solution that is capable of fulfilling

expectations in an increasingly competitive marketplace.

E-commerce continues to evolve and has now entered a

new dimension. Digitization of channels is no longer the

sole issue, today’s e-commerce is about transforming and

combining a wide range of mission-critical processes to

create a holistic business strategy with cross-system solu-

tions that are ready for the digital future. At the center of

this strategy is the individual customer with their specific

and ever-changing needs.

In this white paper, you will learn how an order manage-

ment system (OMS) can help your company meet the

growing challenges of e-commerce by meshing multiple

processes while simultaneously reducing costs through

the automation of increasingly complex processes – as

well as optimizing and extending your value chains.

4

It’s time for intelligent order management

Many B2C and B2B companies now face increasingly

complex digital markets, with all the opportunities and

challenges they present. On the one hand, digital sales

processes offer more efficient access to customers and

markets. On the other, companies have to connect an

increasingly diverse range of sales channels using digital

technologies. The result is a continuous increase in the

complexity of business processes and IT structures.

It is therefore no surprise that integrated, multi-channel

order processes are becoming an increasingly hot topic

for both B2C and B2B vendors. Many SMEs currently use

a range of solutions to handle incoming orders. If they do

not have a dedicated order management system (OMS),

they typically use their e-commerce platform, their enter-

prise resource planning (ERP) system, or a custom-built

solution.

Unfortunately, these solutions are rarely able to cope with

the increasing complexity generated by the growing

number of channels that need to be integrated. Often,

e-commerce platforms, for example, can only deal with

orders received online – i.e., not from brick-and-mortar

stores – while ERP systems take a strict business view of

orders. So the two systems have overlapping capabilities,

but the only way to create uniform processes across all

channels is through complex and costly modifications.

A dedicated order management system, meanwhile,

provides integrated processing of incoming orders from

all available channels – yet such systems are still widely

misunderstood and underestimated. Typically, people

think an OMS is just a tool for capturing orders, process-

ing them, and forwarding them to a warehouse loca-

tion. In reality, they are capable of much more. Their key

strength lies in the fact that they are specifically designed

for multi-channel order processing, making them the

ideal resource for digitally connecting the different chan-

nels. But that is not all. They also make it easy to integrate

totally new business processes into existing IT land-

scapes. Therefore, it is hardly surprising that nine out of

ten companies that currently use an order management

system consider it a key digital tool for connecting their

sales channels (93%)1.

A fully integrated OMS uses automation to process orders

smoothly and efficiently. It collates all information on cus-

tomers, orders, and warehouse inventories in a central

resource that is visible to all users. This enables compa-

nies to make faster decisions and respond with greater

flexibility to changing market conditions.

In addition, an OMS provides a 360 degree view of each

individual customer and all their orders – regardless of

which channels were used. Serving as a central hub, it

merges data and processes from multiple channels and

offers additional specific and customer-oriented func-

tionality that increases customer satisfaction across all

channels.

1 Intershop B2B Commerce Report – Companies with More Than 100 Mio Revenue 5

x Customer orders from all sales channels (e.g., online

stores, EDI, offline stores, or field sales staff ) are

merged into a single system. This enables compre-

hensive analysis of all transactions, both in overview

and in detail. It also allows companies to tailor their

offerings to customers across all channels, thereby

increasing cross- and up-selling potential as well as

customer satisfaction and loyalty.

x All available inventories can be shared across the dif-

ferent channels. If demand in one channel is lower

than expected, the excess inventory can be made

available to other channels. Conversely, if demand in

a particular channel is higher than expected, it can

be met with inventory from other channels, directly

from a central warehouse, or from a dropship sup-

plier. In short, an OMS provides companies with real-

time access to all available inventories in their offline

stores, stock held by suppliers, and inventories within

the supply chain. Armed with this information, ven-

dors can commit to deliveries immediately and create

custom delivery processes.

x A holistic view of all available inventories at all loca-

tions reduces distribution costs. Companies can

optimize the speed and cost of processing each

order while also minimizing integration gaps. Staff no

longer has to call other locations or suppliers to check

available stock. The OMS coordinates every order

automatically in line with the respective customer

preferences, specific order-processing rules, or infor-

mation provided by offline retailers and suppliers.

x Customers can view all their current and past trans-

actions at any time, regardless of whether those

transactions were conducted online, by phone, or

one-to-one with a field sales representative. The infor-

mation they receive is consistent across all channels,

whether mobile device, desktop computer, customer

hotline, offline store, or direct contact with field sales

staff. The combination of complete transparency of

data and processes with consistent real-time infor-

mation across all channels has a positive impact on

customer satisfaction and loyalty while also enabling

additional customer-oriented services.

x For companies, having a 360 degree overview of all

customer transactions and channels makes for more

efficient business processes that result in better and

faster decision-making.

The most imp or tant b enefits of a t ypic al OMS include:

6

C H A P T E R 1

ERP and OMS: the whole is greater than the sum of the parts

Customers, inventories, and orders have always been

incorporated into enterprise resource planning (ERP)

systems – which is why order management has tradition-

ally been regarded as an ERP task. However, this framing

has been changing in recent years as growing market

volatility, the demand for seamless omni-channel com-

merce, and new digital business models create a need

for more agile collaboration and deeper integration of

IT systems, suppliers, and channels.

ERP systems are increasingly reaching the limits of their

capability, as they are simply not designed to deliver

this agility in operational settings². Rather, they were

conceived as enterprise-centric applications that repli-

cate internal business processes in standardized, digital

forms. Conventional ERP systems can no longer meet the

demands of dynamic e-commerce with its rapidly evolv-

ing markets and customer expectations. The key reasons

for this are as follows:

x ERP systems replicate internal business processes that

are usually slow to change and only do so with input

from multiple departments.

x Many ERP systems in use today were designed many

years ago and are no longer adequate for contempo-

rary omni-channel e-commerce.

x ERP systems can only access inventories after they have

been added to the system in the respective warehouse

or offline store. ERP systems are often unable to display

dropship stock or inventories held by external suppliers

or third-party logistics (3PL) providers.

x ERP systems typically handle inventories separately

based on channel and supplier. It is often difficult to

create an overview of all available stock.

x ERP systems do not provide sophisticated rules for

dynamic distribution of order items to multiple ware-

house locations or suppliers. If a customer submits

orders via multiple channels, they cannot be merged

to create a single order.

2 http://it.toolbox.com/blogs/inside-erp/should-you-use-agile-for-your-erp-project-622482 https://www.cio.com.au/article/185655/struggle_define_agility/ 7

³ Gartner Says by 2016, the Impact of Cloud and Emergence of Postmodern ERP Will Relegate Highly Customized ERP Systems to “Legacy” Status. (2014) Gartner press release. Jan. 29, 2014. ⁴ Koch, S., & Mitteregger, K. (2016). Linking customization of ERP systems to support effort: an empirical study. Enterprise Information Systems. 5,6 Forrester Research, Inc: B2B Order Management Bridges The Gap Between B2B eCommerce And ERP

As independent research and advisory firm Gartner

notes, the use of ERP systems is expected to change

significantly in the future³. The current strategy of

concentrating all processes in a single ERP system

will gradually disappear.

Legacy ERP systems tend to limit flexibility and have high

operational and support costs⁴ – which is why they are

increasingly viewed as a potential problem area. Accord-

ingly, companies are now looking for new solutions in

order to reduce their IT costs and boost their flexibility

and agility.

ERP systems will need to adapt to these changes. They

will play a key role within companies as a “system of

record,” ensuring that all mission-critical data is accurate

and consistent. However, differentiated processes will be

implemented as specialist solutions that are closely inte-

grated with the ERP system.

“[Order management systems] complement your existing

ERP platforms by directing orders between ERP instances,

adding capabilities that many ERPs lack, and providing a

consistent view of orders across all front-office systems,” ⁵

says Duncan Jones of Forrester.

According to Forrester, order management products

complement ERP systems by adding important function-

ality, such as consistent order capture across multiple

channels and business units. They allow for a reliable

insight into order status, irrespective of which channel

was used to capture the order. This provides the basis for

optimum allocation of orders to the various fulfillment

systems. The result: harmonious orchestration of the

order execution process⁶.

An order management system is the perfect comple-

ment to a typical ERP system. When the two are com-

bined, the order management system serves as the

central interface between a rapidly changing market-

place with diverse, customer-oriented applications on

the one hand and established ERP-based business pro-

cesses on the other.

The question is not whether it is better to adapt an

existing ERP system or to introduce an order manage-

ment system. In order to increase agility in day-to-day

operations without impacting your accounting and

financial processes, you have to create an effective

symbiosis of ERP and order management systems.

8

C H A P T E R 2

The evolution of order management systems

In the past, order management systems were generally

used for traditional methods of customer interaction,

often forming part of call-center applications and ERP

systems. These early order management systems offered

a basic range of functions that enabled users to create,

modify, and return orders. Deliveries were shipped from

a central warehouse, and there was no real-time informa-

tion on stock levels or order status.

By the turn of the millennium, the growing demands of

online commerce led to the creation of dedicated order

management systems. In order to cater more effectively

to individual customers, companies needed the ability

to query their own inventories in real-time and provide

order information and services to their customers like-

wise in real-time.

The next stage in development was triggered by the

ongoing growth of digital commerce and the concurrent

increase in channels. The evolution from single-channel

to multi-channel and finally omni-channel commerce

necessitated new functionality that enabled the meshing

of order processes across a diverse range of channels.

This need led to the development of distributed order

management (DOM) systems. DOM systems build on the

functionality of order management systems but are also

able to split and route orders. These orders can then be

fulfilled through multiple warehouse locations in accord-

ance with the customer’s wishes – a process called

“distributed fulfillment.” A DOM system incorporates not

only internal warehouse facilities but also any internal

or external fulfillment locations – from offline stores and

dropship suppliers to service provider locations

Stores

3PL/drop ship

Distributed Ordermanagement

ERP/supply chain

CRM/loyalty

Businessintelligence

POSmerchandising

Site search PricingCustomer service

Enterpriseinventory

Store ful�llment

Distributioncenters

Retailstores

Supply chain

Contact CenterKiosk Web Mobile Tablet

Branded digital touchpoints Traditional touchpoints

Inventory/ful�llment locations

Commerce platform

Commerce APIs

Order Management

Enterprise back-o�ce systems

PIM/ product catalog

Experience management/WCM

Personalization Merchandizing

Figure 01: OMS is the core of an Omnichannel Commerce architecture

9

Incorporating distributed locations into the order fulfillment

process requires total visibility of all available inventories at

these locations (“enterprise inventory visibility”), regardless

which channel, location, supplier, or system maintains the

inventory. As a result, the available-to-sell (ATS) and availa-

ble-to-promise (ATP) status of inventory items has become a

key criterion for the efficient distribution of orders to multiple

fulfillment locations or suppliers. The ATS and ATP calculations

used in a DOM system are more sophisticated than traditional

ERP calculations, as they also take into account allocated inven-

tories for orders that are not yet logged in the ERP system (ATS)

or in-transit inventories that have not yet been added to the

ERP system (ATP).

In the B2C sector in particular, distributed order management

systems have evolved in recent years into omni-channel or

retail order management systems. Omni-channel order man-

agement systems combine all the benefits of an OMS with

those of a DOM system but also add specific functionality for

manual shipping and order fulfillment via brick-and-mortar

stores.

B eate S chiler, SVP Business Consult ing and Professional S er vice at I ntershop, on order management and distr ibuted order management systems: “Order management is no longer the key issue – it’s all about orchestration. There is so much more to consider than simply forwarding orders to an ERP system. Nowadays, it’s important to orchestrate orders in a holistic way with regard to channels, CRM, ERP, and other customer- oriented applications. That is a crucial requirement for a successful e-commerce strategy.

There are several ways in which companies can use an OMS. For example, they can use it as a central pool for all customer orders from all available channels, e.g., call center, online store, offline store, and smart phone. All orders are captured centrally from all touchpoints, aggregated, and passed on to an ERP system. Another approach is to use a distributed order management (DOM) system to connect multiple ERP systems or instances. This option is used by companies that have multiple distribution centers using the same or different ERP systems. The DOM determines which distribution center is closest to the respective customer.

A distributed order management system can also be useful during acquisitions. If a newly acquired company is running a different ERP system, you can use a distributed order management system to sell the company’s products through your existing channels by redirecting requests to the new com-pany’s ERP system for fulfillment.”

10

C H A P T E R 3

Bridging the gap: order management systems as the key to digital transformation

For many companies, the digitization process begins

with the same question: How do we prepare our legacy

IT landscape for the challenges of digital commerce?

How can we use it to drive our digital sales, business

processes and business models to improve customer

satisfaction across all channels, and to flourish in an

increasingly competitive marketplace? The emergence

of new digital commerce and marketing models is

increasing the complexity not only of corporate struc-

tures but also of business processes and IT.

When digitally transforming and networking their oper-

ations, many companies are faced with a legacy IT land-

scape that developed organically, becoming increasingly

complex in the process. There are many reasons for this

complexity, but the most common ones are:

x Either the company has grown through mergers and

acquisitions or individual locations, departments, or

subsidiaries have a high degree of autonomy in their

IT decision-making.

x Systems have been in use for many years and, as a

result, they are no longer state of the art; upgrading is

complex and expensive.

x Systems have been heavily adapted to meet the

specific needs of individual departments and/or

business processes.

x Systems are directly connected to each other through

point-to-point integration, which creates greater

complexity and mutual dependencies (see section on

“Order management as e-commerce middleware”)7.

In many cases, these systems have been operating reli-

ably for many years and users are familiar and happy with

them. Unfortunately, though, these solutions are often

unable to keep pace with growing customer demands

and digitization of commercial processes. This creates a

series of operational obstacles that hamper growth:

x Adapting the various legacy systems leads to higher

IT costs and risks. Expansion is a complex undertaking,

and it is difficult to integrate new systems into the

existing IT landscape.

x Integrating new digital channels or new partners is

a frustrating and time-consuming process. It slows

down expansion into new markets and hinders the

development of standardized product and service

offerings across multiple locations and companies.

7 Forrester Resaerch, Inc: B2B Order Management Bridges The Gap Between B2B eCommerce And ERP 11

8 CLASH OF THE TITANS 2016. An independent Comparison of SAP, Oracle, Microsoft Dynamics and Ifor

x Companies lack the agility to respond quickly to

changing customer demands or market conditions,

to test innovative sales and business models, or to

offer new products or digital services.

x It is difficult to maintain or improve service quality

without complete visibility of customers, orders, and

inventories. This leads to dissatisfied customers and

increased costs.

Most companies have two options when consolidating

and integrating their existing IT landscapes: The first

option is to completely replace the existing systems

while they are still in use. This is analogous to replac-

ing a car’s engine while the car is being driven, all the

while jockeying for market position. Such an ambitious

approach is both time-consuming and expensive and

comes with huge operational risk. In addition, any added

value will only become apparent after the new systems

have been fully deployed8. It is also necessary to train

staff in advance and, in many cases, to overcome their

resistance to the introduction of new systems. This

all militates against the speed of action that is a key

prerequisite for successful digital transformation.

The second option is to adapt or expand the existing IT

systems. While this is an effective way of solving current

problems, it also creates problems for the future. The

higher the degree of customization and the greater the

number of integrated systems, the more complex it will

be to implement future changes. This is an issue because

one of the most important characteristics of successful

digital transformation is the ability to respond quickly

to changing customer needs and market conditions.

The agility of a company can be measured by the flexi-

bility with which its IT resources and business processes

can respond to change. Thus, a highly customized IT

landscape is not an appropriate solution, but rather an

impediment to digital transformation.

With this in mind, companies are increasingly

recognizing that they need greater flexibility in their

business processes – without radically changing their

existing IT landscape. Indeed, they are now coming to

the surprising realization that successful digital transfor-

mation requires totally new technologies and solutions.

The most pivotal solutions are those that bridge the gap

between existing IT landscapes and new digital sales,

business processes and business models.

An order management system is one such solution, as it

provides a link between established internal IT systems

and business processes on the one hand and new digi-

tal commerce models on the other. It builds on existing

IT landscapes by adding networked digital commerce

functionality – without changing or replacing the exist-

ing IT resources. This enables companies to expand their

opportunities and drive their new digital commerce

models with greater speed and significantly reduced risk.

12

C H A P T E R 4

Order management as e-commerce middleware

One of the major challenges in contemporary e-commerce is the complexity of inte-

grating multiple customer-oriented applications with diverse internal or external busi-

ness applications as well as partner systems. The reason for this is often the existence

of legacy IT landscapes, whose components are woven together through a complex

array of direct point-to-point integrations. Besides creating headaches for IT depart-

ments, such legacy environments undermine the company’s agility and performance.

Not that point-to-point integration is necessarily a bad thing.

If you only need to integrate a few applications, the point-to-

point strategy is fast, simple, and inexpensive.

The problem is that most companies have to integrate many

different applications and/or external partners – and these

integrations are rarely static.

The task of maintaining or expanding the ever-increasing

number of interfaces and integrations presents a range of

problems for IT departments. While project and maintenance

costs rise, the speed of integrating new systems and partners

or replacing existing solutions is reduced. And whenever

another point-to-point integration is needed, the IT archi-

tects and developers often end up reinventing the proverbial

wheel.

Chan

nels

e.

g., e

-com

mer

ce, c

all c

ente

r, �e

ld s

ales

forc

e

Customer segments e.g., region, industry

Ful�

llmen

t app

licat

ions

e.

g., E

RP, 3

PL, W

M, S

CP

Production facilities e.g., region, product

Figure 02: Point-to-point integrations are a barrier to flexible e-commerce solutions

13

Modern e-commerce landscapes consist of a large num-

ber of systems that have to be networked with each

other. E-commerce middleware solutions play an impor-

tant role here in creating a powerful and flexible e-com-

merce architecture. These middleware systems can be

used to centralize and standardize future integrations,

thereby eliminating complex point-to-point architec-

tures. Rather than being directly connected, applications

are linked using the standardized methods defined by

the middleware.

This is where a modern and sophisticated order manage-

ment system comes in. As e-commerce middleware, it

integrates heterogeneous systems using common infor-

mation and process elements.

It embeds itself completely in a wide range of processes

and solutions, linking online stores, marketplaces, EDI

hubs, approval processes, credit checks, payment provid-

ers, marketing and reporting solutions, ERP and logistics

solutions, CRM, and offline stores to create a holistic order

processing system. A well-designed order management

system is also capable of streamlining all processes and

aiding the integration of all important data and processes

into a unified e-commerce architecture.

Marketplaces Vendors

OMS:1. Item2. Inventory3. Customer4. Order5. Payment6. Ful�llment Execution

WMS

Publish Publish

PublishPublish

PIM

POSE-com OMS

API/EDIAPI/EDI API/EDI

Publish

Figure 03: OMS as central e-commerce middleware

14

C H A P T E R 5

Intershop Order Management: the solution for SMEs

One of the most significant results of digitization is the

fact that large global corporations and SMEs are becom-

ing increasingly indistinguishable, mostly in terms of their

order management requirements. Of course, there are

differences between these two types of companies with

regard to the complexity of the processes used through-

out each business. Yet both need a high level of agility

and flexibility plus the ability to integrate an increasing

number of sales channels in order to remain competitive.

In Europe, for example, there has long been a need for

an independent order management system from a lead-

ing e-commerce provider that is specially tailored to the

needs of SMEs.

At one extreme are the two flagship OMS solutions from

Manhattan Associates and IBM Sterling Commerce. These

powerful systems are joint market leaders, according

to Forrester Research9. They are scalable, customizable,

and ideally suited to large multinational companies with

highly complex order management scenarios. At the

other extreme are software-as-a-service (SaaS) providers,

such as Order Dynamics. While these are useful solu-

tions, the SaaS model means they cannot be customized

or expanded to meet specific business needs, i.e., they

are unsuitable for SMEs, which typically require a mix of

operational agility and long-term security.

SMEs, therefore, have the following options: Use the

Manhattan or Sterling products, spending seven-figure

sums on roll-out, but only actually needing around 40%

of the available functionality. Or opt for a more affordable

SaaS product, while also adapting their established busi-

ness processes to accommodate the fixed functionality

of the SaaS model.

“There are currently no lightweight distributed order man-

agement systems in the European market that offer the flex-

ibility of an enterprise solution but at a cost that suits SME

budgets,” says Simon Phillips of Javelin Group (Accenture).

The Intershop Order Management System has been cre-

ated to fill this gap. It can be adapted to suit individual

business needs and is available as an on-premise solution

or off-premise in the cloud at Amazon AWS or Microsoft

Azure. With its flexible and SME-centric licensing and

operational model, it also suits SME budgets. Another

important benefit of Intershop Order Management is

that it is not limited to Intershop Commerce Manage-

ment, one of the world’s leading e-commerce systems:

“What’s special about our order management system is that

it can be used independently of our commerce management

system,” says Intershop CEO Jochen Wiechen. “There are

many companies that are hampered by a lack of order man-

agement functionality in their e-commerce or ERP systems.

Our order management system provides a new alternative

for these companies.”

With the Intershop OMS, small and mid-sized enterprises

now have a solution that enables them to respond to

current and future demands from markets and custom-

ers – simply, quickly, and efficiently.

9 The Forrester Wave: Omnichannel Order Management, Q3 2016 15

With the Intershop Order Management System, you can capture and merge orders from multiple

channels and process them in a standardized way. Regardless of whether an order is received via an

online store, offline store, field sales representative, EDI connection, or B2B marketplace, you have a

complete overview at all times. You can also quickly integrate new channels and use channel-spe-

cific order processes to adapt with ease to the individual requirements of each channel. Merging all

orders from all available channels in the Intershop Order Management System gives you full insight

into buyer behavior and transaction histories across all those channels, thus enabling you to take cor-

responding management action. Your customer, meanwhile, has a cross-channel account providing

them full details of all their orders – regardless of which channels they used to place them.

1. Connected channels: the key to an integrated multi-channel strategy

As the borders between channels become increasingly

blurred, companies are connecting what were once sep-

arate channels to create a single, consistent shopping

experience. Instead of focusing on the locations where

transactions are performed, businesses are now striving

for a seamless customer experience across all available

channels. For example, a customer can research a prod-

uct online, order it on their cell phone, and pick it up

from a brick-and-mortar store, which sends them a text

when the item is ready for pick-up. After placing an order,

the customer can check the order status from a phone,

tablet, or any other Internet-enabled device and add the

pick-up date to their calendar. The key to successful

multi-channel selling is the convergence of those chan-

nels and removal of the traditional barriers between

them. This enables the vendor to focus on selling and a

holistic view of the customer – regardless of the channel

used.

The greatest potential lies in cross-channel integration

of order management processes and technologies. The

ability to view all orders across all channels and to use all

information collaboratively creates new scope for sav-

ings, synergies, and ultimately increased revenue.

Seven key features of an order management system

92% of companies surveyed have used an order management system to improve their cross-channel order capture processes; 81% have used cross-channel customer accounts to optimize their customer processes.10

How the I ntershop O rder M anagement System c an do this for you:

10 Intershop B2B Commerce Report 201616

With the Intershop Order Management System,

you can create an aggregated, comprehensive view

of all your inventories at internal and external loca-

tions. This provides customers and staff with com-

plete transparency across all channels with regard to

which stock is available at which locations. This ena-

bles you to reduce your stock levels, increase stock

turnover, optimize delivery routes, utilize stock across

all channels, and ultimately release tied-up capital

while improving your ability to meet demand. Your

customers receive a better quality of service on every

order because you are able to offer the ideal mix of

inventory location, delivery address, and delivery

preferences.

85% of companies surveyed have used an order management system to optimize their cross-channel inventory, thereby achieving long-term savings and improvements in business processes.11

How the I ntershop O rder M anagement Sytem c an do this for you:

2. Meet demand across all channels and from any warehouse location

Intelligent order management begins long before an

order is even placed. First, the vendor has to create an

inventory that matches the expected demand. It is essen-

tial that all local inventories at all locations are visible and

accessible to all relevant users. Companies that are able

to create a comprehensive inventory view, with stock at

multiple locations being available as a shared resource

across all channels, can fulfill orders from every channel

and from any warehouse location, thereby reducing stor-

age and distribution costs.

Connecting all channels with the inventories at all loca-

tions provides the basis for cross-channel order man-

agement processes and supply chains. The result is a

seamless customer experience incorporating all available

channels.

11 Intershop B2B Commerce Report 2016 17

3. One order, one customer: multiple systems and channels

For order processes to be efficient, you need a consoli-

dated view of each order. In many companies, however,

these processes are spread over a number of separate

systems. There is often a partial or complete lack of

standardization in the processes used and consolidation

of orders and data. With separate systems for the various

channels and no (properly) integrated enterprise solu-

tions in place, many companies are unable to manage

orders in an efficient and effective way throughout the

entire lifecycle.

Successful companies use a single order management

system to orchestrate all their order processes and inte-

grate them with existing processes and systems. From

order acceptance and approval through to billing, pay-

ment, and the management of shipments and returns,

an OMS ensures that all processes mesh seamlessly and

operate robustly, profitably, and harmoniously with all

other participating systems.

The typical OMS is able to seamlessly integrate the

specific business processes of the respective company,

enabling a transparent and homogenous order manage-

ment process that transcends system boundaries.

81% of companies surveyed have used an order management system to improve the efficiency of e-commerce processes. 12

Regardless of whether you sell B2B or B2C, through an online store, marketplaces, offline stores, field sales force, or EDI, the Intershop Order Manage-ment System serves as a single commerce hub where you can manage your orders in an efficient and integrated manner. The Intershop OMS orches-

trates the entire lifecycle of all your orders and provides a consolidated view of orders and data – all fully integrated with your legacy and third-party

systems, both internal and external. The results are not only shorter and smoother processes but also fewer errors – which means greater customer

satisfaction and a better bottom line.



e-Co

mm

erce

Place OrderOnline

Shipmentupdate

API

CommProtocols

FileFormats

XML

API, SFTP

XML, CSV,EDI

API XML

SFTP CSV

SFTP EDI

Sales OrderCaptured

OrderRouted

ShipmentUpdate

InventoryLog

Ship FromWarehouseNoti�cation

Pick / Pack /Shop

InventoryLog

Ship FromStore

Noti�cation

Pick / Pack /Shop

Send EDI

Receive EDI/ Portal

VendorDrop Ship

OM

S

SKU

1SK

U2

SKU

3

WM

SPO

S/St

ore

Vend

or

Customer orders 3di�ferent SKU‘s

Hollistic Inventory snap shot through integration points with key systems

InventoryAllocationDecision

4. Automate, split, and route

Today’s customers expect to be able to buy products

whenever, wherever, and however they want. This pre-

sents vendors with an enormous challenge and increases

the complexity of order and delivery processes. Success-

ful order management strategies include order place-

ment and routing rules that allow you to coordinate your

available inventory with current demand.

A sophisticated order management system is thus able

to process each order item both as a separate entity and

as part of an overall order. The ability to individually pro-

cess each item makes it possible to optimize every order

using automated rules and thus avoid the “all-or-nothing”

conundrum for a multi-item order. Custom order routing

rules provide the best strategy for processing and ship-

ping orders in accordance with your own commercial

considerations, available inventories, and the customer’s

specific requirements.

77% of companies surveyed use an order management system to optimize their supply chain processes.13

The Intershop Order Management System allows you to optimize your order processes and process

costs through automated, cost-efficient, and transparent order fulfillment via the route selected by the cus-

tomer. You can use order routing and fulfillment rules, such as “ship complete,” “optimize by purchase price,”

“ship from one location,” “ship or do not ship from store,” and “ship from nearest location,” to forward an order

to the optimum location for both you and your customer – on an order-by-order basis. You can also define

sourcing rules that determine the preferred locations to which orders are sent or the preferred locations or

suppliers for entire product groups or manufacturers.



Figure 04: OMS orchestrates complex omnichannel delivery processes

19

5. Efficient payment processing through invoice-to-cash management

Digitization and the continued rise of e-commerce are

presenting new challenges for finance departments and

drive long-term changes in payment and receivables man-

agement. New online payment methods necessitate new

processes and partners. Traditional and online payment

methods must be harmonized and combined with effec-

tive risk and credit check measures to create an optimized

payment and receivables management system.

The latest order management strategies are, therefore,

embedded in efficient and transparent payment pro-

cesses. All processes from billing to payment as well as risk

and credit checks plus the logging of incoming payments

or receivables in the ERP or receivables management sys-

tem must be implemented and managed with maximum

efficiency as part of an all-inclusive order-to-cash strategy.

An order management system supports cross-system

integration of order-to-cash processes through the auto-

mation of workflows and transformation of numerous pro-

cesses within the organization.

The Intershop Order Management System enables you to efficiently coordinate your various risk assess-

ment, payment, and billing processes. Harmonized with your order management processes, you can define

custom approval and payment scenarios featuring partially or fully automated interaction with credit agencies,

payment providers, and internal or third-party systems. By creating a central hub with all payment and billing

information, you can provide your customers and staff with complete transparency across the entire payment

process. The results are a better quality of service and a reduction in costs – which ultimately leads to fewer

outstanding payments, optimized cash flows, shorter order-to-cash processes, and a better cost position.


Electronicallydeposited funds

% 4+5combined

82%

0%1 2 3 4 5

not important highly important25% 50% 75% 100%

73%

61%

60%

51%

43%

39%

39%

32%

Faster payment andbetter cash�ow

Cost reduction(less e�ort chasingoutstanding payments)

Improved customerrelationships

Improved reconciliation

Receipt of payment prior to shipping

Allows sales viaonline channels

Merchant service feeis tax deductible

Opportunity to gain„preferred“ supplierstatus and/or captureadditional orders

Figure 05: Benefits of electronic payments (Source: Deloitte Payment Report 2015)

20

Payment service providers, such as Payone, Computop, and Wirecard, take care of the entire online payment

process in conjunction with the chosen payment providers, e.g., PayPal or Visa. Since the transaction costs and

available payment methods offered by the various payment service providers often vary widely, companies no

longer rely on a single provider for their national and international transactions. Rather, they assemble a strate-

gic mix of service providers or work directly with specific payment providers, such as PayPal.

With the Intershop Order Management System, you can specify which

payment service provider or payment provider to use in conjunction with

each payment method and client. For example, you can select a specific

provider for each individual country and payment method and simply

change the provider if necessary, e.g., because of rising costs – all without

major modification to your systems.

How c an I maximize revenue with multiple payment ser vice providers?

Credit card

Giropay

Direct debit secured by service provider

Payment on invoice secured by service provider

Payment via Amazon

SOFORT online direct payment

PayPal

Direct debit

Payment by consumer loan/installment payment plan

Payment on account

Cash on delivery

Pre-payment by bank transfer

We process payments internally or through the respective payment provider We process payments through a payment service provider

14% 86%

42% 58%

58% 42%

66% 34%

70% 30%

73% 27%

82% 18%

84% 16%

87% 13%

95% 5%

96% 4%

96% 4%

Figure 06: ibi research - Total costs of payment methods; payments are mainly handled by payment service providers

Do you process your payment methods internally or via the payment provider, or do you use a payment service provider (PSP)?

21

72% of customers surveyed would prefer a service portal with more self-service functions.14

6. Better customer service through order management systems

The quality of your customer service can give you an

important competitive edge in markets where price is

just one of many factors that influence the purchase

decision. Today’s customers expect a seamless shopping

experience – from the time an order is placed through

to a potential return. They want to be able to see all

the information they need, whenever they want, and in

whatever channel they choose.

Meeting those demands for each individual customer

is virtually impossible without an integrated view of all

your customers and all their orders. Companies that have

an integrated order management system can provide

customers and service staff with transparent, structured,

and multi-channel access to all information – from pur-

chase history to contact details, current order status, and

payments. These value-adding services are available to

customers at all times.

The order management system serves as

the central “control room” for a powerful and

deeply integrated service portal – a key hub

for all the core processes in your digital cus-

tomer service offering.

The Intershop Order Management System provides your company with a comprehensive overview of all

customer and order data across the entire order lifecycle. From order and delivery status through payments, bill-

ing, and outstanding payments to approvals and returns, all information and services are available to customers

across all your channels. Whichever channel a customer uses – e-mail, service portal, call center, or field sales

representative – the Intershop Order Management System enables you to personalize your customer service by

providing accurate and comprehensive order information at any location and time. In short, the Intershop Order

Management System forms the heart of your digital customer service offering. You can use it to divert routine

tasks to a digital service portal, thereby improving your margins.


MO

ST IM

PORT

AN

T

Complaint

3,0

4,0

5,0

6,0

GeneralQuestion

AccountInquiry

RoutineTransaction

SensitiveTransaction /Billing

Quick Quick Human Contact Secure

Most important factors when choosing channel for each contact reason15

14 Forrester Research, Inc: The B2B Omni-Channel Commerce Platform of the Future15 CX Act 2015 Omni-Channel Customer Care Study

Figure 07: The reason for contact is an important factor when selecting the channel

22

76% of consumers view a vendor’s return policy before placing an order. 81% of consumers prefer vendors who have a simple return policy.16

7. Efficient return processes – for more profitable e-commerce

The more quickly and efficiently a company can perform all the tasks involved in pro-

cessing returns, the more satisfied the customer will be with the quality of service –

which is a crucial element in long-term customer loyalty. The most important variables

from the customer’s perspective are the simplicity of the processes in the channel of

their choice, the speed with which refunds or credits are provided in the case of returns,

and the ease with which incorrect or damaged goods are replaced or repaired. It is

therefore essential to have a cost-efficient method of processing returns throughout

your sales network, with seamless interaction between all relevant actors and systems.

There are various ways in which an order management system can be used to process

returns efficiently. For example, it is an excellent tool for linking a return to a customer

order and validating it in accordance with predefined rules or guidelines. As a central

hub, the OMS can orchestrate all processes involving the customer, the vendor, and the

vendor’s sales network.

16 MetaPack: Delivering Consumer Choice Report 2015

Intershop’s Return Order Management can optimize your return processes by managing the return of items

to company locations or even third-party providers. As an integral part of your service portal, it enables customers

to create returns online and print their own return documents and shipping labels quickly and easily. By creating

custom rules for each reason for return, you can specify which location in your sales network an item should be

returned to. An integrated RMA process ensures that you, the customer, and any relevant partner can view the sta-

tus of each return at any time. With options ranging from fully or partially automated processing of returns received

at your logistics center or offline stores, through to the provision of credits, all return order management processes

are deeply integrated, thus eliminating potential gaps between systems and media.


23

C U S TO M E R C A S E S T U DY

Sybrand Brouwer is the head of INDI.nl, an online provider

of technical and industrial components, which was recently

spun off from technical wholesaler Kramp. “This meant that

two years ago we found ourselves in the luxurious position of

being able to design our platform from scratch, without the

hassle of legacy systems,” says Brouwer. “We didn’t want an

ERP system, as they are often complex and inflexible, which is

why the new platform consists of a commerce and order man-

agement system together with specialist solutions, such as a

financial core package. This set-up covers all our needs.” The

solution not only supports the extensive product catalog

and huge transaction volumes in the online store, it also

facilitates the complex orchestration of multiple orders and

smooth handling of invoice-to-cash processes. The benefits

for INDI customers include real-time querying of product

availability as well as easy access to a range of order fulfill-

ment options, self-service functions, and after-sales services.

Ful l fo cus on e - commerce INDI decided to outsource logistics, so it could focus

entirely on e-commerce. “Others excel in logistics and stock

management and we are happy to contract that expertise,”

says Brouwer. “At present, we have one fulfillment partner

connected to the OMS, but we hope to have more soon. We

have introduced a few parameters so that the OMS checks

which logistics partner fulfills the requirements in terms of

availability and price when an order is placed. Then the right

partner gets the right order and we are able to orchestrate

the whole order flow.”

No need for an ERP “The partner fulfilling the order is invisible to the customer,”

adds Brouwer. “But the client certainly profits from the effi-

ciency levels. We are in a replacement and repairs market

where speed is of the essence. If somebody orders ten prod-

ucts and one partner has five in stock while another has

twenty, then the latter partner will get the order and the cus-

tomer will receive everything they ordered in one delivery.”

INDI chose an OMS for its logistics set-up due to the

scalability and flexibility it offers – plus it supports the

company in the rapid expansion of its product range “It

creates an overview of the order flow and it’s easy to adjust

the parameters,” says Brouwer. “We can add logistics part-

ners or even manage a warehouse, should we decide to keep

certain parts in-house. When it comes to costs, this solution

is considerably cheaper than an ERP system, which are often

also lumbering and complicated systems that require a great

deal of technical know-how and customization when you

want to add functions or make adjustments. The OMS allows

you to do that in the blink of an eye. For example, we wanted

to include an option for invoicing weekly instead of per order,

and it was a piece of cake.”

24


Added value Peter Szabados, Global Head of Digital Manufacturing

and Logistics at Panalpina, regards the order manage-

ment system as an integral part of the new end-to-end

commerce facility that the company plans to offer its

customers. “We are an integrated forwarder and logistics

service provider that specializes in sea and air freight,” he

explains. “Competition is fierce in the logistics market, which

is why we are always seeking ways to distinguish ourselves

from the pack. One example is our Logistics Manufacturing

Service, which aims to get products closer to the end user.

Instead of the entire production cycle taking place in one

location, it is undertaken in different places and the high-

tech components are only brought together after the order

is received, so that the product never becomes outdated. Our

new e-commerce platform was put together using the same

approach. It’s an end-to-end solution where all the elements

are brought together to create a complete solution with

added value.”

The Logistics Manufacturing Service was developed on

the basis of customer demand. “We have noted that many

of our customers struggle to make the move to online selling

or to selling outside of their regions. That is both a B2B and a

B2C issue,” says Szabados. “Panalpina has a global footprint

and our complete solution allows them to utilize that inter-

national presence. We work together with a number of part-

ners in this respect, with Intershop handling the commerce

platform and the OMS. We made a deliberate choice to have

the same supplier deal with both of them, as the online shop

is our face while the OMS is our brain. Those two facets must

work together properly.”

Five c ategories Panalpina had a list of five requirements when it came

to development of the end-to-end solution. “We wanted

a SaaS set-up, suitability for both B2B and B2C, geographi-

cal scope, an integrated package, and the option to adjust

workflows.”

Szabados believes that the resulting solution, which is

currently running as a trial version with the first customer,

will appeal to five target groups: “Firstly, there are those

companies that do not yet sell online but want to do so.

Then there are those that want to get involved in new mar-

kets. Thirdly, we are targeting this solution on organizations

that wish to optimize their existing set-up, maybe by coordi-

nating existing sales channels. Next up are the new compa-

nies that started out offering their products in marketplaces,

such as Amazon, but that have now

grown to an extent where they want

to manage their own brand. The

fifth category covers companies that

want to outsource their e-commerce

infrastructure and ecosystem.”

“The great thing is that we adopt a

modular approach, which means

we offer the benefit of an integrated

package but you can still select a few

elements,” Szabados adds. “Should

a customer already have an ERP

system, then we’ll link the OMS to

it. Of course, the OMS can also run

without an ERP system, allowing us

to give the customer exactly what

they want.”

25


M ak ing the connec tion Zamro is among the companies that have opted to use

the OMS as a link between commerce platform and ERP

system, says Thomas Bloemarts, the company’s logistics

manager: “Zamro is an online shop that sells tools and spare

parts and primarily targets SMEs that have technical require-

ments. At present, we already have a commerce platform,

an OMS, and an accounting package. We are now busy

additionaly selecting an ERP system.”

D ropship suppliers Zamro launched in February 2016 as a subsidiary of the

ERIKS group, an industrial service provider. The online

shop went live in the Netherlands in October of the same

year, followed by Belgium and Germany. “We started off

selling ERIKS products, which allowed us to build on their

logistics system, making our set-up relatively simple with the

online shop, OMS, and financial package,” explains Bloe-

marts “But we now want to extend our range, which means

we must link more suppliers to the system and support vari-

ous capabilities and operational models. We will keep stock

ourselves and use dropship suppliers, and we’ll need an ERP

system for our purchasing and financial administration.”

N imble and f lexible The OMS is the linchpin in the new set-up, according to

Bloemarts: “The system checks stock availability and sees

to the order routing as well as all customer communica-

tions, such as order confirmation and order status. It’s the

back-end system for order administration, which is where

Customer Services goes whenever there are order queries.

The OMS allows us a high degree of flexibility when it comes

to linking suppliers and extending the functions. Because it’s

independent of the front-end, we can develop the OMS in

parallel. For example, we are presently working on refining

and optimizing the business rules. It was also a strategic

decision to not have everything run through the ERP system

because that would have meant we were dependent on a

single supplier. Moreover, ERP systems are generally not so

nimble. The OMS allows us to be flexible.” Another advan-

tage is that the system can easily be replicated for other

countries: “Different countries have different tax rates, dif-

ferent e-mail formats, or different billing formalities,” adds

Bloemarts. “With the OMS, we can easily adapt to each indi-

vidual country.”

26

Intershop Communications AG Intershop Tower

07740 Jena, Germany

Phone: +49 3641 50–0

Fax: +49 3641 50–1111

www.intershop.com

[email protected]

© 2017 Intershop™ Communications AG. All rights reserved.

All other trademarks are the property of their respective owners.

L E T U S B E YO U R G U I D E

Intershop is one of the world’s leading mid-market and

enterprise ecommerce solutions. Using a single platform,

the suite allows companies to showcase their brands, mar-

ket products worldwide, and implement strategies that

will grow their business – all under a single pane of glass.

The Intershop Commerce Suite encompasses:

Omni-Channel Management, Experience Manage-

ment, Product Information, Customer Management,

Transaction Management, Organization Management,

Analytics & Reporting, and Operational Excellence.

To learn more about Intershop, its platform and services,

or to schedule a time when you can learn more about

the Intershop advantage, email [email protected] or

call +49 3641 50 2062. Companies that qualify can take

advantage of an on-site workshop where Intershop will

work with your business and IT executives to understand

how an Intershop implementation can help your organi-

zation scale to new heights.

order management systems · e-commerce platforms, for example, can only deal with orders received...

Documents