IBM Software
Retail
What does seamless
end-to-end cross-channel
order management
look like?
by John L. Stelzer
Executive summary
Contents:
1 Executive summary
2 Order management: The scope
3 Order management: Selling
4 Order management: Fulfillment
6 Meeting customer expectations
7 At your service
8 “Reverse fulfillment” – returns
8 S
eamless end-to-end cross-channel
order management in action
10 Behind the scenes – the retailer’s
perspective
12 Summary
Today’s leading retailers are practicing Smarter Commerce by putting
the customer at the center of how they Buy, Market, Sell, and Service.
And, this commitment to customer centricity is at the very heart of
seamless end-to-end cross-channel order management.
The scope of seamless end-to-end cross-channel order management is
far more expansive than most people think. And, the capabilities that
are possible are much deeper than most imagine. But, applied properly,
cross-channel order management can have a game-changing effect on
both the customer experience and operational efficiency, thus delivering
on the remarkable promise of Smarter Commerce.
In recent years, customer expectations for a seamless cross-channel
experience have skyrocketed. And, initiatives by retailers to deliver on
that expectation (while still controlling costs) have grown exponentially.
Furthermore, those who have had some degree of cross-channel order
management capabilities in place for some time are revisiting their
initial strategies to, now, enable true end-to-end cross-channel order
management.
From the moment a customer selects a product or service until that
purchase is fulfilled (including returns) and serviced, order management
is critical. If that purchase can be made via a variety of channels (e.g.,
Web, call center, store, mobile, kiosk, etc.), then cross-channel order
management is essential. And, if the order is to be sourced and/ or
fulfilled via a variety of channels, then seamless end-to-end crosschannel order management becomes a competitive necessity (i.e., to
drive growth and preserve profitability).
The following discusses the responsibilities of cross-channel order
management during the selling and fulfillment phases of the customer’s
experience. It describes the role of an order orchestration hub in
shouldering those responsibilities. And, it provides a detailed example
of seamless end-to-end cross-channel order management in action…
both from a consumer’s perspective and from a retailer’s behind-thescenes perspective.
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Retail
Order management: The scope
Post-recession Retail finds itself waking up to the age of the
empowered consumer…a world where: information is
instantly available and completely unfiltered; there is no line
of sight into the global consumer conversations taking place
(e.g., texts, e-mails, social networks, reviews, blogs, etc.);
customers expect to engage in entirely new ways (when,
where, and how they want); and decisions are made and
changed in an instant.
Foundational to much of the Smarter Commerce vision is the
ability to enable seamless end-to-end cross-channel order
management. Viewed through Smarter Commerce eyes, the
capabilities of a cross-channel order orchestration hub
become essential to delivering on the promise of Smarter
Commerce to today’s empowered customer.
With that in mind, we consider the fact that from the moment
a customer adds the first line item to her order until the
products or services purchased are delivered and possibly
returned, that order must be managed seamlessly…
irrespective of the number of sales, distribution, and
fulfillment channels and customer touchpoints it traverses.
This broad, diverse expanse is the purview of Retail order
management within the context of Smarter Commerce.
With the potential to span multiple combinations of channels,
systems, business units, and even enterprises, the lifecycle of a
customer order must be managed at every turn in order to
deliver a seamless customer experience and ensure
operational efficiency.
These new empowered consumers are more instrumented,
interconnected, and intelligent than ever before. They’re
adept at gaining instantaneous access to information about
retailers, products, and other consumers’ experiences via a
variety of technologies. They’re inherently social and want to
interact with other consumers and with retailers in a
collaborative manner. And, they have clearly defined
expectations of what they want from their retailer now and in
the future and are willing to serve as advocates for those
retailers that can exceed their expectations.
Just as empowered consumers know more about retailers and
their products – and what others think – they expect retailers
to know more about them, as well. Fifty-three percent of
consumers surveyed expect their retailer to maintain a
cross-channel history of their purchases. Fifty-nine percent
expect to be notified when frequently-purchased items will be
on sale. And, 49 percent expect assistance with matching the
compatibility of a new purchase with a previous purchase.1
Of course, the stakes for being able to operate seamlessly
across the myriad islands of automation have never been
higher. Consumers have grown to expect a seamless crosschannel experience where they can research, shop, buy, track,
receive, and return products and services via any combination
of channels. In fact, 85 percent of them expect their retailers
to deliver this unified cross-channel experience…whether it’s
on the Web, in the store, via mobile, through the call center,
on a kiosk, or any combination thereof.2
In the face of these and other heightened expectations of the
empowered consumer, the path forward for retailers is
Smarter Commerce…putting the customer at the center of
how you buy, market, sell and service…maximizing insight
generated through customer interactions across all
touchpoints…capitalizing on social and mobile commerce…
synchronizing your entire value chain to deliver consistent
and predictable outcomes…and improving visibility and
collaboration with partners to deliver a differentiated
customer experience. And, integral to delivering that
differentiated experience is the ability to deliver a Smarter
Shopping Experience…by maintaining a 360-degree view of
the customer; by leveraging customer insight to deliver
relevant meaningful offers; by enabling her to research, shop,
buy, track, receive, return, and receive services via any
combination of channels; and by ensuring operational
efficiency and execution excellence throughout the process.
Retailers aren’t ignoring their customers’ heightened
expectations. As much as 77 percent of those retailers
surveyed claim to have – or intend to have by the end of
2011 – some degree of cross-channel capabilities in place.
Interestingly, though, only 21 percent indicate that they are
satisfied with their current cross-channel capabilities –
implying to some degree that they are inadequate and/or
inefficient. Indeed, 84 percent indicate that delivering
improved cross-channel capabilities is a priority for their
company in 2011.3
2
IBM Software
Retail
But, if cross-channel order management is so critical to
consumers and the retailers that serve them, what does the
end game – to which everyone is aspiring – look like? What
should those who are just starting down the cross-channel
order management path have as their long-term vision –
e.g., so they can make better initial decisions that won’t prove
disposable later on and so that they can progress logically in a
crawl, walk, run fashion in order to eventually achieve
seamless end-to-end cross-channel order management and
deliver on the promise of Smarter Commerce?
of consumers consider it important to very important to be
able to complete an order via any combination of channels (up
11 percent since before the recession). 74 percent consider it
important to very important to be able to modify an order
anywhere – regardless of where the order was created
(up 14 percent since before the recession).4
With these expectations in mind, the abandoned shopping
cart on the Website should be accessible to the call center
agent or the store associate who might help the customer
modify and complete their order via another channel.
The special order that the associate started with the customer
in the store should be accessible to the customer online or via
the call center agent to complete the order at a later time.
This flexibility is important…not just for the customer
convenience of not having to start from scratch on every
order that wasn’t completed, but because it enables the retailer
to use the contents of orders – whether abandoned, in
progress, or completed – to guide them in cross-selling and
up-selling the customer.
Order management: Selling
Clearly understanding the vision of seamless end-to-end
cross-channel order management requires an understanding
of the lifecycle of an order. Contrary to what one might think
(i.e., that the order only begins once the purchase transaction
has been completed), an order’s lifecycle actually begins the
moment the first item is placed in an online or mobile
shopping cart, added as an order line item on a call center
screen, added to a special order, etc. And, though many may
think of “shopping carts” as only virtual entities, the
properties of end-to-end order management pertain to
shopping carts in the physical brick-and-mortar world,
as well. [This will become increasingly true as (1) RFID
and other technologies enable items to be tallied as they
are placed into the physical shopping cart in a store and
(2) retailers apply real-time marketing analytics and
personalized precision marketing to influence in-store
behavior based on what’s in the shopping cart and where
the customer is physically located.]
Of course, if an order must be easily accessible via any channel
throughout its lifecycle, it can’t be housed in any one channel
– unless that channel can be accessed by – and can access – all
other channels. This is problematic because order capture
solutions are not typically designed to efficiently and
effectively interact with all other order capture solutions.
Certainly, there are order capture solutions that are built to be
used online by consumers and in the call center by agents, for
instance. But, they are not typically capable of interfacing with
store point-of-sale (POS) systems, store associate mobile
utilities, consumer mobile apps, in-store touchscreen special
order kiosks, etc. In those rare instances where an order
capture solution is built to interface with all other order
capture solutions, the primary channel is rarely able to scale –
to handle not only its own transactions, but the transactions of
the other channels and the overhead of interacting with all of
them in real time.
The Selling portion of order management spans the initial
start of the order up until fulfillment has actually begun and
the order can no longer be changed. In between, the order
may be suspended (e.g., while the customer does further
research). It may take on additional items. Or, it may be
modified or deleted. What’s important to remember in a
multi-channel world – where the customer can interact with
the retailer via more than one channel or touchpoint – is that
the retailer must be able to access the order via any channel
available to the consumer throughout the selling phase of
order management.
What’s needed, then, is a centralized order orchestration hub
designed with the assumption that it will have to support
multiple interfaces with numerous live order capture channels.
Such a master order management engine doesn’t have to
worry about the overhead of supporting the customer
shopping experience. Instead, it focuses on order creation and
order fulfillment. Such an orchestration hub collects order
information from all channels and makes it available to any
The importance of this is borne out in the results of a
multi-channel consumer survey. Customers indicated that
they increasing expect to access their order throughout its
lifecycle via any combination of channels. In fact, 61 percent
3
IBM Software
Retail
channel, regardless of the channel from which it originated.
Such an engine interfaces with back-end systems (such as
marketing analytics engines, inventory management systems,
merchandise planning systems, replenishment solutions,
financial applications, etc.) to access information necessary to
manage the order lifecycle and provide those systems with the
critical information they need to effectively execute their
responsibilities. And, such an engine provides a 360-degree
view of all of the customer’s interactions with the retailer’s
brand, regardless of what combination of channels the
customer uses.
[For example, the consumer who selects in-store pickup of an
online item as their desired fulfillment method – where the
order orchestration hub has committed to having the product
there for pickup – dictates to the retailer the location from
which the order will be sourced. Similarly, the retailer that
sells items that are drop-shipped from their supplier directly
to their customer has no sourcing decision to make – other
than having the processes in place to (1) generate an order
with the necessary fulfillment details and (2) send it to the
drop-ship supplier.] But, where there is flexibility in terms of
the inventory pool from which the order should be sourced
and the fulfillment method(s) to be used, it makes tremendous
business sense to leverage sourcing intelligence and
fulfillment flexibility to optimize the customer experience
while minimizing costs.
Order management: Fulfillment
As important as the selling phase of the order is, the bulk of
the order orchestration hub’s heavy lifting takes place during
the fulfillment phase of the order’s lifecycle. It begins the
moment that an order has been captured and doesn’t end until
the customer has obtained the product and/or service
purchased. In the case of products, the process extends to
include the entire returns process – which also includes the
reverse logistics necessary to achieve the desired final
disposition of the returned product as efficiently and
expeditiously as possible.
With the most effective seamless end-to-end cross-channel
order management, the order is first decomposed into its
individual line item components such that each line item in
the order can be considered individually – for those instances
where making separate, per-line-item decisions about source
inventory pools and/or fulfillment methods makes sense for
the retailer and/or the customer. The cross-channel order
orchestration hub employs an intelligent sourcing engine to
determine how each line item in the order should be sourced
based on retailer-defined business rules and a number of
factors including:
Technically, the fulfillment phase of order management begins
the moment the customer requests information on the
fulfillment options available to him or her. For instance, when
an online customer wants to know whether an item is
available for in-store pick up, it’s the order orchestration hub
that queries store inventory and makes the judgment call as to
whether or not to commit to having enough inventory
available for an online purchase and in-store pickup at a
particular store. Or, when a call center agent needs to be able
to indicate how soon the item will ship, it’s the order
management hub that determines whether the item will be
sourced from on-hand, in-transit, or on-order inventory and
returns an estimated ship date – as opposed to the call center
agent giving the less-than-helpful answer of “7-10 business
days”.
Efficiently delivering on the promise to the customer
For all the highly-finessed interactions between order
management and the selling channel(s) during the pre-capture
phase of the order, the vast majority of the order orchestration
hub’s tremendous worth is delivered after the customer has
completed the transaction and placed the order. Once an
order has been captured, the first step is to determine from
which inventory pool the order should be sourced. In some
cases, this is dictated by the customer in the order, itself.
4
•
Availability promise to the customer – Within what
timeframe does the customer expect to have the purchase
made available to them? Are there some line items whose
promise date is farther out (thus creating greater fulfillment
flexibility for the retailer)? Are there some items for which
the fulfillment method requested by the customer dictates
the inventory pool and fulfillment method that must be used?
With seamless cross-channel order management, the
intelligent sourcing engine takes these and other parameters
into consideration when determining which inventory to
draw down.
•
Optimal use of inventory – Does the retailer have excess
inventory that they need to move due to lower-than-expected
demand? If so, intelligent sourcing would enable the seller to
have the fulfillment flexibility to source that line item from
the inventory pool with the greatest amount of excess stock
(thus minimizing inventory carrying costs and potential lost
revenue due to markdowns). On the other hand, if current
demand for one or more of the purchased items is higher
than expected and the retailer is at risk of stocking out on
IBM Software
Retail
one or more of the line items in the order, a flexible order
orchestration hub would enable the retailer to source the
item from inbound in-transit inventory or inventory
that’s on order from a supplier and still arrive in time to
meet the fulfillment promise date to the customer for that
particular item.
•
•
For orders with line items that will be shipped from one or
more of the retailer’s suppliers, there’s the need to aggregate
line items from various orders that will be serviced by a
particular supplier into a master order that will be sent to that
supplier. But, an effective order orchestration hub goes
beyond simply aggregating like customer order line items that
are destined for a common supplier. It also includes any
replenishment items from that supplier that the retailer needs
to purchase to re-stock inventory. By aggregating these many
line items from various orders along with any replenishment
items into a master order for a given supplier, the retailer
ensures more efficient interactions with the supplier (as
opposed to sending hundreds of single-line-item orders to the
supplier) as the fulfillment of the orders progresses.
Minimum overall fulfillment cost – How can the retailer
minimize fulfillment costs – not just for a single line item,
but the overall order, as well? With cross-channel order
management capabilities, the strategy is to balance inventory
optimization considerations with individual line item
fulfillment options, the overall cost to fulfill the order, and
customer expectations for fulfillment turnaround. From an
order orchestration perspective, the intelligent sourcing
engine factors in all of these variables to minimize the overall
cost to fulfill the order while not sacrificing the other
important considerations previously mentioned.
Effectively delivering on the promise to the
customer
Once the sourcing decisions have been made, all the
fulfillment steps necessary to deliver the appropriate
product(s) and/or service(s) must be executed efficiently and
cost-effectively. In terms of product fulfillment, there are
myriad variations that a flexible order orchestration hub can
manage with automation, just a few of which include:
Adjusting to disruptions/exceptions – Of course, almost
nothing always goes exactly as planned. As such, an intelligent
cross-channel sourcing engine is able to accommodate
exceptions as they occur and adjust to them based on
clearly-defined business rules and real-time automated
decision making. For example, if the primary inventory pool
is low on, out of, or experiencing inordinate demands on the
existing stock levels in the primary inventory location, the
sourcing engine can adjust on the fly to query the secondary
and tertiary inventory pools to determine the best alternate
inventory source for filling a particular line item. This, of
course, implies two additional order orchestration
capabilities: holistic inventory visibility and the ability to
flexibly source from multiple inventory pools (e.g., the
retailer that can source from eCommerce, store, in-transit, or
on-order inventory). This also implies the ability to keep the
back-end financial systems in sync with the proper
transactional updates (e.g., who gets credit for the sale, whose
inventory is decremented, etc.). Cross-channel order
management delivers the flexibility to individually define
these business rules for each company to enforce and execute
the policies that are most appropriate for each enterprise.
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•
Pick and hold for customer pickup – This could be a
retailer that must pick and prepare an online purchase for
customer pickup in the store or, possibly, at a distribution
center (DC). It could be a retailer that has given store
associates access to the order orchestration hub to: view
in-stock locations, trigger a pick and hold order for an
in-stock location, and save the sale when faced with a
stock-out. Or, it could be a retailer that needs to pick
and consolidate a bill of materials for pickup by a
business customer.
•
Pick and ship to the customer – This could be from a
traditional direct-to-customer warehouse or from nontraditional shipping locations (such as a retail store –
e.g., because it’s overstocked or because shipping from this
location would appreciably reduce shipping costs/time).
•
Transfer to another location for customer pickup –
This could be a retailer that needs to transfer a product from
their DC or another store to the consumer’s “home” store.
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Business Analytics
•
Cross-dock from an inbound shipment – This allows the
retailer to satisfying the needs of the customer order with
content from an inbound in-transit shipment while using
existing, on-hand inventory to replenish stores and/or fill
orders in the interim.
•
Drop-ship to customer – This involves a retailer that is
selling product that is never carried in inventory, but
that will be shipped directly to the end customer by a
drop-ship supplier.
•
Retail
the retailer or the customer. These alerts may involve internal
parties and external enterprises (such as suppliers, carriers,
third-party logistics companies, freight consolidators/
forwarders, customs brokers, public warehouses, delivery/
installation partners, etc.). In addition, any effective order
management strategy will also employ the necessary businessto-business integration to enable secure, reliable, timely
connectivity with each of these outside entities to ensure fluid
lines of communication.
This monitoring of performance against predefined
milestones also enables the order management suite to
capture and analyze historical performance information.
This analysis yields improved insight into recurring
deficiencies that need to be addressed – either internally or
with outside companies. And, the analysis provides foresight
into expected behavior in the future. This can be used to
improve planning in areas such as inventory, transportation,
and replenishment optimization. Of course, where businessto- business integration and performance tracking and
reporting are employed, they enable real-time visibility into –
and reporting about – deficient performance areas for each
entity involved. In this way, they not only enable retailers to
run their businesses more effectively, they also enable them to
help their business partners improve their execution, as well.
Third-party delivery/installation – This applies to any
retailer that has contracted with an outside firm to handle the
delivery and installation of the retailer’s products at the
customer’s site.
All of the above must not only be done accurately and on
time, but efficiently, as well – lest resource inefficiencies
undermine the profitability of the sale. Thus, cross-channel
order management first facilitates the timely, reliable
exchange and processing of information between disparate
systems (e.g., the order capture application and the back-end
DC; the Website and the store; the in-store special order
system and the many entities that will supply and complete
the project; the call center and the drop-ship supplier; etc.).
Meeting customer expectations
But, then, the order orchestration hub goes beyond merely
initiating the process. Instead, it continues to monitor the
triggered steps for timely and accurate completion. An
effective order management hub checks to ensure that key
milestones are met within planned timeframes (e.g., the
product has been picked at the store and placed at the
Customer Service station with a printed receipt in time for
the customer to pick it up; an order to a drop-ship supplier
that has been delayed won’t impact the promised fulfillment
date for the item(s) involved; the carrier has arrived to pick up
the outbound shipment; the shipment is on schedule for
on-time delivery; inbound shipments have been unloaded and
entered into inventory within the prescribed window to
service planned outbound shipments; the shipment has been
successfully delivered to the customer; etc.).
Of course, at the end of this fulfillment cycle is the customer
who placed the order to begin with. This customer doesn’t see
– or want to be burdened by – the plethora of variations and
complexities that their order might have experienced. The
customer doesn’t want to know that one item on the order is
being shipped from a store or DC close to the customer’s
home…another item is coming from a drop-ship supplier…
another was included with a group of replenishment items in a
master order being sent to a supplier who will ship all items to
the retailer’s DC – where the one item ordered by the end
customer will be extracted and shipped to the customer.
The customer simply wants what was ordered in the
timeframe promised via the fulfillment method(s) agreed
upon. Part of that expectation is that the customer will be kept
abreast of the status of their order throughout its lifecycle.
The customer expects acknowledgments that the order was
received, can be filled, is scheduled to be – and was – shipped
on a particular date, is on time for the scheduled delivery, has
As milestones are missed, an effective order management suite
detects the exceptions and triggers real-time alerts to the
appropriate people and/or systems to determine and execute
recovery measures to avoid or minimize negative impact to
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been delayed and now has an anticipated delivery date of “x”,
and was finally delivered on date “y”. The less visibility the
retailer can provide the customer regarding the status of the
order, the greater uncertainty and inconvenience the retailer
introduces into the customer’s life and the less satisfied the
customer will be with that retailer.
use any of the retailer’s points of interaction to check her
order’s status. In fact, 87 percent of consumers (up more than
55 percent since before the recession) consider it important to
very important to be able to track their order via any
combination of channels.6 Seamless cross-channel order
management avoids the brand fragmentation and customer
disappointment that occur when a retailer cannot provide the
kind of holistic, channel-agnostic order/shipment/ delivery
visibility that customers expect.
It’s no small wonder, then, that 88 percent of consumers
consider it important to very important to be notified that
they’re order has shipped; 91 percent consider it important to
very important to be told about any shipping delays; and 79
percent consider it important to very important to be notified
when their order has been delivered. Of course, they expect all
of this information to be made available across any
combination of channels – regardless of the channel on which
the order was originally placed.5
At your service
But, what about the fulfillment of services? How does
fulfillment differ for the retailer using a cross-channel order
orchestration hub for those parts of its business that involve
services (either along with products or services only)?
The answers are much the same. But, there are additional
complications. There’s still the factor of the timeframe in
which the customer expects to receive those services. And, if
two or more of the services sold are interdependent (i.e.,
Service A must be rendered before Service B can be provided),
then the retailer must also have a way to monitor and manage
the sequential delivery of those services in order to create a
positive customer brand experience while keeping execution
costs at a minimum.
So, what role does order management play in living up to
these customer expectations? Recall that the intelligent
sourcing engine in the order orchestration hub first
decomposed the order into its line item components to
maintain optimal sourcing and fulfillment flexibility. An
effective order orchestration hub will maintain a linkage
between the individual line items and the original customer
order from which they came. In so doing – as one or more of
those line items are included in master orders that are sent to
a replenishment or drop-ship supplier – the intelligent
sourcing engine is able to link the master order’s shipment
and delivery status information back to the individual line
items affected. With that knowledge, the order management
hub can easily link those individual line items to the customer
orders in which they were originally received. As such,
centralized order management enables the retailer to
gather status information from their supplier – and from
any other fulfillment nodes – and provide visibility into that
status back to the appropriate customer (on a per line-item
basis if need be).
If the services to be delivered involve one or more of the
retailer’s internal departments or business units, this
coordination can be challenging. But, if those services are to
be provided by one or more outside firms, it can get
substantially more complicated. Retailers faced with such
multi-enterprise service offerings are under extreme pressure
to ensure that the customer has a unified experience with the
retailer’s brand, not a disjointed nightmare that feels more like
a game of 52-card pickup than a well-orchestrated process.
Unless the retailer is willing to throw massive amounts of
manual resources at the task of managing multiple product
and service order lines in a single customer order, the only
effective answer is to employ a centralized order orchestration
hub to manage every service event as a separate – but related
– line item within the overall order. Earlier, we described how
a cross-channel order orchestration hub should be able to
decompose an order into its line item components – in order
to determine how each should be optimally sourced and
fulfilled. This becomes essential with product orders that
include services.
But, this facet of seamless cross-channel order management is
more than just about providing the customer with the order/
shipment/delivery status updates she considers important. It’s
also about providing the customer with the flexibility to check
that status via any combination of the retailer’s channels.
Regardless of how/where the customer placed the order (e.g.,
via a call center, in a store, via the Website, using a mobile
device, on a special order kiosk, etc.), she expects to be able to
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When an order contains a combination of product and service
components, there are often timing dependencies between
various line items on the order (e.g., you wouldn’t want to
install the TV until the cable service is installed). If there are
also timing dependencies between products in the order, each
line item must be individually tracked, but, then, managed
within the context of the entire order. To add further
complexity to the matter, since different service elements may
be performed by different companies, they must be managed
separately. However, in order for the customer to have a
unified brand experience, it’s also important to manage the
individual service elements within the context of the overall
order. An effective cross-channel order orchestration hub
should be able to effectively manage these complexities
individually and collectively.
proper disposition of the returned product(s) is critical for
optimal cash management and inventory utilization. At the
same time, it’s important that the steps in the reverse logistics
process be executed efficiently, lest errors, delays, and
personnel inefficiencies be introduced into the process
courtesy of excessive manual involvement.
A business-rules-based order orchestration hub guides the
seller’s personnel through the determination of the product’s
proper disposition (e.g., place back in inventory, repair
packaging and resell, obtain return authorization from the
supplier, return to supplier for credit, return to the DC,
destroy and submit request for vendor credit, etc.). Such
business rules take into consideration the specific product
involved, its condition, all applicable policies, etc. Crosschannel order orchestration automates manual steps, triggers
the appropriate back-end information updates, and initiates
the necessary steps to ensure that the money invested in this
returned product is liberated as quickly as possible (i.e., either
through resale or return credit).
“Reverse fulfillment” – Returns
As much as there is – and should be – a strong focus on the
sourcing and delivery of products and services within
fulfillment, there is also the mirror image of fulfillment,
namely returns. Cross-channel order management plays a
critical role in this challenging aspect of business, as well.
Consider the return of a product to a store. First, there’s
the need to determine what the refund amount should be.
The centralized order orchestration hub spans sales channels
to provide a holistic view of all of the customer’s interactions
with the retailer’s brand – including all purchases and the
details of those purchases.
Seamless end-to-end cross-channel order
management in action
There are myriad variations that can be thrown at – and
managed by – a true end-to- end cross-channel order
orchestration hub. One example of a complex multichannel
purchase that brings many of the seamless cross-channel order
management capabilities to life is one that (1) includes both
products and services, (2) is sourced from multiple channels,
(3) is fulfilled via multiple channels, and (4) involves one or
more returns. Let’s consider a live example that involves all of
these…and more.
In a seamless cross-channel world, the holistic view of all of
the customer’s purchases might reveal that the items being
returned should not be refunded at full price (e.g., because
they were purchased at a discount as part of a volume or
bundled buy). In a seamless cross-channel world, the customer
returning a product to the store would not have to have a
copy of their original order or receipt in hand – even if they
purchased the product online. Instead, the retailer would be
able to access all past purchases – regardless of sales channel
used – and locate the order details necessary to provide an
equitable refund.
The customer’s perspective
Consider the consumer standing in a checkout line at the
grocery where he’s stopped on his way home from work one
night. While standing in line, he receives a promotion on his
mobile phone for a sale on a new high-end Blu-ray player.
The timing is right because it’d been a few years since he
bought his DVD player from the retailer sending the ad and,
recently, he’d been reading various blogs and forums on the
topic of Blu-ray versus DVD. He clicks through from the
mobile ad to the retailer’s mobile site to learn more about the
player. As he sees that he’s about to check out, he adds the
Blu-ray player to his mobile shopping cart and closes out
the browser.
But, giving the customer the proper refund is only the first
step in effectively handling a return. The returned
merchandise now – once again – represents inventory in
which capital is tied up until the product can be resold or
converted to a credit from the supplier. Either way, the
expeditious handling of the reverse logistics to ensure the
8
IBM Software
Business Analytics
Retail
At home, after dinner, he logs onto the retailer’s Website and
pulls up the suspended shopping cart to do some more
research on the Blu-ray player that’s on sale. As he reads the
specifications and reviews for the player, he encounters an ad
for a new big-screen 3D TV that’s also on sale. Again, the
timing seems curious, since it’d been a few years since he
bought his current TV. And, he’d been thinking about
upgrading. He decides to buy the Blu-ray player and
completes his purchase online. He opts for in-store pickup in
order to get the player, that evening.
The customer decides to purchase the delivery/assembly/
installation service. And, the clerk is able to schedule all the
service dates and times via her POS terminal.
Upon arriving home, the customer realizes that he needs to
reschedule the installation date and calls the retailer’s 1-800
number. The call center agent who answers the call is able to
quickly and easily access the customer’s order and confirm the
viability of the requested installation date change. During the
call, she tells him about an extended in-home service warranty
that can be very convenient – particularly with large items
such as the big screen 3D TV. And, upon thinking about it,
the customer decides to buy it.
While sitting at a light on his way to the store, he receives a
text from the retailer offering deep discounts on Blu-ray
movies on purchases of 3 or more. Upon arriving at the store,
he heads straight for the Blu-ray movies and picks out three
titles that interest him.
Prior to the delivery of the home theater components, the
high-def cable TV service is installed. On the day of the
scheduled delivery and installation, the remaining components
arrive. The entertainment center is assembled and put in
place. All components are installed and configured. And, the
customer is delighted. That afternoon, he receives a call from
the retailer checking to see if he is satisfied with his purchase
and the delivery and installation service. He says that he
couldn’t be happier.
He looks around and finds a store associate to ask some
questions about the 3D TV he’d seen online. The store
associate takes out his smartphone, scans the customer’s
loyalty card and brings up detailed information about the TV
in question. His mobile app shows him that there’s a special
they’re running on a complete home theater system bundle
that includes the Blu-ray player the customer just purchased
and the TV he’s researching plus high-definition cable TV
service, a surround sound system, and a home entertainment
center to house it all. He tells the customer that since he just
purchased the Blu-ray player, he can qualify for the
discounted bundle.
A week after the installation, the customer realizes that the
surround sound system that came as part of the bundle is not
quite adequate for the size of room in which he had the home
theater system installed. He decides he wants to return it and
upgrade to a better system.
He travels to the store with the product and tells the
Customer Service representative that he wants to exchange
the unit for a higher end system. Though he’s not brought the
receipt from his original purchase, the associate is able to scan
his loyalty card and the bar code of the product and bring up
his purchase details. The associate tells him to pick out the
unit that he’d like and she’ll reconcile the price differences.
The customer decides to take advantage of the offer and asks
about taking the TV home with him along with his new
Blu-ray player. The associate checks inventory using his
mobile app and sees that the store only has the display unit in
stock. But, the app shows him that it can be picked and held
for the customer to pick up at the store across town or
shipped to his home from the local distribution center. Since
it’s getting late, the customer opts to have the TV shipped to
his home.
When the customer returns with the higher-end system, the
Customer Service representative has already checked the
customer’s original order for the home theater system bundle
(which included a discounted price for the surround sound
system as part of the promotional bundle). She indicates that
because the audio system was discounted by 20 percent as part
of the special promotion bundle, the customer’s return credit
will be 80 percent of the unit’s normal retail price (i.e., for a
stand-alone purchase). She scans in the originally-purchased
system as a return and the upgrade system as a purchase and
the customer pays the difference.
The customer goes to checkout to purchase his movies and
inquire about his Blu-ray player. The clerk scans his loyalty
card and three movies and sees the customer’s order for the
home theater system and his online purchase of the Blu-ray
player. The POS system sends a message to have the Blu-ray
player brought to the register for the customer. The associate
tells the customer about a special they’re running on a
delivery and installation service. It even includes assembly of
the entertainment center that will be shipped unassembled.
9
IBM Software
Business Analytics
Retail
On his way home, the customer receives a promotion for
state-of-the-art 3D glasses that would further enhance the
picture on his new 3D TV. He makes the purchase via the
retailer’s mobile app on his smartphone and opts for free
delivery to his home.
on time, the order orchestration hub would have sent an
escalation notice to a predefined contact in the store to
institute rapid recovery measures to ensure that the item was
picked and ready before the customer’s arrival.] Meanwhile,
the collaboration between the Website, the order
orchestration hub, and the marketing analytics engine
triggered yet another offer via the mobile channel…this time
for a discount on multiple Blu-ray movie purchases.
In the weeks that follow, the customer receives information
about online communities interested in higher quality home
audio and video, the latest news on 3D movies, tips for
optimizing audio and video quality with the Blu-ray player/
TV combination that he purchased, and other pertinent topics
that add value to his home theater system purchase.
When the customer asked the store associate about the 3D
TV – and the associate scanned the customer’s loyalty card
with his smartphone – the associate’s mobile app received an
up-sell notice from the marketing analytics engine to promote
the home theater system bundle (which included the Blu-ray
player just purchased online and the TV that the customer
had been researching).
Behind the scenes –
The retailer’s perspective
For the customer, the experience was seamless from beginning
to end. But, the complexities that had to be managed on the
back end by the retailer were another story.
The associate’s mobile app enabled him to capture the
customer’s order for the home theater system bundle on the
sales floor – thus minimizing the risk that the customer would
talk himself out of it before it left the store. In addition, the
backend order orchestration hub provided the necessary
inventory visibility for the store associate to determine from
which location the TV could be fulfilled – and to trigger it to
be shipped to the customer’s home.
The customer received the promotion for the high-end
Blu-ray player because the order orchestration hub had passed
previous customer purchase information to the marketing
analytics engine which could then see all products that the
customer had purchased from the retailer – regardless of
channel. In this case, the customer had made several high-end
audio and video purchases several years ago…some in stores
and some over the Web. Viewed holistically, it was clear that
the customer preferred higher-quality audio and video
components (hence the promotional offer for the high-end
Blu-ray player) and that the customer was due for an upgrade
– given the age of his purchases.
At checkout, the integration between the Website, the
backend order orchestration hub, the mobile app, the
marketing analytics engine, and the retailer’s POS system,
enabled several key capabilities. As the customer’s loyalty card
was scanned at checkout, the POS system brought up the
order for the home theater system that had been created on
the mobile app. It also brought up information about the
Blu-ray player that the customer was there to pick up. And, it
sent a message to the Customer Service desk to bring the unit
to the register where the customer was checking out.
Finally, the marketing analytics engine prompted the checkout
associate to up-sell the delivery/assembly/installation special.
When the customer clicked through to the retailer’s mobile
site to investigate the player and, then, put it into his shopping
cart while at the grocery, the “Selling” stage of order
management commenced. The order orchestration hub
passed the updated shopping information to the marketing
analytics engine which generated the next “best offer” of the
3D TV when the customer visited the Website to further
investigate the Blu-ray player.
The integration between the POS system and the order
orchestration hub’s delivery and service scheduling module
enabled the checkout associate to view scheduling availability
and book the installation appointments before completing the
transaction. Once entered, the appointment dates and times
were electronically transmitted to the cable company that
would do the cable installation and the delivery/assembly/
installation company. Throughout the fulfillment phase, the
order orchestration hub monitored the completion of each
milestone in the order’s lifecycle looking for conditions that
might require delivery or installation dates to be reset.
As the purchase of the player was completed on the Web –
and the customer selected in-store pickup of the item – several
events occurred. The order orchestration hub triggered a pick
and hold order to the pickup store. It automatically printed a
receipt at the Customer Service desk at that store to attach to
the purchased item once picked. And, it began monitoring the
process to ensure that the task was completed within a
predefined completion window. [Had it not been completed
10
IBM Software
Business Analytics
Retail
As the Blu-ray player was brought to the register, it was
scanned to record the fact that the customer had picked up his
online purchase. The POS system knew not to charge the
customer for the Blu-ray player he was picking up because the
integration between the Website, the order orchestration hub,
and the POS system showed that payment had already been
received online. As the transaction was completed in the store,
several sourcing actions were executed. The order
orchestration hub deconstructed the order into its individual
line item components (i.e., TV, surround sound system,
entertainment center, high-def cable TV service, delivery/
assembly/installation service – and later – extended in-home
service warranty). The intelligent sourcing engine within the
order orchestration hub balanced projected fulfillment dates
with inventory levels and fulfillment costs to optimally source
each item in the order.
•
•
status of individual line items. Using this linkage between the
master order and individual customer order line items that
depended upon it, at each milestone (e.g., order
acknowledgement, shipment departure, any delays, shipment
arrival, etc.), the order orchestration hub triggered retailerdefined updates to inform the customer about the progress of
his order. And, the order orchestration hub made this status
information available to all channels (Web, mobile, call
center, stores, e-mail, and/or text) so that the customer could
choose which one(s) he preferred to use to track the progress
of his order.
The TV was sourced from a store that had excess inventory
for that model and was at risk of end-of-season markdowns
to move the merchandise. The order orchestration hub sent a
pick and hold order to reserve the inventory at the store. It
scheduled the transfer of the TV from the in-stock store to
the DC from which the customer’s home theater system
would be shipped. And, it interfaced with the retailer’s
warehouse management system to alert the DC that the TV
was due to arrive there and should be combined with the
other items in the order to be shipped to the customer’s
home on the scheduled date.
The entertainment center was a drop-ship item that would
be shipped from the manufacturer to the retailer’s DC – from
which all items to be delivered to the customer would depart
on the scheduled delivery date. The order orchestration hub
added that line item to a larger order that contained items
from other customer orders, as well as, replenishment items
for products that were carried in stores. This master order
was, then, transmitted electronically to the supplier (who
later returned a purchase order acknowledgement confirming
their ability to fill the order in its entirety and indicating the
projected shipping date). Once the order was shipped, the
supplier sent a notice indicating the ship date and the exact
contents of the shipment. And, the carrier electronically
transmitted ongoing shipment updates to enable the retailer
to predict whether everything was on schedule. These
updates were fed to the order orchestration hub that
monitored the milestones in the order’s lifecycle. By
maintaining a link between the master order and all the
individual customer order line items that fed into it, the order
hub was able to translate the master order’s status into the
•
Based on current demand signals, the order orchestration
hub could see that the retailer’s on-hand inventory for the
surround sound system was low. And, since the home theater
system bundle wasn’t due to be installed for several days, the
order orchestration hub’s intelligent sourcing engine chose to
source the audio system from an in-bound in-transit
shipment that was due to arrive at the retailer’s DC well
before the planned delivery date. The order orchestration
hub sent an alert to the DC that was due to receive the
shipment instructing them to take one of the audio systems
from the inbound shipment and cross-dock it to the staging
area where the rest of the items to be delivered to the
customer were being collected.
•
The order orchestration hub’s delivery and service module
transmitted the cable TV service order along with the
installation date for that service. And, it tracked the
completion of that installation to ensure that the delivery
date for the home theater system would not need to be
delayed.
•
The order hub also transmitted the in-home service warranty
information to the insurance company that would provide
the extended coverage.
When the customer contacted the retailer’s call center to
change the delivery and installation date, the agent was able to
quickly access the customer’s order because of integration
between POS, the order orchestration hub, and the call center
application. As the new delivery and installation appointment
time was discussed, the order orchestration hub double
checked all dependent events to ensure that the newlyproposed date could be accommodated. And, as the call
center agent had the order open for review, the backend
marketing engine highlighted the up-sell extended in-home
warranty service that the call center agent, then, proposed to
the customer.
11
IBM Software
Business Analytics
Retail
Summary
Once the delivery and installation had been completed
and the order orchestration hub received notice about that
fact, it triggered a notice to the call center to contact the
customer to check his satisfaction with his purchase and the
retailer’s performance.
As a foundational element of an overall Smarter Commerce
Retail strategy, seamless end-to-end cross-channel order
management has a game-changing impact on both the
customer experience and the retailer’s operational efficiency.
Customers expect it. And, retailers are working to achieve it.
When the customer arrived at the store to exchange the
surround sound system for an upgraded model, the Customer
Service associate was able to access the original order courtesy
of integration between the POS system and the order
orchestration hub. She was able to see that the surround
sound system being returned was part of a promotional
theater system bundle and that it had been priced at
20 percent off its normal retail price. With this important
information, she was able to determine the appropriate
refund for the customer and apply it to his purchase of the
upgraded model.
The scope of order management begins the moment an item
is placed in the shopping cart or wish list and doesn’t end
until the product and/or service has been delivered – and
potentially, returned. As such, few attempt to tackle all aspects
of cross-channel order management in one fell swoop. Rather,
they define their end vision of seamless end-to-end crosschannel execution and, then, roll out incremental phases
to achieve it.
Regardless of the starting point or the evolutionary steps that
are chosen to achieve the vision, the order orchestration hub
is essential. Its agility, configurability, and scalability are
critical to ultimate success. Its ability to manage orders across
all order capture channels is foundational. And, the need for
its ability to source, distribute, and fulfill via any combination
of channels is indisputable. It is, quite frankly, the future of
retailing, made possible today.
Once the item was returned, the order orchestration hub
managed the reverse logistics of the returned item to
(1) determine its proper disposition (to minimize float),
(2) trigger the appropriate steps, and (3) monitor the reverse
logistics process to completion.
Finally, visibility into the customer’s upgrade to the higherend audio system (courtesy of the integration between the
POS system, the order orchestration hub, and the marketing
analytics engine) triggered a promotion for the state-of-theart 3D glasses that would be compatible with the 3D TV the
customer had purchased. And, the purchase (via the mobile
channel) – and subsequent fulfillment (via ship to home) – of
the glasses was recorded and managed in the order
orchestration hub. In the weeks following the purchases, the
precision marketing engine triggered ongoing updates to the
customer to add worth to his purchase and deepen the
relationship with him based on his extended purchases.
12
© Copyright IBM Corporation 2011
IBM Corporation
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Produced in the United States of America
July 2011
All Rights Reserved
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1 S
ource: “Cross-Channel Brand Interaction: 2010 Consumer Preferences”;
Sterling
2 S
ource: “Cross-Channel Brand Interaction: 2010 Consumer Preferences”;
Sterling
3 Source: Retailer Cross-Channel Readiness Survey; Edge Research; Dec. 2010
4 S
ource: “Cross-Channel Brand Interaction: 2010 Consumer Preferences”;
Sterling
5 S
ource: “Cross-Channel Brand Interaction: 2010 Consumer Preferences”;
Sterling
6 S
ource: “Cross-Channel Brand Interaction: 2010 Consumer Preferences”;
Sterling
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