Operations & Fulfillment: What Omnichannel Retailers Need to Know When Choosing an OMS

An order management system is a critical resource for omnichannel retailers who sell merchandise that they ship from either their own warehouse or via a third-party service bureau or logistics provider.

With an OMS, for example, you can:

• support cross-channel order entry and customer service;
• manage a cross-channel customer database;
• manage personalized product offers across channels;
• offer appropriate rules-based promotions by customer and channel;
• provide consistent and accurate information about stock quantities across channels;
• facilitate payment processing, including doing such things as issuing and tracking refunds; and
• optionally manage picking, packing and shipping, along with inventory receiving and returns, if the OMS includes a fulfillment module.

To take full advantage of these benefits, however, you need to make a strategic decision about which OMS is right for your organization.

Taking the First Step
The most important part of the system selection process is creating a "change team," with representatives from marketing, merchandising/purchasing, operations, inventory management, fulfillment, customer service and accounting.

Next, the change team should define what it wants the OMS to accomplish. If you use a written needs analysis document, this can become a formal request for proposal (RFP). You may assume your needs and requirements are "too simple" to justify this step, but you'll likely be surprised by what your team comes up with. Most everybody has a wish list in a bottom desk drawer, which your team will use in creating the RFP.

The more specific the needs and requirements in the RFP, the better. You'll be sending this document to six to eight candidate system vendors for their written proposals, and the more you know about how well they can meet your requirements, the better.

Keeping Score
Each response should be noted in the form of a "score," ranging from "we can meet this requirement in the current system" to "our system doesn't support this functionality." In between are options including "will require minor modifications," "will require major modifications" and "we have an alternative approach."

You can also assign a numerical value to each answer to tally and compare the scores for each vendor. Plus, you can weight the requirements by "must have," "nice to have" and "wish list." If these are also assigned a numerical value, the score times the weight equals the rank for each requirement, which can be tallied for each vendor for all requirements.

You must also ask each vendor to indicate the cost of the system based on metrics you provide regarding number of users (full and part time) and number of SKUs, along with additional costs for the modifications the vendor proposes as well as any fees for data conversion (if you have legacy data), integration with your e-commerce platform and other systems (e.g., accounting), and training.

Processing the RFPs
You should allow each vendor about three weeks to four weeks to respond to the RFP, and another month for your team to evaluate the proposals. Typically, you can eliminate about half of them based on price and vendor scoring/ranking.

For the remaining candidates, ask for a two-hour initial web demo so that your team can get a sense of the "look and feel" of each contender.

Here again, you'll learn more than you think and can probably eliminate one or more vendors as a result. The remaining candidates should be asked to do a day-long web demo (three hours in the morning, three hours in the afternoon). At this point, you can ask them to demonstrate some scripted requirements.

This should easily narrow the field down to a final list of two or three vendors, who should be invited to come on-site for a more in-depth exploration (taking one day to three days based on vendor discretion).

The Acid Test
By now you know a lot about the vendor, and should probably arrange to visit the vendor's offices for the final candidates just to be sure there are no surprises. Ask who will be in charge of your implementation if the vendor is selected, then meet with that person for an in-depth conversation about their experience with project management.

Finally, your team should ask itself a telling question: If selecting a vendor is like getting married, with the "for better or worse" elements of such a relationship, which vendor do they feel more compatible with? You'll be spending a lot of time with these people. If you really don't like the people with the best system, and think the next best is run by superstars, go for the people you're happier with. You won't be on the new system forever, but it will seem like it if your new partners are hard to get along with.

Implementation
A final thought on implementation: Most systems require six months to 12 months to get in place (sometimes longer). Cost is a big concern prior to selection; time becomes the priority afterwards.

Ernie Schell is founder and executive director of Marketing Systems Analysis, a consulting firm that specializes in specifying, selecting and implementing solutions for direct commerce order management. Ernie can be reached at ernie@schell.com.