What does seamless end-to-end cross-channel order management look like?

Transcription

1 What does seamless end-to-end cross-channel order management look like? by John L. Stelzer 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 Seamless end-to-end cross-channel order management in action 10 Behind the scenes the retailer s perspective 12 Summary Executive 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.

2 Post-recession 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, s, 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. 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 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. Order management: The scope 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 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. 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 ers 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

3 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? 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.] 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. 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 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. 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. 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 3

4 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. 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. 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. [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. 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: 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 4

5 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. 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. 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. 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. 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: 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 picku p This could be a retailer that needs to transfer a product from their DC or another store to the consumer s home store. 5

6 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. 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.). 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.). 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 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. Meeting customer expectations 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 6

7 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. 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 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). 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 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. 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. 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. ers 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. 7

8 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. 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. 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. 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 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). 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. 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. 8

9 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. 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. 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. 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. 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. 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 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. 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. 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. 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. 9

10 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. 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. 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 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. 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. 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 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. 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). 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. 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. 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. 10

11 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. 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 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, , and/or text) so that the customer could choose which one(s) he preferred to use to track the progress of his order. 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

12 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. 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. 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. Summary As a foundational element of an overall Smarter Commerce 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. 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. 12

13 Copyright IBM Corporation 2011 IBM Corporation Software Group Route 100 Somers, NY Produced in the United States of America July 2011 All Rights Reserved IBM, the IBM logo, ibm.com and Sterling Commerce are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol ( or ), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the web at Copyright and trademark information at legal/copytrade.shtml. The information contained in this publication is provided for informational purposes only. While efforts were made to verify the completeness and accuracy of the information contained in this publication, it is provided AS IS without warranty of any kind, express or implied. In addition, this information is based on IBM s current product plans and strategy, which are subject to change by IBM without notice. IBM shall not be responsible for any damages arising out of the use of, or otherwise related to, this publication or any other materials. Nothing contained in this publication is intended to, nor shall have the effect of, creating any warranties or representations from IBM or its suppliers or licensors, or altering the terms and conditions of the applicable license agreement governing the use of IBM software. References in this publication to IBM products, programs, or services do not imply that they will be available in all countries in which IBM operates. Product release dates and/or capabilities referenced in this presentation may change at any time at IBM s sole discretion based on market opportunities or other factors, and are not intended to be a commitment to future product or feature availability in any way. Nothing contained in these materials is intended to, nor shall have the effect of, stating or implying that any activities undertaken by you will result in any specific sales, revenue growth, savings or other results. 1 Source: Cross-Channel Brand Interaction: 2010 Consumer Preferences ; Sterling 2 Source: Cross-Channel Brand Interaction: 2010 Consumer Preferences ; Sterling 3 Source: er Cross-Channel Readiness Survey; Edge Research; Dec Source: Cross-Channel Brand Interaction: 2010 Consumer Preferences ; Sterling 5 Source: Cross-Channel Brand Interaction: 2010 Consumer Preferences ; Sterling 6 Source: Cross-Channel Brand Interaction: 2010 Consumer Preferences ; Sterling Please Recycle XX0000-USEN-00