Fraud vs Customer Centricity - III
In my opinion, the Order Management system should take care of two things to reduce loss of revenue. One is to make sure that the retailer has the Order covered in terms of ring-fenced credit (in other words, a valid authorisation) before the order is shipped and the second is to make sure that the payment is processed as soon as possible once the order is shipped.
Unfortunately, at many of the retailers that I have been associated with, I have noticed somewhat of a haphazard and organic growth across channels. This has essentially meant that the business processes and IT systems have quite often been patched up to make it work in the shortest possible time thereby cutting some corners. Among these, the biggest area of concern that I have come across is the lack of timely feedback in the Order fulfilment lifecycle. Many of these retailers have started small with quite a few processes which do not support exceptions too well. One example is sending out fulfilment requests, especially to their drop-ship suppliers (Direct to Customer suppliers) through email with no confirmation on the actual fulfilment till the supplier raises an invoice for those items. Such processes mean that retailers either charge the customer upfront and then handle any fulfilment failures manually or charge the customer 'x' days after the request sent to the suppliers which degenerates into complete chaos as the order volumes go up.
This is where standardisation of process would come into play. I tend to go in with a recommended standard model which could then be tailored for each retailer's specific process peculiarities.
The included Fig 1 depicts the schematic process for In-stock products with minimal handling times (< 2 days).
The process essentially provides for a feedback for the retailer to charge the customer's card before the shipment takes place. This would provide coverage for the retailer in terms of a valid authorisation covering the shipment. This process aims at the optimal mix of covering the retailer while keeping the ring-fencing on the customer's card to a minimum.
The included Fig 2 depicts a similar schematic process for products which have longer lead times. These could include products which are either made to order or replenished to order.
The key difference here is an additional update from the Fulfilment system when the Order is ready to be fulfilled. This would act as the control point for the retailer to authorise the card before the shipment process goes through.
These are very high level schematic processes and there are a lot of challenges faced in each implementation to converge to such a process, but these would at least provide a good starting point.
While I will try and collate some of the challenges and potential solutions in another post, I would be delighted to hear from others on the challenges they have faced too.