This discussion highlights the critical role of a Distributed Order Management System (OMS), specifically Fluent Commerce, in enabling retailers to manage inventory and fulfill orders efficiently across multiple sales channels, ultimately improving customer experience and driving revenue.
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- Hello, welcome to "This Is My Offer" episode.
We will be talking about order management system today.
Now, retailer sell on multiple channels,
web, apps, social, store,
and the challenge in selling the same inventory
in multiple channels is having visibility,
consistently, what to sell where,
and that's what we are gonna discuss today
with Nicola from Fluent Commerce.
Nicola, if you introduce yourself,
and tell us a little bit about Fluent Commerce,
we'll get started. - Yeah, sure.
So, I'm Nicola Kinsella,
and Fluent Commerce, despite our name, we don't do commerce,
but we do specialize in distributed order management,
so, thank you so much, Ronak, for this opportunity.
- So, Nicola, what is a order management system?
- Yeah, so an order management system actually plays
two key roles in digital commerce.
First is inventory availability,
giving you an accurate, real-time view of all your inventory
across all backend systems and locations,
and letting you segment that inventory
and manage your safety stock,
so you control what you can make available
to each channel, market, or region.
And you can also show accurate delivery and pickup promises
to your customers to build customer trust,
and they're based on real-time sourcing decisions
across the buying journey.
The other thing it does is once an order's placed,
it lets you fulfill orders from the best,
most profitable location,
manage the entire order lifecycle from fulfillment,
including store fulfillment and returns.
- Oh, that's great, so, it allows one showing inventory
on different channels,
and if we talk about e-commerce,
then you could be showing how much,
what's available for a particular SKU
on product detail or product listing page.
- Exactly, yeah.
- Yeah, so, question comes up is, like,
can my ERP system or e-commerce platforms do this?
- Yeah, so, for simple use cases,
an ERP, you know, can handle some basic order management,
but really, they're your inventory master, right?
They're a financial system of record,
and while they can do basic sourcing and order management,
they weren't designed for the realities
of digital commerce today.
Commerce platforms also weren't designed
to give you fine-tuned control over inventory availability,
what you're making available where,
and we see so much sort of variation
in how businesses wanna apply safety stock.
For example, one brand might wanna apply
a higher safety stock buffer on popular items
to protect an in-store experience.
Another one might wanna adjust them based on, you know,
how long a product has been in season,
like how many weeks it's been in season,
because towards the end, they might have
a higher canceled order rate than they do
at the beginning of the season,
or they might want to increase safety stock
just after a new product launch,
when a particular product is in high demand.
And then an order management system,
like Fluent Order Management, is your availability master
as opposed to your inventory master.
It's the master of what stock you have available
to promise to your customers at any point in time
based on real-time complex sourcing decisions
and safety stock controls.
And you can do that across the shopping journey,
so, that includes commerce search,
or even, you know, search engine sort
of search capabilities as well on the product details page,
at checkout, but at scale, right?
So, this can mean thousands of stock availability checks,
including all these different sort of places
across the journey every second.
So, you can deliver real business results,
like, actually, one of our customers,
and this is such a fun brand, Psycho Bunny.
- Wow, so, one thing is it's,
let's say, you still have five items in store,
but you don't wanna make that available for purpose,
because you don't want the store shelf to look empty,
and so, what you're saying is with the Fluent OMS,
it makes it possible for business user
to configure what they want to sell where, when.
- Yeah, absolutely.
They can, you know, they can protect
a certain amount of store inventory
so they can protect that in-store experience,
but it really depends on, you know,
how much stock you have in each sort of product variant
as to how you wanna control that inventory.
- And talking about results on Psycho Bunny,
did that solve the problem of canceled order?
Because many retailers are struggling with, you know,
overselling, and product not getting into...
Canceling customer order,
because that hurts not only top line and bottom line.
- So, canceled orders are a huge common problem, right?
Really common problem,
but within just a few short months
after the Fluent Order Management go-live,
Psycho Bunny saw a 93% reduction in their canceled orders,
which means a better, like, overall customer experience.
Another great driver of customer experience
is they were able to reduce their average delivery time
to an order to a customer by 33%.
They also saw a 50% reduction in split shipments,
which reduced their delivery costs,
and as a result of their overall digital transformation,
which included both commerce and order management,
they saw a 30% increase in incremental revenue,
and a lot of that was due to being able
to make more inventory available to their digital channels,
because they had better inventory accuracy,
and there aren't many tech investments
where you can achieve that level of ROI so quickly.
- Absolutely, that's pretty impressive.
So, what really makes the Fluent Order Management system
different from the legacy OMS,
or other systems, other similar systems in market?
- So, we used to say we were cloud-native
back when we were founded over 10 years ago,
but these days, everyone has a cloud offering, right?
So, really, it's about the way Fluent Order Management
is architected.
- If I am a retailer,
and let's say, I have 100,000 SKUs,
400 stores,
and if I do the math, that makes it, like,
40 million inventory positions,
which I want to update daily or probably more.
Does Fluent OMS allow that?
- Absolutely, and for fast-moving items,
you're gonna wanna update that multiple times a day,
or even every few minutes, right?
In fact, over the 8-day Black Friday
sort of holiday trading period last year,
we processed 1.2 billion inventory position updates,
and AWS is key to providing that scale.
We use AWS Glue for fast intelligent data processing,
tenant isolation patterns here to process the data,
and using AI, we process the fast-moving items
or hot SKUs first,
so, data's available to sell in channels
in a matter of minutes,
and this results in both better inventory visibility
and accuracy.
- So, that's great.
I mean, no more order cancellation,
but what about, like, each business is unique,
so, what about, like, flexibility of defining workflow,
or creating custom UIs for store associates?
- Yeah, so, that's super important.
If there's one thing we've learned in years of, you know,
working with brands, and retailers, and distributors,
they all have unique backend processes.
Everyone's different, which means flexibility
is essential to customers.
So, you can fine-tune your sourcing logic
and business processes to increase
operational efficiency over time,
like reducing order processing time,
and increasing your on-time in-full rate.
So, we provide flexible workflows
you can configure using an existing library of rules.
You can also create new rules,
and extend those workflows as well.
- So, can you provide some example
how the customer is really using these in practice?
- Yeah, sure, so, we have some customers
who want, say, orders over a certain value
to go through a fraud check review process,
so, they'll create a rule that puts that order
in a fraud review status,
triggers notification to the appropriate team members,
and then once the the review is complete,
they will process orders as usual.
Another example is customers who need
very precise control over the timing of payment capture.
This is particularly applicable for high-end luxury items,
where there's, you know, insurance ramifications
and chain of custody that they have to consider
around the timing of payments.
Or we have customers who need special sourcing logic
to factor in things like whether an item is bulky,
or requires special handling requirements.
We also provide a flexible front-end UI
with a micro front-end architecture,
so, you can configure the user experience.
Once again, we provide a library of UI components,
but you can also create new ones.
One example is a customer who has a Slack integration
for their customer service reps to escalate orders,
'cause that's what they use as their internal
order escalation mechanism,
and so, the customer service rep can press
a button in the UI,
it triggers a notification that gets posted to Slack,
and then that the appropriate team member
can handle that escalation,
and our AWS architecture is key
to providing us flexibility and digital agility.
- That's impressive.
Usually, you know, you forget,
or usually, the store associates and internal constituents
comes last when it comes to, you know,
addressing UI need for them,
and a fact that Fluent Commerce allows that
is really helpful to meet those needs.
Now, if I summarize what we talked,
it's seems like there are a lot of different components
or microservices which Fluent Commerce has,
ranging from inventory management to fulfillment planning,
execution, order workflow, and more,
and that very flexible architecture allows you
to extend and provide multiple functionality
in flexible architecture as a multi-tenant, also.
And using the depth and breadth of AWS services,
you are able to process not only the batch data,
but also streaming data,
either coming from point of sale or warehouse,
and provide the real-time visibility of inventory,
and provide faster decisions on allocation.
Now, in my ideal world of OMS, right,
giving the dials or levers to the business
for either the user experience,
i.e., the delivery speed,
or the profit margin, or the warehouse capacity,
like, if I have this three dial as a retailer,
and I can adjust those,
and let AI figure out what's best optimization is
for those value or dials I pick,
how are you looking at AI, and using AI
within Fluent Commerce platform?
- Yeah, so, we're looking at AI
from a few different perspectives.
One of the other big differentiators we have
is that we capture a lot of event data
throughout both the pre-purchase
and the post-purchase journey that can be
great data signals for training and testing an AI model,
particularly for demand forecasting
and sourcing optimization.
One of our customers, ALDO, actually is currently building
their own model for that purpose.
They wanna further improve their inventory terms,
out-of-stock reductions,
and reduce delivery and end-of-season recall costs.
One of the reasons they chose Fluent Order Management
was because it provided the flexibility
to consume the output of their model,
and factor that into real-time sourcing decisions.
- That is great, so, what are other AI ML use case
does OMS support?
Because you said you have a lot of data,
which is the key to drive any AI,
and you probably have a lot of clean data,
and (chuckles) that, so,
I'm curious what other use case
you have seen your customer enable,
and you are also thinking?
- Yeah, so, one area is around estimated delivery dates.
AI can be used to provide more accurate
delivery day estimates to customers
during the buying journey,
which helps increase conversions and customer trust.
It can also enhance AI-driven demand forecasting accuracy
by providing visibility into digital demand signals.
For example, the ratio between the number
of stock availability checks that are happening
and the actual number of orders
that are actually being placed,
'cause we see large variations.
For example, a commoditized white T-shirt,
it might be a ratio of three to one, right?
Three stock checks to one order.
For a high-end, luxury good, that might be up to 700 to one,
and so, that data happens a lot of predictive value.
Fluent Order Management can also share data
with other AI-driven solutions to optimize their output.
So, we are exploring right now pricing
recommendation engines,
and using inventory data to increase those
or optimize those recommendations,
digital app platforms, to optimize ad platforms
to help increase sell-through, hit sell-through targets,
and increase inventory turns,
commerce search, to increase add-to-cart rates,
and also conversions,
and then it can also share, like say,
average delivery distance of an order,
or whether it was shipped through a low-carbon
delivery method with your AI-driven
carbon management solution, too.
So, there are a lot of different use cases
we're exploring right now.
- That's awesome.
It seems like the having good inventory
and availability data is, like, core to the commerce,
and it enables so much of a use case from AI standpoint,
pricing optimization to search and digital ad platform.
That's pretty impressive.
So, tell me, how can people learn more
about this going forward?
- Yeah, so, we're in the AWS Marketplace,
so, you can definitely check out the, you know,
the AWS Marketplace for more information,
or if you'd like to read more about the ALDO
and Psycho Bunny case studies,
the links are available in the video description.
- That's great.
Thanks, Nicola, for your time today.
I learned a lot.
- Thank you, Ronak, always a pleasure.
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