Dynamics 365 and DOM: Keeping pace with the speed of fulfillment

When today’s consumers order products online, they expect the items they purchase to arrive at their doorsteps within a matter of days. In fact, 62% of consumers expect items ordered with free shipping to arrive in less than 3 business days, and 38% expect them delivered in less than 2 days.  And the faster a customer’s purchases arrive, the happier they are.

To meet these expectations, retailers need cost-effective ways to fulfill orders. This is a difficult task when a retailer’s inventory is scattered across different warehouses, in different stores, and in different states, and is also combined with dynamic inventory levels. To overcome this challenge, Microsoft has added distributed order management (DOM) to its Microsoft Dynamics 365 Commerce platform.

Distributed order management with Dynamics 365

DOM is an algorithm that can be run in Dynamics 365 that determines the best warehouse, distribution center or store to provide fulfillment for orders based on criteria tailored to each company’s needs.

DOM has two fundamental principles:

1. It costs less to ship an entire order out of one warehouse or store (location) than it does to ship individual parts of an order out of multiple locations. For customers who purchase multiple items, DOM assesses which location can fulfill the entire order. If a single location can’t fulfill the entire order, DOM attempts to fulfill the order at the fewest number of locations possible.
2. The closer the product and fulfillment site are to the customer, the less it costs to ship. DOM calculates the distance between the customer and the possible fulfillment locations by entering address information into Bing’s Map API, then selecting the closest location that has the item(s) ready to ship.

Before DOM applies these two fundamental principles, it looks at fulfillment rules designed to meet the organization’s objectives.

The following are DOM rules that can be leveraged out of the box:

• Fulfillment priority rule: This rule defines which locations should be prioritized ahead of others. A client of RSM used this rule to ship out of its distribution center before its stores, since more than half of its orders could be fulfilled from the distribution center. DOM will attempt to fulfill from the highest priority locations. If multiple locations have the same priority level and can fulfill the order, DOM will select the location closest to the customer.
• Offline fulfillment location rule: This rule defines which warehouses or stores are not eligible for sales order fulfillment. Some use cases may include stores that are too busy to fulfill customer orders or stores that are experiencing a power outage.
• Partial orders rule: This rule defines the maximum number of warehouses that can be used to fulfill a single order. This rule is useful if you want to help the customer avoid receiving multiple shipments.
• Minimum inventory rule: This rule allows organizations to define a safety stock for their products at the store level. This is a great rule to use on popular products that customers want to purchase in stores.
• Maximum orders rule: This rule sets a limit on the number of open orders a location can have. Some warehouses or stores may be in more populated areas while others may be only one of few in a particular region. These locations can easily become overloaded with fulfillment requests that consequently increase the amount of time it takes to ship a customer’s order. If a location has met its open orders limit, DOM will not consider it and will select the next best location to fill an order.
• Maximum distance rule: This rule is used to control how far a location can be from a customer. An organization may choose to fulfill an order with an alternative method if eligible locations are too far from a customer.
• Maximum rejection rule: This rule defines the number of times an order line can be rejected before DOM no longer processes it. At times, DOM may choose a location for fulfillment, but when an attempt to select one is made, the selector may discover that the product isn’t available. A location can choose to reject the fulfillment request and DOM will assign the order line to a different location.

These rules help determine qualifying locations with inventory available for fulfillment. Once DOM has a list of locations for each sales order line, it narrows the list down by determining which location can fulfill the entire order. After this, it determines which remaining location is closest to the customer.

What happens next?

DOM is a key unified commerce capability that enables buy online ship from store. DOM helps retailers meet their strategic objectives by improving service levels and keeping costs in check.  DOM with Dynamics 365 is easy to use so companies feel empowered to make adjustments and review their results as their strategic objectives change—making it easier for retailers to achieve their desired results.

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